COPF questions higher interest rate for Central Expressway loan

The Committee on Public Finance (COPF) recently met under the chairmanship of MP Dr Harsha de Silva to review borrowing plans, particularly focusing on the construction of the Kadawatha-Mirigama section of the Central Expressway.

Ministry of Transport, Highways, Ports, and Civil Aviation officials informed the Committee that they anticipate securing a $500 million loan from China’s EXIM Bank, with the balance to be raised domestically, to complete the 36.475 km stretch.

A key point of contention arose over the loan’s interest rate: while the standard fixed rate offered by the EXIM Bank was 2.5%, COPF questioned why the Ministry agreed to a variable interest rate that can go up to a maximum of 3.5%.

Officials explained that the bank was unwilling to grant the loan at the prevailing 2.5% fixed rate and that they agreed to the variable rate with the expectation of further negotiations.

Chairman Dr de Silva expressed dissatisfaction, stating that agreeing to this rate was disadvantageous to Sri Lanka and should be re-evaluated. The Committee also reviewed a supplementary estimate for the Ministry for 2025, seeking parliamentary approval to settle a portion of the loans taken by the Road Development Authority (RDA) for various road projects.

Officials revealed that the RDA’s outstanding loan balance from domestic banks for road construction stood at over Rs. 310 billion as of 31 July 2025.

The supplementary estimate sought approval for Rs. 36 billion already allocated in the budget to repay these loans, which the Committee subsequently approved.

Separately, COPF officials from the State Debt Management Office (SDMO) were questioned about the national debt, reporting that the outstanding foreign debt is $37 billion and the local debt is Rs. 19.6 trillion.

However, the Chairman expressed discontent when SDMO officials were unable to provide the figures for the debt instalments due this year, stressing the importance of recruiting competent officers for the SDMO now that it manages the entire debt acquisition process.

 MPs Ravi Karunanayake, Sunil Rajapaksha, and Nishantha Jayaweera also participated in the meeting.