• COPF Chair says Govt. should renegotiate to achieve fair terms

The $ 500 million loan from China’s Export-Import (Exim) Bank for Section 1 of the Central Expressway Project (CEP-1) is under review by the Committee on Public Finance (COPF), even though the Cabinet has already approved the project. 

Deputy Secretary to the Treasury Ajith Abeysekera told The Sunday Morning that the final decision would consider both Cabinet approval and COPF recommendations. 

Abeysekera stated: “The entire debt finalisation process is guided by the COPF as a standard procedure. While the Cabinet has already given its approval for the project to proceed, the final decision must reflect both the Cabinet’s considerations and the COPF’s recommendations.”

The $ 500 million loan from China Exim Bank for CEP-1 has become the focus of intense negotiations, as the COPF seeks better terms while the Government moves forward with the project under initial approvals. 

Abeysekera’s comment hinted at the position that the Government may consider the proposals of the COPF prior to proceeding to renegotiate the terms. 

COPF Chairman Dr. Harsha de Silva, speaking to The Sunday Morning, voiced strong reservations about the proposed changes to the interest rate, describing the new structure as unfavourable to Sri Lanka. 

He said: “The proposed loan terms have shifted from a fixed interest rate of 2.5% to a floating rate capped at 3.5%. My main concern is the floor for the floating rate, which is currently set at the present rate.”

Dr. de Silva added: “For a floating rate to be fair and mutually beneficial, the range should be more balanced. The acceptable range should be 1.5–3.5% rather than 2.5–3.5%, so that Sri Lanka can benefit if market interest rates fall.”

“We questioned whether the terms had already been finalised and they responded negatively, so we still have time. The Government should consider renegotiating these terms to make it fair.”

He also emphasised: “As the first major facility under the new Public Debt Management Act, the loan must strictly follow Treasury advice. According to this act, only the Treasury can apply for a public debt, so the Treasury must take strong responsibility to negotiate in the best interests of the country.”

He noted that the Treasury itself had provided three options for managing the revised rate structure, highlighting the importance of careful adherence to the law. 

On the timing of renegotiations, Abeysekera clarified: “We have not received the COPF’s formal written recommendation yet. We are waiting for that, so I am not in a position to comment yet.”

Road Development Authority Chairman T. Paskaran explained the role of his organisation, stating: “The RDA does not negotiate the terms of the loan agreement. That is the role of the Treasury. We are only concerned with the civil matters related to the road development work, which have already been settled. The loan negotiation aspect of it is the role of the Treasury”

Deputy Minister of Economic Development Prof. Anil Jayantha Fernando, Treasury Secretary Dr. Harshana Suriyapperuma, and Deputy Minister of Transport and Highways Dr. Prasanna Gunasena were unavailable for comment.