News
China’s Exim Bank suspends loan; Central Expressway hits road block
View(s):Economic crisis and suspension of repayment of loans cited as reasons
By Damith Wickremasekera
China’s state-owned Exim Bank has put on hold a US$ 51 million loan required for the construction of the first phase of the Central Expressway, throwing the Government into a fresh crisis over the project.
Government sources said that as an immediate result some 2000 jobs held by locals were in jeopardy while some 500 Chinese employed in the project covering a span of 37 km between Kadawatha and Mirigama had started leaving. The release of the funds from the Exim Bank of China has been mainly suspended in view of the current economic crisis in the country and the Sri Lanka Government’s decision to suspend repayment of foreign loans, Treasury sources said.
The suspension of the loan would result in the delay of the project and in turn would draw a penalty on the Sri Lankan government from the contractor, Metallurgical Construction Company (MCC) of China. the sources said.
The construction of the project began in September 2020 with the target to complete it by the end of 2024.
So far some 32 percent of the project has been completed with the Sri Lankan government’s funds which amounts to Rs 33 billion.
The Sunday Times learns that the Road Development Authority (RDA) has taken up the matter with the External Resources Department of the Finance Ministry.
The project in the recent months has also been hit by the lack of diesel and explosives needed to blast the rocks. A daily requirement of 40,000 lts of diesel is needed.
“We would have to wait until the economic situation improves and renegotiate loans to go ahead with the project,” a Finance ministry source said.
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