March 18, 2013 / 2:38 PM / in 6 years

Sri Lanka opens Chinese-funded international airport

COLOMBO (Reuters) - President Mahinda Rajapaksa on Monday opened Sri Lanka’s second international airport, funded by a $209 million Chinese loan, in his native district which he hopes to turn into a commercial hub.

Sri Lanka's President Mahinda Rajapaksa attends the World Energy Forum during the first day of the programme at the Dubai World Trade Centre October 22, 2012. REUTERS/Jumana ElHeloueh/Files

Rajapaksa’s latest effort to attract investment into post-war Sri Lanka follows expressions of concern by the International Monetary Fund and rating agencies about heavy external borrowing.

State-run television showed Rajapaksa launching operations at the airport, named after the president himself, by landing there in an aircraft of loss-making state-owned Sri Lankan Airlines along with a 213-member delegation.

Three commercial flights followed.

The airport is able to handle annually one million passengers, 30,000 aircraft movements, and 45,000 tonnes of cargo. Government plans call for expansion by 2015 to handle five million passengers.

Rajapaksa said the airport’s location, about 200 km (125 miles) south of Colombo in Hambantota, will boost the $1 billion tourism industry by enabling visitors to bypass the capital and also help farm exports.

Rajapaksa has set improved infrastructure as a top priority since government forces crushed a three-decade rebellion by Tamil Tiger separatists in 2009. Plans call for $21 billion in projects through 2015, mostly with the help of loans.

“We need international funding. We have not hesitated for external loans and we will not hesitate in future as well,” Rajapaksa told the gathering.

Sri Lanka has increasingly been relying on commercial loans from China since the end of the war, stoking concern in neighbouring India.

A document presented to parliament last month showed Sri Lanka had borrowed 411 billion rupees for 42 development projects ranging from a port to the airport, a coal-fired power plant and expressways from 2005-2011.

The government in July said its owed $4.9 billion to China, including interest payments in respect of $2.96 billion in loans obtained since 1997.

The IMF, which completed the disbursement of a $2.6 billion loan in July, last month raised concern over Sri Lanka’s high external debt of over 80 percent of gross domestic product. Moody’s Investors Service last week said the economy was facing elevated external pressure in the year ahead.

Rajapaksa said the Chinese presence was strictly for economic gain and had no political aim.

Writing by Shihar Aneez; Editing by Ron Popeski

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