• Borrowing primarily used to repay maturing government securities
• Foreign investor confidence boosts government security holdings

Sri Lanka’s new government has borrowed Rs. 172 billion from the domestic market in the first month after taking office, Central Bank data showed.

According to weekly indicators by the Central Bank, the new government under President Anura Kumara Dissanayake has net borrowing of Rs. 172 billion in government securities in its first month in office.

Showing investor confidence, the amount of government securities held by foreigners have increased by Rs. 11.7 billion while the net foreign purchases within the one month period at the Colombo Stock Exchange stood at Rs. 98 million.

Moreover, the three-month Treasury bill yield has fallen by 117 bps to 9.32%, while the 12-month Treasury bill yield has fallen by 10 bps to 9.95%.

The average weighted prime lending rate (AWPLR) by banks has fallen by 22 bps to 9.10%.

Last week, former Samagi Jana Balawegya MP Rohini Kaviratne told media that the government had borrowed Rs. 419 billion in Treasury bills and Treasury bonds within 13 days from 2-15 October.

However, this statement is partly true as most of the borrowings were made to pay off the Rs. 466 billion of Treasury bills and bonds that were maturing within the period.

Also, Presidential Consultant Prof. Fernando has commented that raising funds from the domestic financial market to cover ministry expenses and repay maturing Treasury bills and bonds is not an unusual activity.

“The Government needs funds to cover day-to-day essential expenses and to continue its services. The Central Bank raises funds every week through the sale of Treasury bills and bonds,” he said, adding that “additionally; they make repayments on those that mature on the due date. This is a regular process and it is continuing as usual. There is nothing special because a new president has been appointed.”