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22 January, 2016 09:11 AM Source: Financial Times - Sri Lanka
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Following the launch of the Asian Infras-tructure Investment Bank (AIIB), Cabinet has approved Sri Lanka to subscribe around $268 million and draft a fresh bill to allow the country to obtain formal membership.  

Finance Minister Ravi Karunanayake presented the Cabinet paper to gain approval to raise the quota allocated to each country depending on their Gross Domestic Product (GDP) to be part of AIIB.

“Cabinet has approved the drafting of a Bill to enable Sri Lanka to obtain the formal membership of AIIB through ratification of the member agreement. Approval was also given to join Group G led by Indonesia to form a constituency of AIIB,” the Cabinet paper noted.   

The AIIB is expected to lend $10 billion-$15 billion a year for the first five or six years and will start operations in the second quarter of 2016. Thirty founding countries that hold over 74 percent of shares in the bank have ratified the AIIB agreement and the remaining countries have until the end of the year to complete the membership process.

China has an initial subscription of $29.78 billion in authorized capital stock in the AIIB, out of a total of $100 billion. It invested another $50 million on Saturday. Despite opposition from Washington, US allies including Australia, Britain, German, Italy, the Philippines and South Korea have agreed to join the Asian Infrastructure Investment Bank (AIIB) in recognition of China’s growing economic clout. Nepal has already expressed expectations of the bank funding infrastructure development in the tiny land-locked nation.

The Cabinet decision comes a day after Prime Minister Ranil Wickremesinghe confirmed the controversial $ 1.4 billion Port City project would be allowed to continue along with the second phase of the Hambantota Harbour during a press conference in Davos, Switzerland on the sidelines of the World Economic Forum.   On Wednesday Cabinet also approved the appointment of a negotiating committee and project committee to call for investment proposals to be implemented in the Hambantota port’s industrial zone.

The ventures are expected to be done on a private-public partnership basis, according to a Cabinet paper presented by Ports Minister Arjuna Ranatunga. 

Acknowledging China was one of the biggest economic powers in the world Wickremesinghe went on to say within Sri Lanka there were a large number of infrastructure projects being funded by the Chinese Government.

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