"Not only does this transaction stimulate U.S. job creation, but it also contributes directly to the quality of life in Sri Lanka,” said Ex-Im Bank chairman Fred P. Hochberg said in a statement.

"This project will bring potable water to thousands of those who need it, and that is a success."

The project involves new treatment plants integrating them will rehabilitated ones, building storage tanks, pumping stations, a new dam and reservoir, 50 kilometres of transmission and 100 kilometres of distribution pipeline.

"This is the first full-scale, design-build water-supply project that Ex-Im Bank has financed for an international client,” said Tetra Tech chairman Dan Batrack.

"Tetra Tech is proud to support the government of Sri Lanka in this important effort to bring safe drinking water to its people.

"This transaction supports high-end technical jobs in the United States and allows us to bring our best water services where they are needed most."

Sri Lanka has begun to rely more on Exim bank credit for infrastructure in recent years with the China leading the tables, while the US has mostly given Sri Lanka outright grants not given much credit.

According to data released in Sri Lanka's parliament the US has given 225 million US dollars in grants that need not be paid back and only 33 million US dollars in credit during the past 15 years.

China has given 2.9 billion US dollars in credits and 105.3 million US dollars in grants.

US has been helping with rehabilitation efforts in former war-torn areas and the USAID, the country's aid agency has also been helping private firms set up shop and form links with farmers and others.