The Central Bank of Sri Lanka today (19) issued a statement dismissing media reports suggesting that it was in danger of defaulting on its debt repayments. “The Government of Sri Lanka finds inferences in recent media reports questioning its ability to honour its debt service obligations. The Government notes with dismay such inferences made by certain media to imply that Sri Lanka is at risk of falling into a sovereign debt crisis by comparing Sri Lanka with other sovereigns which are said to be in similar situations. The Government wishes to categorically deny all such baseless claims, and would like to reiterate to all stakeholders that Sri Lanka will duly honour all its debt service obligations in the period ahead,” the statement read. It said that the recent volatilities in yield levels of Government of Sri Lanka’s International Sovereign Bonds (ISBs) during the Covid-19 pandemic period “are no different” to what has been observed across a majority of emerging and frontier market economies. It claimed that despite such volatility, global institutional investors, fund managers and analysts recommend Sri Lankan debt instruments for investment, while remaining confident of Sri Lanka’s credit quality. It said that, contrary to “unfounded inferences and comparisons”, Sri Lanka has already initiated measures to return to normalcy and gradually being opened up for business throughout the country. “In this backdrop, the Government of Sri Lanka categorically disagrees with recent assessments of risks and rating decisions by some international rating agencies.” The Central Bank said that the Government has taken proactive measures in mobilising funds from multiple sources of market based and official sources of financing to effectively improve the terms and conditions of financing. “Given volatile market conditions across the globe, the issuance of an international bond by the Government is not anticipated in the near term, thereby rendering the current yields observed in the international bond market irrelevant. The focus of financing will be to further explore bilateral and multilateral sources to benefit both risk and cost considerations of debt management, and these discussions are well underway. Further, the country is in the process of exploring SWAP facilities with regional central banks, while arrangements are being made for syndicate financing with identified foreign sources,” it said. The Central Bank also emphasized that Sri Lanka has demonstrated its commitment to honouring all its obligations on time, even during difficult times in the past, and will continue to do so in the future, while engaging with all investment and development partners.