* China is Sri Lanka’s top lender this year

July 10, Colombo: The Chinese government has become the top most aid provider to Sri Lanka this year with a total aid commitment of US$ 759.8 million during the period of January to end of April 2011, according to a recently released report by the Finance and Planning Ministry.

The mid-year Fiscal Position Report-2011released by the Finance and Planning Ministry lists China as the top lender surpassing Japan. Japan has committed.

China has committed nearly 55% of the total aid to the Sri Lankan government while Japan came second with nearly 30%. Asian Development Bank (ADB) and World Bank (WB) committed US$ 413.2 million multilateral aid.

All of China’s aid is for the rehabilitation and improvement of road networks in Sri Lanka. A majority of US$ 500 million is for the improvement and rehabilitation of Priority Roads. Another US$ 138.2 is for the construction of the Southern Expressway from Pinnaduwa to Godagama in the South.

Lenders and donor agencies to Sri Lanka have made a total commitment of US$ 1.385 billion from January till end April 2011. Project loans amounted to US$ 1.361 billion while grants have only amounted to US$ 24.4 million.

China’s influence on Sri Lanka has raised concerns in the United States. A recently released US Congressional report has said that China, seeking to gain influence in the Indian Ocean, has increased its aid to Sri Lanka dramatically since 2005.

“In the view of some analysts and observers, China is seeking to gain influence with the Sri Lankan government as part of a ‘string of pearls’ naval strategy to develop port access in the northern reaches of the Indian Ocean,” the report by bi-partisan and Congressional Research Service has reportedly said.

The Finance Ministry’s mid-year report states that the government now has an un]disbursed balance of foreign financing of US$ 8.6 billion available with a time period of 2- 5 years for project implementation.

A major portion of the un-disbursed funds, US$ 3.1 billion is for Roads and Transport while US$ 1.09 billion is for Power and Energy. Among other major sectors that un-disbursed funds are earmarked include, Water Supply and Sanitation – US$ 922 million, Agriculture, Fisheries, Irrigation and Land – US$ 722 million, Ports – US$ 388 million and Rehabilitation of Conflict Affected Areas – US$ 338 million.

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