Sri Lanka has settled 70-pct of foreign debt for 2019: CB Governor

ECONONOMYNEXT – Sri Lanka has settled about 70 percent of 5.4 billion US dollars in foreign debt repayments in 2019 and will have a buffer to settle part of next year’s debt as well, Central Bank Governor Indrajit Coomaraswamy has said.

"We repaid 70 percent of that and we think we have raised enough money," Governor Coomaraswamy told a business forum organized by Sri Lanka’s Ceylon Chamber of Commerce.

"And we are about to raise a bit more money I hope, in the coming weeks. And we will be able to settle all of our obligation till about the middle of next year."

Sri Lanka is in talks to sell a Japanese Yen bond with a currency swap to raise extra funds under a new debt management law, Governor Coomaraswamy has said earlier.

He said Sri Lanka now had about 8.5 billion US dollars of reserves.

"Soon we will be getting into the election cycle and we won’t be able to go into the markets tomorrow, but we think we have now built up enough reserves to meet our obligations."

Sri Lanka’s domestic interest rates are also falling, with a slowdown in private credit.

"Our interest rates are coming down," he said. "We have had like a dozen government treasury bill issuances and each occasion the interest rates came down.

"We had two of the largest bond issuances of all time in Sri Lanka – 120 and 125 billion – again the interest rate came down.

"The yields on our international sovereign bonds have come down. The short term money market rates have come down. Inflation is down."

Sri Lanka’s interest rates spiked in 2018, as the rupee came under presusure. (Colombo/July19/2019)