Tuesday, February 23, 2016

ADB looks team up with China's AAIB to finance Sri Lanka

ECONOMYNEXT - Manila-based Asian Development Bank is looking to team up with China's Asian Infrastructure Investment Bank to co-finance projects to Sri Lanka and several other nations, a top official said.

"ADB is happy to co-finance with AAIB," ADB President Takehiko Nakao told reporters in Colombo.

"Sri Lanka is one possible country to start co-financing."

Nakao said AAIB was expected to be up and running with staff in place by the second quarter of 2016.

"There are several projects we are looking at," he said, without elaborating.

He said ADB had office and staff in place who had technical capacity and knowledge which could be used by the AIIB.

The Export Import Bank of China and China Development Bank have been large financiers of infrastructure in Sri Lanka, while there have been several Renminbi denominated loans from the government of China as well.

China and ADB - which is mostly controlled by Japan -, and the Japan International Co-operation has earlier financed sections of Sri Lanka's first expressway running from Colombo to the south of the island.

Nakao said ADB will ramp up its lending from around 500 million US dollars in the past three year to around 700 million dollars which will total 2.0 billion dollars in the three years from 2016, up 30 percent from the past three years.

"We can even increase it with budgetary support loans," he said.

ADB is shifting it loans from basic roadways and education to expressways and higher education.
Sri Lanka had to fix the budget deficit which had deteriorated, he said.
Sri Lanka's rulers in 2015 raised salaries to state workers and subsidies to special interest groups pushing the burden to a level ordinary people could not afford. The central bank then printed money, leading to a collapsed of the rupee.

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