$ 4.8 b debt to be repaid in 2020

• CB assures sufficient reserves to ride out next few months 
• Large payment of $ 1 b only due in Oct. 2020 
• Awaiting instructions from Govt. on how to proceed 
• $ 500 m Samurai bond still in pipeline 

Sri Lanka will have to repay $ 4.8 billion in debt in 2020 with the Central Bank awaiting the Government’s instructions on how the funds should be raised, a top official said, assuring there is a sufficient buffer of reserves to meet repayments for the first few months. 

Central Bank Senior Deputy Governor Dr. Nandalal Weerasinghe told reporters that they were awaiting directions from the Finance Ministry and said future plans will likely be clearer after President Gotabaya Rajapaksa’s address to Parliament, which is expected to set out the policy framework of the Government. The Central Bank as also preparing to issue its first $ 500 million Samurai bond but it is now unclear when this will take place. 

“The Government will have to decide the repayment plan, when to go to the market, and how much to raise. There are different instruments under discussion by the previous Government but the new Government has to come up with short, medium and long-term financial plans looking at the financing requirement for the year. The large repayment of $1 billion is only coming in October, so till then, there is a smooth flow of repayments, and we have raised sufficient funds to meet at least the first few months of next year. We are in a comfortable position to meet payments at least until the new Parliament commences their activities,” he said. 

He also said the new government will have to make decision on reforms, which include amendments to the Monetary Law Act that were drawn up by the previous administration and were gazetted ahead of the Presidential Election in November. However, Dr. Weerasinghe assured that the functions of the Central Bank will not be impeded by the delay in passing the fresh legislation. A new Banking Act was also under consideration earlier. 

“A lot of reforms we were proposing was only to institutionalise what we are already doing, such as the inflation targeting framework. We will continue to do follow the monetary policy framework based on the inflation targeting framework. The other new element is macro prudential authority, which we have already been practicing from time to time, so we will continue to do all those things. The only thing that will be delayed is the governance structure. We have proposed a separate monetary policy board and governing body. That structure will come into place only if the proposed amendments are enacted. The way we do business will continue as usual.”