SL capable of meeting debt repayment, macro economic targets - NEC

Sri Lanka stands capable of meeting her targets of debt repayment, macro economic fundamentals in a sound footing and maintaining the budget deficit and cost of living under a manageable level, Secretary General of the National Economic Council (NEC) Dr. Lalith P. Samarakoon said yesterday.

Commenting on the downgrading Sri Lanka’s credit rating by global credit rating agency, the Moody to B2 (stable) from B1 (negative) and changed the outlook to stable from negative, Dr. Samarakoon said Sri Lanka’s foreign exchange reserves stand at US$ 7.2 billion right now and as such US$1 billion of this amount representing Foreign Currency Banking Units (FCBU) and Sri Lanka Development Bonds (SLDBS) can be easily rolled over, leaving about US$4.8 billion to be refinanced.

“In regard to the concerned raised by Moody’s, I would like to point out that Sri Lanka has more than adequate capacity to service its foreign debt obligations, is unequivocally committed to honouring all its foreign and domestic debt obligations, and will maintain the fiscal discipline and adhere to agreed medium-term macro-economic targets,” Dr. Smarakoon added.

“Debt service obligations in 2019 amount to about one billion dollars. We already have US$ 650 million in Foreign Currency Account at the Central Bank which are remaining funds from the Hambantota Port transaction of US$ 1.1 billion. Bank of Ceylon, People’s Bank and People’s bank are going to raise up to a US$ billion via international markets by the end of the year which will be invested in SLDBS,” Dr. Smarakoon stressed..

Clarifying Sri Lanka’s current economic situation and in particular the debt servicing commitments at the weekly press brefing at the Information Departmet, Dr. Samatrakoon went onto say that the government expects to raise further US$500 million from the China Development Bank in February 2019 and another US$1 billion from SDC at 5.3% for 8-yr maturity). These funding arrangements in excess of US$ 2 billion (US$2.15 billion) will provide more than adequate funds to service maturing sovereign debt in 2019. These include two maturing international sovereign bonds amounting to US$1 billion in January and US$500 million in April of 2019.

“Therefore, Sri Lanka will be in a position to comfortably service its maturing foreign debt obligations and the CBSL has planned to negotiate and put in place a number of swap facilities ($400 mn with India, $1,000 with Qatar,” Dr. Samarakoon emphasized. Further, beyond the debt obligations maturing in the shortterm, Sri Lanka has time and space to pursue other bilateral options including bilateral and multilateral credit lines in order to enhance reserves to pay our debt Obligations as they become due.

Then, in regard to the fiscal policy, Sri Lankan Government would assure its unwavering resolve to maintain fiscal discipline in line with the medium-term macroeconomic targets.

Therefore, Sri Lanka will be in a position to comfortably service its maturing foreign debt obligations and the CBSL has planned to negotiate and put in place a number of swap facilities