Sri Lanka’s financial organization denies risk of default

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Sri Lanka is facing its worst money crisis in decades, and interchange reserves have fallen to $2.36bn.

Photo by: Jalitha Hewage | Source : Unsplash (Lotus Tower)

Sri Lanka’s financial organization has aforesaid that the country is committed to honoring all forthcoming debt obligations, which the island nation isn’t on the verge of a sovereign default.

Sri Lanka is facing its worst money crisis in decades, and interchange reserves have fallen to $2.36bn, in keeping with Central Bank of Sri Lanka (CBSL) information.

“The government and the Central Bank committed to honor all forthcoming debt obligations,” the financial organization aforesaid in an exceedingly release on weekday.

“The attention of the Central Bank has been drawn to bound recent media reports that have claimed that Sri Lanka is at the verge of a sovereign default,” it added. “The CBSL needs to state that such claims square measure all unsupported.”

Drone view of Colombo city | Source : You Tube

The CBSL has taken necessary measures to secure various interchange inflows through bilateral and trilateral funding arrangements with a concept to settle future debt obligations, it said.

Sri Lanka has total outstanding sovereign bonds amounting to $12.55bn, with $1bn of the bonds maturing in June 2022.

“With the realization of expected forex inflows and therefore the ensuing build-up of international reserves, the necessity for initiating discussions with investors on debt restructuring… doesn’t arise,” the CBSL said.

Citi analysis on Monday aforesaid that confidence within the Sri Lankan government’s external compensation position remains weak and interchange reserves were declining quicker than expected.

“We stick with our base-case state of affairs that international bonds can got to be restructured by July month,” Citi said.

Sri Lanka has been scouring for funds to sustain its reserves and repay debt amid importing bills. The country’s finances have nosedived since the pandemic, with its key interchange earners of business and remittances hit. The nation’s leaders have sought-after to balance ties between the key powers to induce funds, whereas resisting a bailout from the International money.

India in Jan extended a $400m swap line to land associate degreed delayed an Asian Clearing Union settlement of $500m. Sri Lanka’s larger neighbor conjointly last month offered a replacement line of credit of $500m for the acquisition of crude oil merchandise.

President Gotabaya Rajapaksa on Jan nine requested from visiting Chinese secretary of state Wang Yi for Beijing for Peiping to contemplate restructuring the South Asian island nation’s debt repayments.

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Sri Lanka is additionally roping in lenders to finance fuel imports because the island nation appearance for tactics to ease associate degree electricity generation crisis and cushion the strain on finances at a time once national capital has got to pay money for necessities like dry milk, sugar and wheat.