China provides more money to Sri Lanka

by admin
Mar 23, 2010

CHINA has loaned US$290 million (S$405 million) to the Sri Lankan government to build an airport and expand the island's railway network, according to Sri Lanka's foreign ministry.

 

The Export-Import Bank of China loaned $190 million to construct a second international airport in Sri Lanka's south and $100 million to develop the island's railways.

 

The loan agreement was signed in Beijing last week and the two countries also discussed more funding for highways in the island's war-ravaged Jaffna peninsula, the foreign ministry said in a statement.

 

Officials in India, Sri Lanka's neighbour and China's rival, fear Beijing is trying to undermine Delhi's influence in the region through its economic assistance.

 

India, for its part, has just announced a credit of $70m to help upgrade Sri Lanka's southern railway line. The two countries are vying for contracts in Sri Lanka following the end of more than 20 years of civil war.

 

However, analysts say India is playing a losing game.

 

Sri Lanka successfully played off its larger neighbours against each other during the war to obtain military and monetary assistance needed to sustain the war. However since the end of the war, although Sri Lanka praises India as its closest ally, China has won all the key development projects in the island clearly indicating Sri Lanka has strategically aligned itself with China for political and economic support in the post war period.   

 

The new airport will be near a vast sea port at Hambantota, which is largely being funded by the Chinese government's lending arm, the Export-Import Bank. Both projects have the same Chinese state-owned company as contractor, says the BBC's Charles Haviland in Colombo.


Meanwhile, Sri Lanka received further funding assistance from China to build a flood protection system for parts of the capital Colombo, a government minister said.

 

Colombo suburbs of Kotte, Dehiwela-Mount Lavinia, Maharagama, Kesbewa and Moratuwa will be protected from storm water flooding by the project, minister Gamini Lakshman Peiris said.

 

The 6,800 million rupees (59 million US dollar) project will be financed with a loan from China Construction Bank.

 

China, which is a key military and political ally of Sri Lanka, loaned the island $1.2 billion in 2009.

 

The projects Beijing is financing in Sri Lanka include a host of road improvements in the formerly war-torn north, a huge theatre in the capital and coal power plants.

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