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Monday, 21 December 2020 00:35 - - {{hitsCtrl.values.hits}}
By Shihar Aneez
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French Ambassador to Sri Lanka Eric Lavateru
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The Agency of France Development (AFD) is ready to raise the portfolio of non-sovereign debt to as much as Euro 400 million available in the next three years to Sri Lanka’s public and private sectors given the island nation’s tight fiscal situation, the AFD’s Sri Lanka Country Director Reda Souirgi said on Friday.
The AFD, since it started to finance funding to Sri Lanka in 2005, has disbursed Euro 700 million to the Government and Euro 270 million to the private sector. Some of the projects are still continuing and more financing options are under discussion.
Sri Lanka’s higher fiscal deficit and concerns over foreign debt suitability have already resulted in rating downgrading by all three international rating agencies, which have in total downgraded two notches each in the last eight months, prompting Sri Lanka to think twice about sovereign borrowing due to higher cost.
Souirgi said AFD’s soft loans with 1%-1.5% interest rate of lower quantity could help Sri Lanka to use the agency’s loans especially as non-sovereign debts to Sri Lankan firms.
“There are credit lines available and we have been looking for prospects and opportunities. Depending on the creditworthiness of the firm both State owned and private sector have opportunities for lower interest soft loans,” he said.
“We can do this with through the network of public and private banks. I cannot give an exact figures of loans. But we are looking to increase the non-sovereign loans by 20%-25%.”
Souirgi also said the Sri Lankan Government had sought Euro 200 million as a COVID-19 emergency fund at the early stage of COVID-19 spreading in March, but the group was still waiting on some directions from multilateral agencies on Sri Lanka’s macroeconomic stability to proceed.
French Ambassador to Sri Lanka Eric Lavateru speaking to reporters said Sri Lanka had not asked for a debt moratorium from France so far. The island nation is facing heavy pressure on repaying foreign debts as its foreign borrowing cost has gone up after the rating cuts.
“Sri Lanka has always been on time for repayment and this is well known internationally,” Lavateru said.
The French Government also helps Sri Lankan projects through the European Union and International Monetary Fund (IMF).
The AFD is involved in construction of four substation projects, green power development, water sanitation, waste water disposal, and urban development projects, all approved under the previous Government, while a Euro 172 million Mundeni Aru river basin development project and Euro 123 million Jaffna sanitation project have been already approved by the AFD.
