Chinese Chamber fo Commerce rejects high interest rates allegation for Chinese loans to Sri Lanka

The Chinese Chamber of Commerce in Sri Lanka (CCCSL) on Sunday rejected Sri Lankan Financial Minister Ravi Karunanayake's allegation of the so-called high interest rates of Chinese loan.

Spokesperson of the Chinese Chamber of Commerce in Sri Lanka ( CCCSL) Chen Chuan told Xinhua that the interest rates of Chinese loans are not high. During the past 10 years, at the request of the Sri Lankan government, China has provided loans amounting several billion US dollars in supporting of Sri Lanka's economic and social development, among which more than half are at the interest rates of only 2 percent. China provides preferential loans at low interest rates to the developing countries all around the world with the purpose of helping them upgrade infrastructure construction and improve the people's well-being. By granting discount loans, the Chinese government extends goodwill to the developing countries. The interest rates of Chinese commercial loans are also much lower than most of that in the international market or in the Sri Lankan commercial banks at the same period.

As for the commercial loans, Chen further pointed out that the international financing costs hiked in 2007, and the Sri Lankan government issued treasury bonds at the interest rates ranging from 12 percent to 14 percent during that period when Sri Lanka was still in internal conflict. At that time, Chinese relevant banks provided Sri Lanka with a large amount of preferential loans as well as some commercial loans with 6 percent interest rates which were quite favorable and reasonable at the time.

The spokesperson stressed that it is the Sri Lankan government that submitted applications for loans from Chinese banks and no one forced the Sri Lankan side to apply for loans. The Sri Lankan side always conducted a thorough survey prior to applying for loans from China. The negotiators from the Sri Lankan side were very professional and loyal to their country and the people while negotiating loan agreements with Chinese banks.

Just as what the financial experts have indicated, the interest rates of the loans from some international financial institutions are relatively lower. however, they can provide only limited amount of loans which are not able to meet the urgent demands of the developing countries for economic development and infrastructure construction, nevertheless to say there are certain prerequisites attached to such loans. It is quite difficult and time-consuming to complete the application procedure for these loans. By contrast, the Chinese banks have enough funds, and could provide preferential loans and commercial loans through a comparatively quick examining and approving procedure without any prerequisites. Such timely help and assistance is welcomed by the developing countries, including Sri Lanka, Chen said.

Chen said the prompt and abundant Chinese loans at lower interest rates have made great positive contribution to the state reconstruction and development of Sri Lanka. For instance, the Norochcholai Coal Power Plant funded by the Chinese loans now generates more than 50 percent of the whole country's power, which has completely solved the problem of power shortage for this island country, lowered the cost of electricity to a great extent, thus benefiting every family, everyone and every economic and social sector. besides, Over 1,000 km roads at different levels finished construction with the support of Chinese loans, which made easier and more convenient for the local people to travel and do business. Better roads are strong support to the social and economic development of Sri Lanka.

Some high ranking official's wrong allegations on interest rates of Chinese loans have damaged the images of Chinese banks in Sri Lanka and demotivated their enthusiasm of offering preferential loans to the country, said the spokesperson.

"We hope that Sri Lankan official concerned will make remarks based on the facts, take the people's well-being as first priority and make joint efforts with the Chinese side to maintain the good environment of China-Sri Lanka pragmatic cooperation." Endi