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4 million dollar) loan to develop its construction industry and rebuild areas hit by the December 2004 tsunami, the finance ministry said. The money will be channelled through local banks to help contractors buy equipment and for their working capital needs, a ministry statement said.
The loan agreement was signed here between Sri Lanka's treasury chief Punchi Banda Jayasundera and Michel Lummaux, France's embassador to Colombo.
The aid comes after Britain and Germany suspended debt relief to Sri Lanka amid human rights concerns in the embattled nation where more than 5,000 people have been killed in the past 18 months in renewed clashes between troops and Tamil rebels.
Japan, Sri Lanka's biggest bilateral lender, said recently that it had no plans to cut aid for the moment.
Sri Lankan President Mahinda Rajapakse has shrugged off Britain's move and pledged that his government would not depend on aid. Foreign lenders disbursed 1.1 billion dollars in aid to the island last year and the government hopes for a further 1.2 billion dollars this year, the treasury chief has said.