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Sri Lanka says all Chinese infrastructure deals to go ahead
December 17, 2015 / 2:40 PM / 2 years ago

Sri Lanka says all Chinese infrastructure deals to go ahead

The China-funded "Colombo Port City" project, whose development is suspended, is seen in Colombo October 19, 2015.Dinuka Liyanawatte/Files

COLOMBO (Reuters) - Sri Lanka's government said on Thursday it would go ahead with billions of dollars' worth of Chinese projects, almost a year after declaring it would cancel them because of corruption and overpricing.

The government of President Maithripala Sirisena, elected in January, had suspended many of the projects that critics have described as sweetheart deals between China and the previous administration.Rajitha Senaratne, a government minister and spokesman for the cabinet, said the projects cannot be scrapped because the contracts are binding, even though there was no competitive bidding and some projects went against the advice of experts.

"All the projects will continue, because we can't stop them. We have already signed agreements," Senaratne told reporters.

"We are on a weak wicket," he added -- a cricketing analogy meaning the government is in a difficult position. The move may improve Sri Lanka's diplomatic ties with China, its biggest foreign investor.

Sirasena's government has sought to pursue a more global foreign policy, breaking with the previous administration's pursuit of closer China ties. So far, however, it has failed in its stated aim of replacing 70 percent of the more than $5 billion Sri Lanka owes to Chinese lenders with loans at cheaper interest rates and of longer durations from other governments.

Sri Lanka's government has 16 ongoing Chinese-backed infrastructure projects, including a $1.4 billion 'port city' project in Colombo that encompasses shopping malls, a water sports area, golf course, hotels, apartments and marinas.Work on that project was halted soon after the new government took power as it investigated whether deal broke rules and involved corrupt payments.

Editing by Catherine Evans

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