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Sri Lanka to get over $3.5 billion from Japan for development

Staff writer ▼ | May 20, 2016
Japan will lend Sri Lanka more than $3.5 billion, mostly to finance development, Finance Minister Ravi Karunanayake said.
Sri Lanka Japan
Cooperation in Asia   Sri Lanka agreed a $1.5 billion bailout with the IMF last month
The island nation tries to reduce its debt costs and avert a balance of payments crisis.

Karunanayake told parliament the cost of borrowing would be between 3.5 and 4 percent once the cost of swapping yen to dollars was taken into account.

"We are getting more than $3,500 million from Japan for our development activities," he said, adding that $1.2 billion would be used to buy government bonds and $2.5 billion used for lending to development projects.

Sri Lanka agreed a $1.5 billion bailout with the International Monetary Fund (IMF) last month to help address the balance of payments crisis caused by big foreign outflows from government securities and high external debt repayments.

The previous government borrowed heavily to fund infrastructure while foreigners have sold around $2 billion of government debt since early last year.

Karunanayake said a special advisor to Japanese Prime Minister Shinzo Abe had met President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe on Wednesday before pledging the money.