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Sri Lanka seeks $1 billion loan from China amid debt woes

Key Points
  • Finance Ministry spokesman M.R. Hasan said Saturday that he's waiting to hear whether terms of the loan for the highway project have been approved.
  • A large chunk of Sri Lanka's foreign debt is from China.
The famous Sri Lankan budget taxi, a three wheeler, drives through traffic in Colombo
Buddhika Weerasinghe | Getty Images

Sri Lanka is negotiating a $1 billion loan from China to construct a highway linking the capital Colombo to the hilly resort city of Kandy, even as the heavily-indebted South Asian island nation makes arrangements to pay down $5.9 billion in foreign loans this year.

Finance Ministry spokesman M.R. Hasan said Saturday that he's waiting to hear whether terms of the loan for the highway project have been approved.

A large chunk of Sri Lanka's foreign debt is from China, which sees Sri Lanka as a key link in its transcontinental Belt and Road infrastructure initiative.

President Maithripala Sirisena's government had criticized the previous administration of strongman Mahinda Rajapaksa for leading the country into a Chinese debt trap. However, the government has turned to China to help relieve economic pressures.