SL may borrow up to US $ 4.5bn before election cycle begins
Prior to the beginning of the election cycle at the end of this year, Sri Lanka may tap international capital markets to borrow up to US $ 4.5 billion, including US $ 2 billion for debt repayment for next year, the Central Bank said.
“Our plan is to go out to the markets and raise as much money as possible to look after not only the debt repayment requirements for this year but also cover some of the payments of next year.
It’s possible that the election season may well go on to about the middle of next year. Therefore, we are trying to be proactive and raise the money that’s necessary to meet our commitments,” Central Bank Governor Dr. Indrajit Coomaraswamy said.
Last week, the Cabinet gave the Finance Ministry the nod to go ahead to raise up to US $ 2.5 billion through dollardenominated International Sovereign Bonds (ISBS), which come under the limits of the 2019 budget.
Accordingly, BOC International, Citigroup, Deutsche Bank, HSBC, J.P. Morgan, SMBC Nikko and Standard Chartered Bank, which acted as the Joint Lead Managers for the earlier successful US $ 2.4 billion ISB, have been appointed for the prospective issuance as well. Dr. Coomaraswamy revealed that Sri Lanka might further raise up to US $ 2 billion under the Active Liability Management Act (ALMA) targeting the debt repayments due next year.as per ALMA, the government has the provision to borrow up to 10 percent of the outstanding debt in the previous year for the debt management of the following year.
However, Central Bank Deputy Governor S.R. Attygalle noted that Rs.480 billion (US $ 2 billion) or 4 percent of the debt stock is sufficient for liability management, which falls next year.