The Government borrows amounts in foreign currencies to fund the development of SLTL’s network. These amounts have been re-lent to SLTL with shorter repayment periods than the underlying loan. The loan balance as at 31 December 1999 is Rs. 10,646 million (1998 - Rs. 8,683 million).

One loan was fixed in Sri Lanka Rupees at the exchange rate on the date of incorporation of SLTL or on the draw down dates of the loan facility, as appropriate. Accordingly the exchange losses on this loan are borne by the Government of Sri Lanka. The interest rates were fixed at 13% per annum. The liability as at 31 December 1999 is Rs. 772 million (1998 - Rs. 1,158 million).

SLTL bears the foreign exchange risk and the related costs on a loan, bearing interest at 10% per annum. The balance as at 31 December 1999 is Rs. 2,717 million (1998 - Rs. 2,903 million).

Certain Government re-lent loans amounting to Rs. 3,780 million (1998 - Rs. 4,143 million) have been granted on condition that at least 25%-30% of the average capital expenditure on the related projects is funded from funds generated internally.