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$ 500 m allocated for maturing ISB payment

06 Jan 2022

The Central Bank of Sri Lanka (CBSL) has allocated $ 500 million for the servicing of an international sovereign bond (ISB) that is reaching its maturity on 18 January 2022. The announcement was made by CBSL Governor Ajith Nivard Cabraal via a Twitter post yesterday (5). In his Tweet, Cabraal said that it was a shame that some investors lost out due to the spread of organised negativity by certain vested interests. On 17 December, downgrading Sri Lanka’s Long-Term Foreign Currency Issuer Default Rating (IDR) to “C” from “CCC”, Fitch Ratings stated that they believe it will be difficult for the Government to meet its external debt obligations in 2022 and 2023 in the absence of new external financing sources. “Obligations include two international sovereign bonds of USD 500 million due in January 2022 and $ 1 billion due in July 2022. The Government also faces foreign currency debt service payments, including principal and interest, of $ 6.9 billion in 2022, equivalent to nearly 430% of official gross international reserves as of November 2021. Cumulative foreign currency debt service, including interest and principal, amounts to about USD 26 billion from 2022 through to 2026,” Fitch Ratings stated. Prior to the downgrade, Samagi Jana Balawegaya (SJB) MP and senior economist Dr. Harsha de Silva claimed that Sri Lanka will be bankrupt by January 2022, as the country’s foreign currency reserves are insufficient to fund the foreign currency-denominated debt service repayments over the next two months. “During the months of December (2021) and January (2022), we have to repay $ 114 million in short-term funds. In addition, we have to repay $ 1,137 million in other loans as well as $ 194.7 million in interest payments. Therefore, by the end of January, we will have only $ 140 million left from the existing total foreign reserves, and when considering in terms of liquid foreign currency, our balance will be negative $ 437 million. How can we go forward like this? Our reserves at hand have never fallen like this,” he stated in Parliament on 8 December 2021.


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