Sri Lanka Secures $1.5 Billion Chinese Loan

In this file photo taken on July 23, 2020, the Chinese flag flies behind barbed wire at the Chinese Consulate General in San Francisco. Philip Pacheco / AFP
In this file photo taken on July 23, 2020, the Chinese flag flies behind barbed wire at the Chinese Consulate General in San Francisco. Philip Pacheco / AFP

 

Sri Lanka and China have signed a $1.5 billion currency swap deal, the island nation’s central bank said Tuesday, as it struggles with a major foreign exchange crisis and debt repayments.

Colombo had been negotiating for months to secure credit from China — its largest single source of imports — as the island’s foreign reserves plummet amid the pandemic.

Chinese influence in the South Asian nation has been growing in recent years, through loans and projects under its vast Belt and Road infrastructure initiative, raising concerns among regional powers and Western nations.

READ ALSO: Germany To Enter Strict Easter Shutdown Amid ‘New Pandemic’

The Central Bank of Sri Lanka said the three-year swap arrangement for 10 billion yuan with the People’s Bank of China was “with a view to promoting bilateral trade and direct investment for the economic development of the two countries”.

Officials said talks were also underway to secure another $700 million from the China Development Bank.

Sri Lanka’s economy was already reeling from the deadly 2019 Easter bombings, with the coronavirus epidemic and lockdowns further weighing on growth.

The economy contracted by a record 3.9 percent last year.

Foreign reserves fell to $4.5 billion in February from $8.0 billion a year ago, despite Sri Lanka banning the import of luxury goods and vehicles as well as some food commodities.

Under former President Mahinda Rajapaksa between 2005 and 2015, Colombo borrowed billions from China, accumulating a mountain of debt for expensive infrastructure projects.

Rajapaksa returned to power as prime minister in 2019, after his brother Gotabaya Rajapaksa was elected president.

Sri Lanka was forced to hand over its strategic Hambantota port on a 99-year lease to a Chinese company in 2017 after Colombo said it was unable to service the $1.4 billion debt from Beijing used to build it.

AFP

NASS Will Ensure Nigeria Does Not Enter ‘Chinese Debt Trap’ – Senator Arise

 

 

Senator Ayo Arise has said the National Assembly will ensure Nigeria gets favourable terms when negotiating for loans, stressing that the lawmakers have a responsibility to make sure the country does not enter into the “Chinese debt trap.”

Arise said this on Wednesday during his appearance on Channels Television’s Sunrise Daily.

Arise while admitting that the country needs funding to develop its infrastructure, said there is a need for Nigeria to thoroughly look into the terms of loans from China.

“On one side, we need money to develop our infrastructure, and on the other side, the National Assembly has the responsibility to ensure that we do not enter into negotiations that will actually put this country into the so-called Chinese debt trap,” he said. “So, it is a good thing that this is coming into the open.”

READ ALSO: Allow Us Complete $5.3bn Loan From China – Amaechi Appeals To NASS

Arise who was the Chairman, Committee on Privatization in the 6th Senate admitted that though the terms of the agreements on the loans may not be rewritten, the National Assembly will ensure the future of the country is not jeopardized.

“Even if nothing is directly achieved in terms of rewriting whatever agreement we had in the past,” he said, “the National Assembly will use this opportunity to ensure that terms are defined for international loans and ensure that there is no agreement that would actually jeopardise the future of this country and our sovereignty in terms of our assets.”

 

Senator Ayo Arise during his appearance on Channels TV’s Sunrise Daily, August 19th, 2020.

 

While citing Kenya, Djibouti, Malaysia and Sri Lanka as countries grappling with the repayment of foreign loans, Arise called on the Nigerian government to plan how to effectively repay the loans.

“There are so many examples all around the world particularly in the African continent and Asia that leaves a lot of concern to people of those countries,” Senator Arise said.

He added, “If proper planning is not put into it, 30, 20 years might seem like a long time, but it will soon be here.”

Lawmakers’ Probe

On Monday, the Minister of Transportation, Rotimi Amaechi appeared before the House of Representatives Public Hearing on Treaties and Protocols.

 

A file photo of the Minister of Transportation, Rotimi Amaechi, during an interview on a Channels Television programme.

 

During the hearing, Amaechi said he is unaware of an N33 billion contract by the Ministry of Transport but only a $1.6 billion contract.

According to him, the action of the committee is political, claiming that the investigation by the lawmakers suggested that the various arms of government do no support the loan.

 

 

Allow Us Complete $5.3bn Loan From China – Amaechi Appeals To NASS

A file photo of the Minister of Transportation, Rotimi Amaechi, during an interview on a Channels Television programme.

 

The Minister of Transportation, Rotimi Amaechi, on Saturday appealed to the National Assembly to halt its questioning of Nigeria’s loan agreement with China.

Mr Amaechi said questions from the National Assembly is likely to deter China from extending credit to the country, especially the $5.3bn required for the Ibadan-Kano railway.

He made the remarks during an inspection tour of the Lagos-Ibadan standard gauge rail project which is being primarily financed by Chinese banks.

“They are not investigating corruption in construction,” Mr Amaechi said. “We want the National Assembly to allow us to get the loan for Ibadan to Kano, which is about $5.3bn.

“If you are telling the man who lent you money you don’t like the way he lent you, he won’t lend you any further.

“For this one (Lagos-Ibadan rail project), we have $1.6bn for which we are contributing about $200 and $300 million. But don’t forget, they have not finished paying, they can stop at any time.”

