ECONOMYNEXT – Sri Lanka will resume its suspended road infrastructure projects with 20-billion-rupee funding and strict guidance from the Asian Development Bank (ADB) following the island nation’s debt restructuring deal with its bilateral creditors, Highways Minister Bandula Gunawardena said.
Sri Lanka officials on Wednesday said the sovereign debt defaulted island nation has been informed that a debt-restructuring agreement with creditor nations has been reached pending confirmation letter from the official creditor committee.
The move would unlock some funds to resume suspended road projects due to the unprecedented economic crisis.
“We have signed a deal worth around 20 billion rupees with the ADB. The ADB by itself went and assessed the whole country to find out repairs to the road network that needed repairs,” Gunawardena told reporters in Colombo at a media briefing.
“The ADB has selected the roads that are now in a dilapidated situation and given 20 billion rupees,” he said.
“Accordingly, I have advised the Highway Ministry and Road Development Authority (RDA) officials to inform the relevant local government authorities to start the work sooner. We should be able to start next week.”
The government could only repair the road network selected by the ADB, he said.
Successive Sri Lankan governments have spent billions of borrowed money from both local and foreign creditors with less return on investments.
The island nation’s post-war investment push under former leader Mahinda Rajapaksa led the country to see vital infrastructure like express highways, coal power plant, port, and railway network, but those infrastructure projects failed to generate income to repay the loans.
The country was forced to declare bankruptcy in April last year.
President Ranil Wickremesinghe’s government with the backing of an International Monetary Fund deal has been trying to implement some difficult restructuring to come out of the crisis.
After repeated failures and sovereign default, Multilateral and bilateral funding agencies have said future funding for Sri Lanka will be based on the success of achieving IMF-deal targets.
A deal on bilateral debt restructuring was one of the targets to release funding and approval to disburse the second tranche of the $3 billion IMF loan.
The ADB’s latest funding of 20 billion rupees ($65 million) comes as part of reaching an agreement on debt restructuring with the bilateral creditors including India, China, Japan, and Paris Club members. (Colombo/Nov 30/2023)