Sri Lanka is expected to receive $500 million in dollar credit from the China Development Bank this month, according to a report in The Sunday Morning. 

The payment is a part of the deal the Sri Lankan government had stuck with the Chinese Development Bank last year for $700 million in dollar loans. The report said, “the remaining 200 million is renminbi-denominated credit and would be issued to the country during Sri Lankan President Gotabaya Rajapaksa’s upcoming visit to China.”

Sri Lanka has been facing the problem of external debt for some years now. The situation was exacerbated by the Covid-19 pandemic. The country’s foreign exchange reserves are also dwindling. 

The Sri Lankan Central Bank earlier claimed that the country’s gross official reserves amounted to $ 4.1 billion (excluding the swap facility with China), at the end of March. And, it has upcoming debt repayments in May and July of around $ 720 million and $ 1 billion respectively. 

Last month, Sri Lanka had signed an agreement with the People’s Bank of China for a $1.5 billion currency swap facility. Also, in recent weeks, the Sri Lankan government has been trying to diversify its funding source. Efforts included talks of currency exchange cooperations from Oman and Bangladesh. 

India, another big source of its funding, had earlier refused to extend the currency swap deal until the Sri Lankan government reached an understanding with the International Monetary Fund (IMF).