COLOMBO — A deal to lease Sri Lanka's southern Hambantota harbor to a Chinese firm will have broad benefits, such as boosting foreign exchange reserves and relieving pressure on the rupee, Minister of Ports and Shipping Mahinda Samarasinghe said, quoted by the local media as saying here on Monday.

The minister said an agreement with China Merchants Port Holdings to run the Hambantota port should be ready soon with a solution acceptable to both parties being reached after several rounds of talks.

"The importance of these talks is that it will be one of the largest FDIs (foreign direct investments)," Samarasinghe said.

"It is of paramount importance to get them, so we can build international reserves and use it to stabilize the rupee, control cost of living," Samarasingha added.

The minister said the project will also have a demonstration effect as this kind of mega investment will prompt other investors to look at Sri Lanka seriously.

In addition to the Hambantota Port, Sri Lanka and China will also set up an industrial zone in Hambantota which will be open to investors from all parts of the world.

The zone will create thousands of jobs for youth in the country and strengthen Sri Lanka's position as an investment hub.

China is one of Sri Lanka's largest development partners, investing billions of dollars in infrastructure development, ports, hospitals, education and tourism in the island country.