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Sri Lanka to borrow USS300mn from state banks to settle dollar bonds

ECONOMYNEXT – Sri Lanka is planning to borrow 300 million dollars from state banks to settle maturing dollar bonds in 2018 which have high interest rates, the government has said.

The cabinet of ministers had approved a proposal by the finance ministry to borrow the funds from the offshore banking units of state-run Bank of Ceylon and People’s Bank.

The government believes the proposal will reduce the interest costs of the government.

Acting Finance Minister Eran Wickremeratne had told the cabinet that 732 million dollars is required for debt service in the first quarter of 2018.

Sri Lanka earlier stopped borrowing directly from the state banks under a plan to make borrowings more market oriented and converted loans from offshore banking units Sri Lanka Development Bonds.

This allowed large volumes of dollar denominated funds to be raised by the government from resident investors who were allowed to have dollar bonds. (Colombo/Mar22/2018)

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