Gov’t Refinances USD 75 Million of EXIM Bank Loan for Airport Upgrade

The Government has refinanced USD 75 million of a USD 378 million loan taken from China’s Export-Import (EXIM) Bank in 2015 to fund upgrades to Velana International Airport (VIA).

Refinancing refers to the process of obtaining a new loan to repay an existing debt, often under more favourable terms. The new agreement was finalised on 23rd September, according to a letter from the Finance Ministry disclosed at a meeting of the Parliament’s Public Accounts Committee on Monday.

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The refinanced loan, totalling USD 75,767,599.98, will carry an interest rate of two percent, with the first interest payment due on 21st January 2025. Thereafter, interest will be paid bi-annually, on 21st January and 21st July. The total interest payment amounts to USD 3.3 million.

The loan will be repaid over six years, including a three-year grace period, with final settlement required by 2030. According to the Finance Ministry, the primary purpose of refinancing is to alleviate the government’s short- and mid-term debt servicing obligations.

The original loan was taken on non-conditional terms.