CB assures adequate funds to settle bond payments next year
Three state banks to raise up to US $ 1bn from Middle East
CB negotiating swap arrangements with Oman and Qatar central banks Upscales term loan with China Development Bank to US $ 1.5bn
SL has US $ 1.5bn sovereign bond payments due next year in Jan. and Mar.
SL has US $ 4bn on average for five years starting from next year
The Central Bank yesterday affirmed that it has been proactive and has lined up various sources of funding to settle the maturing international bonds and other foreign borrowings next year, despite the political turmoil currently brewing in the country.
Central Bank Governor Dr. Indrajit Coomaraswamy said three state-run banks—bank of Ceylon (BOC), National Savings Bank (NSB) and People’s Bank (PB) would together raise US $ 750 million to US $ 1 billion from the Middle East before end of this year.
He said this was a result of a
mission undertaken by the Central Bank and these three banks with two other systematically important banks to the Middle East to explore the possibilities to raise funds for future debt repayments.
Dr. Coomaraswamy said the moneys raised would be invested in Sri Lanka Development Bonds.
Sri Lanka has to settle a US $ 1 billion sovereign bond maturing in January 15, 2019 and another US $ 500 million sovereign bond maturing in April.
Further, allaying any fears that Sri Lanka may not be able to honour its financial obligations to the world, Dr. Coomaraswamy said the government has now decided to upscale the term loan arrangement with China Development Bank by US $ 500 million.
Sri Lanka recently received US $ 1 billion from a term loan arrangement with China Development Bank.
He further revealed the Central Bank is now in consultation with the central banks of Qatar and Oman for swap arrangements. He said these swaps would be negotiated below the yield curve of international sovereign bonds.
Dr. Coomaraswamy also said they haven’t abandoned the plans to go for Samurai and Panda bond issues as announced earlier, in responding to a query whether the current political instability in the country would allow such fund raising exercises.
“These (Panda and Samurai bonds) are a bit different to ISBS. The government to government links will help us going through with them,” he said.
However, Dr. Coomaraswamy did not rule out the possibility of going for an international sovereign bond issue as planned earlier.
Sri Lanka will have to keep on raising funds from various sources at least for the next few years as the country has to settle US $ 4 billion on average for five years, starting from next year.
Parliament last month passed a resolution to raise Rs.310 billion (approx Rs.1.75 billion) by way of loans in or outside Sri Lanka for Active Liability Management by the Government of Sri Lanka.
Dr. Coomaraswamy said a US $ 645 million carryover from the Hambantota port lease would also help Sri Lanka to settle its debt next year.