COLOMBO (EconomyNext) – Sri Lanka will go ahead with joining the China-led Asian Infrastructure Development Bank (AIIB), in which the island became a founding member last year, Cabinet spokesman Minister Rajitha Senaratne said.
The AIIB will have an authorized capital of 100 billion US dollars and 50 billion in subscribed capital, with members contributing based on their gross domestic product, with 70 to 75 percent of the capital stock allocated to regional members and 25 percent to non-regional members.
Countries like the United Kingdom have also agreed to join the AIIB, much to the consternation of the United States.
Sri Lanka will have to subscribe to 45 million US dollars of capital in five equal annual instalments. The founding minority member will also have extra voting rights allocated on a proportionate basis.
The AIIB is expected to finalize and sign an Articles of Agreement by June 2015 following a series of negotiations.
China has been lending billions of dollars to Asian, African and Latin American nations mostly to build infrastructure.
In Sri Lanka itself the loans have come under fire for being expensive and overdesigned and with questionable economic sense in some cases.
China is now beginning to see defaults from indebted nations. It had already allowed Venezuela, high-inflation country, to re-schedule payments.