China's loans to Sri Lanka over the past four years total over $3,836 million, reported The Sunday Leader.
The loans are repayable over a 14 to 20 year period, at interest rates ranging from 1.53% to 6.5%, much higher than usual rates for infrastructure loans from the World Bank or the Asian Development Bank.
Most of the loans had conditions, requiring Sri Lanka to buy everything, from raw materials to machinery, from China, and to give the contracts, and sometimes even sub-contract, to firms from China, the paper said. China’s current 42 projects employ more than 1,700 Chinese workers.
China has financed key development programmes, including road construction, port development, power supply, water supply, irrigation and other infrastructure developments, and the equipment and machinery necessary for the projects.
For example, the new 25.6 km (16 mile) airport highway was built with a loan of $248.2 million from Exim Bank of China, with China Metallurgical Group Corporation as the contractor, according to Reuters,
One of the largest projects was the port in President Mahinda Rajapaksa's hometown of Hambantota, which was built with a loan of $1.3 bn from China's Exim Bank at an "exorbitant 6.3% interest", the Ceylon Today reported last November.
The paper added: