SL ‘BB-’ rating reflects global trust in Govt. process: Harsha

Friday, 24 April 2015 01:35 - - {{hitsCtrl.values.hits}}

By Waruni Paranagamage Deputy Minister of Policy Planning and Economic Affairs Dr. Harsha De Silva asserted that Fitch Ratings’ affirmation of Sri Lanka’s long-term foreign and local currency issuer default rating at ‘BB-’ by Fitch Ratings reflected the international investor community’s confidence in the country’s economy. Addressing a me

dia briefing yesterday, the Deputy Minister argued that even though Opposition parties were engaged in unsubstantiated criticism as to the outcomes of 100-day program, neutral international agencies and investors have only projected a positive outlook for country, effectively vindicating the economic policies of the Government. “We appreciate the confidence placed in us by this ratings agency and by extension, the international investment community. We hope this will encourage greater Foreign Direct Investment into Sri Lanka, thereby encouraging lower and more reasonable rates for our funding requirements in the foreseeable future. “This ratings outlook is further evidence that we have started a process that will lead to a better, more trustworthy and more transparent process that will meet the ultimate objectives of taking Sri Lanka forward,” De Silva stated. He also went on to reiterate the Government’s commitment to establishing a highly-competitive social market economy in Sri Lanka which would be capable of delivering an increase to real household incomes following the completion of the 100-day program. Among the factors positively influencing Fitch’s country rating for Sri Lanka was the orderly transition of political power following recent elections, favourable GDP growth, projected improvements to the balance of payments and a positive outlook for the country’s external borrowing strategies. Notably, Fitch had projected that Sri Lanka would succeed in rebuilding international reserves to $10 billion by the end of 2015 through a combination of renewed borrowing on international capital markets and foreign currency swaps with Indian and Chinese Central Banks. However, Fitch cautioned that further domestic political turmoil could risk derailing such processes, particularly in the context of impending parliamentary elections and their implications for effective policy making in future.

Indian PM permits RBI to enter into $ 1.1 b Currency Swap Arrangement with Sri Lanka

New Delhi: The Union Cabinet chaired by the Prime Minister, Narendra Modi, Wednesday gave its ex-post-facto approval for Reserve Bank of India (RBI) entering into an agreement with the Central Bank of Sri Lanka for extending $ 1.1 billion as a special/ad-hoc swap outside the Framework on Currency Swap Arrangement for SAARC Member Countries. India has a Framework on Currency Swap Arrangement for SAARC Member Countries since 2012. The facility is available to all SAARC member countries with a floor of $ 100 million and ceiling of $ 400 million within overall limit of $ 2 billion and is valid till 14 November. RBI in their letter dated 18 February has proposed to make available $ 400 million to Sri Lanka under this Framework and the remaining $ 1.1 billion as a special/ad-hoc swap facility outside the Framework, but with the same terms and conditions, for six months against the request of the Central Bank of Sri Lanka. During Indian Prime Minister Narendra Modi’s visit to Sri Lanka last month, the RBI and the Central Bank agreed to enter into a Currency Swap Agreement of $ 1.5 billion to help keep the Sri Lankan rupee stable. “This will help Sri Lanka in availing a safety net against the probable volatility of their currency and provide short-term liquidity that would contribute to Sri Lanka’s economic recovery. This will also strengthen India’s bilateral relations and economic ties with Sri Lanka,” the Press Information Bureau of Government of India said in a statement.