Sri Lanka foreign loan program ‘difficult’ under current conditions: official

Nov 18, 2008 (LBO) - Sri Lanka's infrastructure projects could face delays if the island is unable to raise over half a billion dollars though commercial loans amid tough conditions in global financial markets, a top official said. "The government needs external financing of around 500 million dollars in commercial money for financing counterparty funds required for concessionally financed projects," says P N Weerasinghe, who is chief economists of the island's central bank.

The global financial crisis that started with a US property bubble collapse has pushed up risk premiums and liquidity in global capital markets in the last few months increasing borrowing costs for emerging countries like Sri Lanka.

Syndicated Loan

Plans for raising up to 300 million dollars early next year through a syndicated loan also looks doubtful.

"Some of the major banks have indicated that they find it difficult under the current financial conditions in the global market, says Weerasinghe who also heads the Central Banks influential Economic Research Department.

"We have asked them to proceed a little slowly and we are negotiating. If the money doesn’t come in however it won't be a do or die situation, it's not a d