Highway project resumes with $500m new China funding

Sri Lanka resumed construction of a stalled highway project with a new $500 million Chinese loan, the first funding from its largest bilateral creditor since the island nation defaulted on its foreign debt three years ago.

The construction of the 38-km highway stretch of the Central Expressway that links the hub of Colombo with Kandy city in the central highlands was launched in 2016 but suspended in 2023 when the project ran out of funds and building materials in the aftermath of the country’s worst financial crisis.

The highway aims to provide faster connectivity between two major cities in the South Asian nation and support economic activity. About one-third of it had been built before work came to a halt.

The Sri Lankan government now aims to complete the project by April 2028, highways minister Bimal Rathnayake said on Wednesday.

The $500 million loan from China EXIM Bank was extended to Sri Lanka on concessionary terms, Sri Lankan President Anura Kumara Dissanayake said during a ceremony to restart the project.

“Typically, when a country goes through a financial crisis, experts say that the country loses a decade of development. But I’m confident that we can reduce this time by half,” Dissanayake said.

“Sri Lanka will post growth close to 5% this year and our upcoming budget for 2026 is targeted at ending the crisis,” he said.

Chinese Ambassador to Sri Lanka, Qi Zhenhong, hailed the construction of the highway stretch by China Metallurgical Group Corporation as a symbol of partnership between the two countries.