Sri Lanka on track to repay foreign debt in 2019: Finance Minister
ECONOMYNEXT – Sri Lanka has already repaid about 2.0 billion US dollars denominated debt so far this year and is on track to settle the rest, which were taken by previous administrations, Finance Minister Mangala Samaraweera said.
Sri Lanka had raised 2.4 billion US dollars from bond markets last week adding to fiscal reserves for debt repayment.
Sri Lanka will also repay the balance debt due, he said.
Samaraweera said new debt was being raised to repay old debt which was taken during previous administrations.
"We cannot say this debt was taken by an earlier government and refuse pay," he told reporters. "That is why we have to get new debt. If there is a better way to do this please tell me."
In January, a billion US dollar bond originally sold in 2013 was repaid with forex reserves. Another 500 million dollar bond matures in April.
Officials have previously said out of a total of about 5.4 billion US dollars, about a billion was dollar-denominated domestic debt.
Sri Lanka usually contracts domestic debt with the Central Bank mopping up inflows by operating a peg with the US dollar, generating part of the resources to repay debt and effectively converting forex debt to rupee debt.
Last year, however, the Central Bank lost control of the peg by printing money and generated capital flight.
The rupee has been generally in stable in 2019 after it fell to 180 to the US dollar from 153 over 2018, lowering living standards, boosting the rupee value of debt and also keeping interest rates of domestic debt higher than if a consistent peg was maintained.
Monetary instability generated by the soft-peg which was set up in 1950 is a key obstacle to the well-being of the people, triggering strikes, political unrest, and trade restrictions.
The soft-peg is now a threat to debt repayment. (Colombo/Mar13/2019-SB)