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Govt. settles $ 96 mn in SLDBs 

02 Nov 2022

 
  • $ 58 mn-worth SLDBs refinanced, $ 242 mn suspended 
  • Total SLDBs held by Govt. $ 1.47 bn, majority owned by LCBs
  By Imesh Ranasinghe  Sri Lanka has settled dollar-denominated Sri Lanka Development Bonds (SLDBs) worth $ 96 million (principal and interest) in Sri Lankan rupees (LKR) under the Interim Debt Policy between 12 April and 30 June, while $ 58 million has been refinanced, the Ministry of Finance revealed. At the investor presentation held by the Government in September, it had said that shortly after the implementation of the Interim Debt Policy In April, it settled $ 96 million in SLDBs, both principal and interest, in LKR, consistent with the Central Bank of Sri Lanka’s (CBSL) monetary objectives at the time. Further, the Government had noted that the majority of SLDB debt from mid-April to end-June has either been refinanced or suspended, and the same applies to upcoming SLDB debt servicing, notably in the third and fourth quarters of 2022.  Sri Lanka has refinanced $ 58 million worth of SLDBs, while $ 242 million was suspended. The total value of SLDBs held by the Government as of end-June 2022 was $ 1.47 billion, where the majority is owned by local commercial banks (LCBs). In the Interim Debt Policy, the Ministry of Finance advised any holders of affected debt (including International Sovereign Bonds [ISBs]), who wished to receive the LKR equivalent of any payments on such debts, to contact the Ministry of Finance to express such willingness.  The Interim Debt Policy goes on to state that the Ministry of Finance shall attempt to accommodate such requests, but would only be able to do so to the extent this is consistent with CBSL’s monetary policy and feasible under the relevant credit documentation. A statement by the Ministry of Finance said that the authorities ultimately took the view that it was too difficult to pursue this option due to the limitations in the relevant documentation of some debts (notably the ISBs) and the current economic conditions in Sri Lanka.  “As a result, Sri Lanka is currently not making any payments on affected debts in LKR. The authorities took note, however, of all requests received, and will advise investors if the situation in relation to payments on the ISBs or other affected debts in LKR changes,” it said. The Government had told the creditors that the Interim Debt Policy has resulted in a significant reduction in foreign currency debt servicing, and approximately $ 759 million has been saved as a result of the implementation of the Interim Debt Policy.


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