ECONOMYNEXT – Sri Lanka is expecting a 700 million dollar loan from Chin and rupee bond purchases by China and a Samurai and Panda bonds to boost dollar inflows in 2020, State Minister for Money, Capital Markets Nivard Cabraal said
Foreign investors are expected to invest around 500 million US dollars in rupee bonds in 2020, after forex risk cover was offered through a dollar rupee swap, he said.
Inquiries area already coming from investors, Minister Cabraal said,
There has been net buying in rupee bonds over the past two weeks before the swap was announced.
The central bank will also start work on trying to raise 500 million dollars from Panda (Yuan) and Samurai (Yuan) denominated, bonds.
Sri Lanka will not default on foreign obligations and a billion US dollar bond will be repaid with money credited to investors on October 02, he said.
He said the downgrade of Sri Lanka’s sovereign rating by Moody’s to Caa1 (CCC+ equivalent) was not warranted and the economy was recovering.
Cabraal said it was important to keep the rupee steady and the central bank had bought dollars in the last three months in the interbank market.
On September 29 the central bank had bought 30 million dollars to stop the rupee from appreciating.
Though the rating agency had downgrade d the country economic agents are remitting money and continuing activities, he said.
Sri Lanka’s rupee which is loosely pegged to the US dollar appreciates when domestic credit slows and inflows are not fully spent.
Sri Lanka in April 2020 slapped the worst import controls since the collapse of the Bretton Woods system in 1971.
Cabraal said the import controls were imposed to allow resources to repay debt obligations.
Sri Lanka had never defaulted and would keep the record he said. (Colombo/Sept30/2020)