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Signature of a Supplementary Loan Agreement for the Financing of Kalu Ganga Development Project in the Democratic Socialist Republic of Sri Lanka
A Supplementary Loan Agreement was signed today in Kuwait between the Democratic Socialist Republic of Sri Lanka and Kuwait Fund for Arab Economic Development (the Fund) whereby the Fund will make a Loan of Kuwaiti Dinars five million (K.D.) 5,500,000/- (equivalent to about U.S.$ 17 million) to assist in financing the additional costs of Kalu Ganga Development Project. The Loan will be the second loan for financing the said Project, as the Fund is making at present a loan of K.D. 10 million (equivalent to about U.S.$ 34 million), by virtue of the Agreement No. 781 signed on 9/3/2009 for financing the same Project. It is worth mentioning that in extending its loans and developmental assistance, Kuwait Fund depends exclusively on its own resources.
The Supplementary Loan Agreement was signed on behalf of the Democratic Socialist Republic of Sri Lanka by His Excellency Dr. RHS Samaratunga, Secretary, Ministry of Finance whereas Mr. Hamad Al-Omar, Deputy Director-General of the Fund signed the Loan on behalf of the Fund. Mr. Waleed Al-Bahar, Regional Manager for East South Asia & Pacific Countries and Mr. Fawaz Al-Adasani, Assistant Regional Manager for East South Asia & Pacific Countries at Kuwait Fund attended the signing Ceremon and Mr. Charitha Weerasinghe , First Secretary and Head of Chancery to the Embassy of the Democratic Socialist Republic of Sri Lanka to the State of Kuwait, attended the signing ceremony .
The purpose of the Project is to increase agricultural production in the Mahaweli Basin through providing the water needed to increase cultivated land, thereby increasing food production and improving the living standard of the population. The Project is a component of the Mahaweli development program, initiated by the government in the nineteen sixties for the purpose of increasing agricultural and livestock production, creating work opportunities, and improving living standards in the areas of the Mahaweli Basin.
The total cost of the Project, as revised and updated recently, is estimated at Sri Lankan Rupees 31.6 billion (equivalent to about K.D. 84 million) of which about Sri Lankan Rupees 18 billion are in foreign exchange, equivalent to about K.D. 47 million, representing about 57% of the total cost of the project. The First and the Supplementary loans will cover about 18% of the total cost of the Project, or about 32% of the foreign exchange. The Saudi Fund will provide an additional financing for Development along with the OPEC Fund for International Development. The Government of the Sri Lanka would cover the remaining estimated cost and any other cost increases.
The Supplementary Loan is made for a term of 22 years, including a grace period of 2 years, and is to be amortized in 40 semi-annual installments, the first of which will be due after the elapse of a grace period of 2 years. The Supplementary Loan bears an interest rate at 1.5% per annum, in addition to 0.5% per annum for meeting administrative costs and other expenses incurred in the implementation of the Loan Agreement.
Upon signature of this Loan Agreement, this Loan will be the 15th loan extended by the Fund to the Republic of Sri Lanka, considering that the Fund has already extended 14 loans to it, totaling about KD 72.66 million (equivalent to about US$ 247 million). The Fund has also extended to Sri Lanka 2 Technical Assistance the total value of which is KD 455,000 (equivalent to about US$ 1.52 million) to finance the Technical and Economic Feasibility Studies for projects in agricultural and energy sectors.