China Eximbank provides RMB 264.2 million government concessional loan for the Supply of 2 MA-60 Aircraft Project

Project narrative

On September 9, 2010, China Eximbank and the Government of Sri Lanka signed an RMB 280,000,000 government concessional loan (GCL) agreement for the Supply of 2 MA-60 Aircraft Project. The face value of the GCL was subsequently downsized to RMB 264,203,447. The GCL carries the following borrowing terms: a 20 year maturity, a 5 year grace period, a 2% interest rate, a 0.5% management fee, and a 0.5% commitment fee. China Eximbank disbursed RMB 264,293,858.67 (Rs. 4,519,953,571) in 2011. The loan had achieved a 100% disbursement rate (RMB 264,293,858.67 out of RMB 264,203,447) as of December 31, 2011. The borrower made repayments worth RMB 17,613,563 in 2018, RMB 17,613,564 in 2019, RMB 17,613,563 in 2020, and RMB 17,613,563 in 2021. The loan's amount outstanding was RMB 228,976,321 as of December 31, 2017, RMB 211,362,758 as of December 31, 2018, RMB 193,749,194 as of December 31, 2019, RMB 176,135,631 as of December 31, 2020, RMB 158,522,068 as of December 31, 2021, and RMB 149,715,287 as of June 30, 2022. The proceeds of the GCL were to be used to purchase two commercial (MA-60) airplanes that will be used for passenger transportation between domestic and regional destinations. The MA-60 is a twin engine turboprop aircraft with seating capacity for 56 passengers. China National Aero-Technology Import & Export Co. (CATIC) was the contractor responsible for project implementation. The two MA-60 aircraft were successfully delivered to the Sri Lanka Air Force on September 30, 2011. These aircraft were to be operated by ‘Helitours’, the Sri Lanka Air Force's commercial arm for domestic flights. However, this project has encountered debt repayment problems. On April 12, 2022, the Government of Sri Lanka announced a ‘pre-emptive’ sovereign debt default, noting that it would suspend debt repayments to all external creditors other than multilateral institutions. Its decision to suspend external debt service reportedly affected all China Eximbank loans with amounts outstanding at the time of the announcement.