THE LURE V R - OF CHINESE LOANS - Sri Lanka’s experiment with

The Inter- project is in the “public investment plan of the Ministry” national Monetary Fund (IMF) defines the grant element and it aligns with the overall policy strategy of the gov- as the yardstick that measures the concessionality of ernment and the associated funding offer is “important a loan: “It is the difference between the nominal value and relevant” compared to available funding arrange. [...] THE LURE OF CHINESE LOANS SRI LANKA’S EXPERIMENT WITH A SPECIAL FRAMEWORK TO FINANCE ITS INFRASTRUCTURE INVESTMENTS 17 3 The Case Study This section of the report analyses the origin and the The analysis finds that the lax application of the provi-evolution of the Gampaha, Attanagalla, Minuwangoda sions introduced by the special framework led to the Integrated Water Supply Scheme (GAMWSS), that wa. [...] The proposal did not go through the standard relaxed application of the criteria introduced by the procurement process but approval to proceed with the framework to guide the decision-making process, and the USP was granted based on the recommendation of the failure to conduct the minimum due diligence required SCARC. [...] Further, the GAMWSS exposed the hidden special framework functioned in practice with respect debt problem relating to Chinese loans, where the loans to public sector infrastructure projects and whether the were taken out of the books of the central government special framework achieved its intended objectives, i.e., and hidden in the books of the SOEs, despite the final improving the rigour of the. [...] The mendation of the SCARC and the Cabinet of Ministers in final feasibility report for the project was dated May 2013, the funds were secured not from the EXIM Bank 2013, the same month the contract was awarded to the of China but from the CDB.