China grants $200mln in loans for new railway project in Sri Lanka

China's Exim Bank has agreed to lend Sri Lanka 200 million U.S. dollars to finance a railway project, the Finance Ministry said in a statement here on Monday.

The loan will be given to the Sri Lankan government under a Preferential Buyer's Credit facility to finance the Matara- Beliatta Section of the Matara-Kataragama Railway Extension Project.

This is following the Chinese government on request from Sri Lanka agreeing to provide a loan of 278.2 million U.S. dollars through Export-Import (Exim) Bank of China on concessional terms to finance Phase I of the project.

The Finance Ministry said out of the total loan amount, 200 million U.S dollars will be provided under Preferential Buyer's Credit facility and the balance 78.2 million U.S. dollars will be provided under Chinese government concessional loan facility.

"These loan facilities will be provided at an annual interest rate of 2 percent with a repayment period of 20 years including a five-year grace period," the statement added.

Since Sri Lanka ended a 30-year war in 2009, China has been involved in several large scale projects, which include a 1.3- billion-U.S. dollar coal power plant on the north western shore as well as a host of other investments in the south of the country that are estimated to exceed 4 billion U.S. dollars, including a 1. 2-billion-dollar harbor.