Sri Lanka is facing delay in receiving a US $ 300 million loan offered by Bank of China, recent media reports outlined quoting Sri Lankan government officials familiar with the negotiation, reports including international media agency Reuters noted.

Reuters said that Sri Lanka is a key battleground in the tussle for influence in South Asia between China and traditional regional power India, and was due to receive the loan before the end of January, but it is now unlikely to be finalised until later this month.

Report quoted Sri Lanka’s Treasury Secretary and Finance and Mass Media Ministry Secretary Dr. R.H.S. Samaratunga who told reporters that Sri Lanka expected a response from the Bank of China by February 20, meaning the loan may not be finalized for several more weeks.

“They had asked a few questions and we have responded,” Treasury Secretary and Finance and Mass Media Ministry Secretary Dr. R.H.S. Samaratunga had told reporters adding that “Then they said they will come back. But now they say they want to consult their head office.”

Report also quoted another official, who is also involved with the negotiation, who had said Sri Lanka was likely to receive the loan by the end of February, “if all goes well”.

“We can only start negotiations after February 14 due to Chinese New Year holidays. Then we need to go through Cabinet approval,” Officials had told reporters whilst another official from the Ministry had said that the government would negotiate on increasing the loan to US $ 1 billion separately after receiving US $ 300 million.

Report noted that Sri Lanka is seeking the loan, which it said could be raised to US $ 1 billion by the end of March 2019, as it struggles to repay foreign debts after a political crisis delayed the government’s borrowing plan. International reports further outline that the current Government has turned to China to help relieve economic pressures through extensive lending although it came to power in January 2015 criticizing the former Government (2005-2014) on lending from China.

“Usually if Chinese banks promise a loan, they give it quickly and on time,” report quoted a top government official, who is aware of the negotiation, whilst eh has added that the negotiation, which was due to be closed in the last week of January, had dragged on after the Chinese bank had asked for “in-depth and lengthy data unlike in the previous negotiations” to compile the loan and the Finance Ministry needed more than a week to compile the data.

In Mid-January (15th January 2019), Sri Lanka’s Finance Minister Mangala Samaraweera officially confirmed to reporters that Sri Lanka has maintained the unblemished record of paying debts on time by re-paying the 2014 International Sovereign Bond (ISB) issuance of US$ 1 billion onetime using country’s reserves.

Sri Lanka’s foreign debt is at 77% of its GDP and the GDP in terms of US Dollars stand at around US $ 84 billion (Same figure as in 2014) after country’s currency Sri Lankan Rupee depreciated over 30% against the US $ from Rs. 133 per US $ 1 to Rs. 185 per US $ 1 from January 2015-December 2018. Sri Lanka’s accumulated foreign debt is estimated at over US $50 billion. Reports note that between 2019 and 2023, Sri Lanka has to come up with US$17 billion for foreign loans that are maturing and debt servicing.

According to other media reports Sri Lanka currently has repayments of nearly US $ 5 billion to date of which US $ 1.6 billion due before April 2019. Early in the year 2019 Sri Lanka was due to repay a record US $ 5.9 billion this year, including US $ 2.6 billion in the first three months. Sri Lanka is making arrangements to pay down nearly remaining US $ 5 billion in foreign loans this year, after it paid US $ 1 billion in second week of the year 2019 from country’s foreign reserves, according to media reports.