President Anura Kumara Dissanayake has sought Cabinet approval to obtain a loan equivalent to US$500 million in Chinese renminbi (RMB) from the Export-Import Bank of China (China EXIM) to finance the completion of the first section of the Central Expressway (CEP 1). According to The Sunday Times, the government will also allocate US$438 million from its funds to cover the remaining cost of the 37.1 km Kadawatha-to-Mirigama stretch.
The loan, which was originally denominated in US dollars, will now be issued in RMB at the request of China EXIM. As Sri Lanka does not generate RMB income, the country will be required to convert its US dollar reserves for repayment. This change necessitates an amendment to the original commercial contract, which will also require Cabinet approval.
A committee reviewing claims from the Metallurgical Corporation of China Ltd (MCC), the project’s contractor, has recommended settling outstanding payments and continuing with MCC for the remaining construction. Since its commencement in September 2020, the project has achieved only 36.38% progress, with delays attributed to Sri Lanka’s economic crisis and the suspension of loan disbursements.
The preferential buyer’s credit agreement for the project was first signed in March 2019, with an amendment added in June 2024 as part of Sri Lanka’s debt restructuring. Of the original US$989 million loan, only US$51.5 million had been disbursed before suspension. Following restructuring, China EXIM has now committed to lending US$500 million in RMB, leaving Sri Lanka to cover the US$438 million shortfall. The government also faces approximately US\$200 million in claims and interest payments to MCC.
In April 2025, the Ministry of Finance, Planning and Economic Development, headed by President Dissanayake, confirmed its commitment to completing CEP 1 with EXIM Bank financing. Negotiations finalized an interest rate range of 2.5% to 3.5%. Meanwhile, a proposal by five major Sri Lankan construction firms to cancel MCC’s contract and call for a competitive tender aimed at reducing costs and accelerating completion was not adopted.