READ ALSO: Nothing Bad In Borrowing For Infrastructure – Lai Mohammed

The House of Representatives had raised an alarm about the nature of loans received from China which, it said, puts the country’s sovereignty into question in the case of a re-payment default.

However, Mr Amaechi has insisted the loans, which are primarily spent on capital projects built by Chinese companies, will benefit the country.

 

Touring Lagos-Ibadan Railway

On his Saturday inspection tour, Amaechi was accompanied by the Minister of Information and Culture, Lai Mohammed, and top management of the Nigerian Railway Corporation.

According to a Channels Television correspondent, the inspection started from the mega station in Ebute Metta to Apapa in Lagos and moved all the way to Ibadan, Oyo state.

The ministers inspected the construction of all boarding stations and yards along the route.

Minister of Transportation, Rotimi Amaechi speaks to a Chinese construction official during an inspection tour of the Lagos-Ibadan railway project on August 15, 2020.
Minister of Transportation, Rotimi Amaechi speaks to a Chinese construction official during an inspection tour of the Lagos-Ibadan railway project on August 15, 2020.

 

Mr Amaechi expressed satisfaction at the pace of work, despite the delay caused by the coronavirus pandemic.

However, he did not specify when the project will be completed. “Let’s hope by January, this thing will be ready,” he said.

Mr. Amaechi said the Ibadan-Kano rail project is being delayed by the expected approval by the national assembly to acquire a loan for its execution.

On his part, the Minister of Information, Mr Lai Mohammed, said monies borrowed from China are being utilised judiciously for capital projects.

Meanwhile, Managing Director of the NRC, Engr. Fidet Okhiria, said skeletal operations are likely to commence from Yaba to Ibadan in September.

Minister Of Transportation Appeals To Reps To Stop Probe Of $500m Chinese Loan

A file photo of the Minister of Transportation, Rotimi Amaechi, during an interview on a Channels Television programme.

 

The Minister of Transportation, Rotimi Amaechi, has appealed to the National Assembly to halt its probe of the 500 million dollars loan from the Chinese government.

Amaechi made the appeal during an investigative hearing of the House of Representatives Committee on Treaties and Protocols on Tuesday in Abuja.

He said, “The investigation being carried out by the National Assembly may frustrate the loan agreement between us and China on the Port Harcourt to Maiduguri rail project.

“We have the approval to construct the Lagos-Ibadan, Lagos-Kano and Lagos-Calabar rail lines; we are also at the point of negotiating for the loans.”

“Summoning us to the National Assembly to come and address the loans would look like the government is no longer interested in the loan,” the minister added.

According to him, the loan which is meant for the completion of the Federal Government’s rail projects may be truncated by the Chinese government if it suspects that there is a disagreement between the executive and the legislature.

He also argued that constant probing or investigation may suggest that an arm of the government does not agree with the loan and may cause the Chinese government to withdraw it.

Amaechi noted that while the lawmakers have the powers to conduct such a probe, he begged them to do so after Nigeria has obtained the loan to prevent the proposed projects from suffering a setback.

He said, “If tomorrow we are unable to construct Port Harcourt to Maiduguri railway because we didn’t get the loan, it is because of the investigation by NASS.

“I told the National Assembly that they can investigate but they should allow us get the loan first; if they stop the work from Ibadan to Kano, it is because of the investigations, same with Lagos to Calabar railway.”

“If you think there is corruption, investigate corruption. What we are saying is that we should conclude negotiation first because there is pressure affecting the Chinese government in which they are talking to us directly. So, for me, what is primary here should be national interest,” the minister stated.

The lawmakers had raised an alarm over loan agreements being entered into by the Nigerian Government with China.

They warned that Nigeria would concede some of its sovereignty to the Asian nation should it default in the repayment plan.

The House had, however, stated that it would review loan facilities already taken by Nigeria from China and other countries.

FG Reiterates Commitment To Tackling Infrastructure Deficit With China Loan

Minister of Industry, Trade and Investment, Okechukwu Enelamah

 

The Federal Government has reiterated its plans to address the infrastructural deficit in the country with the Chinese loan.

Minister of Trade and Investment, Mr Okechukwu Enelamah, during an appearance on Channels Television’s breakfast show, Sunrise Daily on Wednesday, said the Federal Government is currently implementing various projects across the country.

“The projects have been there. They have been conceptualized in the past. But honestly, as far as I can tell, I haven’t seen the degree of commitment to implementation,” he said.

“If you look at the railways, the Kaduna-Abuja has been finished, the Lagos-Ibadan is going on.

“And that is why this relationship with China on those infrastructural projects that are demonstrably useful must be done. If you look at Mambilla (power project), it has been there for well over 10 years almost abandoned.

“But now, there has been a re-commitment by both China and Nigeria to develop it that will generate a lot of power that will add to our national grid and that will make a huge difference because we still have a power deficit,” he added.

Read Also: FG Will Sign More Agreements With China For Infrastructure Development – Presidency

 

Enelamah’s comments come two weeks after President Muhammadu Buhari traveled to participate in the 7th Summit of the Forum on China-Africa Cooperation (FOCAC) in Beijing.

During the summit, the Chinese President Xi Jinping pledged to provide $60 billion to finance Africa’s development over the next three years.

The financing will include $15 billion in “free assistance and interest-free loans”, he said, in remarks meant to ease growing concerns that China’s assistance to developing nations is putting them in debt.

Speaking about the Memorandum of Understanding between the Federal Government and German auto giant, Volkswagen, the minister explained that the car manufacturer believes Nigeria is a hub for the production of over two million vehicles.

According to him, the government needs to create an enabling environment for the deal to be effective by initiating certain policies.