Central Bank says no plans to delay debt repayment
Monday, 17 May 2021

Central Bank says no plans to delay debt repayment

16 April 2021 01:43 pm

The Central Bank says it has no plans to delay debt repayments but they will roll over debts 

CB Director Communications claimed that there are no plans to delay or defer repayment of Sri Lanka Development Bonds (SLDBs) or the repayment of foreign currency loans obtained from the domestic banking system or delay or defer the repayment of any other debt instrument of the Government as stated by the newspaper.

 Central Bank noted that during recent discussions, market participants holding such debt instruments have expressed willingness to rollover a sizeable portion of these liabilities falling due in the period ahead.

 This is normal practice that has been adopted in the past as well, and should not be interpreted as delaying or differing the repayment of maturing debt obligations” 

The Central Bank’s wordplay seems to be that there are no plans to delay or defer repayment of the foreign currency Development Bonds or from the loans from local private banks, but there is willingness to “rollover” these liabilities.

An economic definition of the word “rollover” is “to defer payment of (an obligation)” or “to renegotiate the terms of (a financial agreement)”.

Recession-hit Sri Lanka appealed  for international investors to roll over bonds maturing this year, a further indication of the island nation's dire financial situation.

The South Asian nation's tourism-and the trade-dependent economy is reeling from the twin impacts of the deadly 2019 Easter bombings and the fallout from the coronavirus pandemic.

International rating agencies have already slashed Sri Lanka's creditworthiness after raising fears over the island's ability to repay its debt.

Government spokesman Minister Udaya Gammanpila said capital and interest repayments on foreign debt this year was $6.86 billion.

"We encourage investors to roll over (bonds) and if they do that, it would be a great help for our country," Gammanpila told reporters at the weekly cabinet briefing recently .Gammanpila stressed that the country had honoured its debt commitments last year.

China owns about 10 per cent of Sri Lanka's foreign debt, according to official figures from August. The government did not say how much of the maturing debt was Chinese.Sri Lanka's economy contracted by 3.9 per cent last year, its worst-ever slump.

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