Sri Lanka spins under bond spree
Sri Lanka is forced to borrow US$ 500 million for imports of material of foreign funded projects as this amount raised during end 2014 appears to have disappeared or used by the previous regime for other projects, official sources said. Foreign borrowings through a state owned bank appears to have been utilised by several state-owned enterprises and Urban Development Authority on infrastructure projects that were not the focus of such borrowing, a senior official of the Ministry of Policy Planning and Economic Affairs, told Business Times.
He said this was the assumption as some important files relating to project costs were among the 2,600 important files which had disappeared from the Finance Ministry and there was no proof where this money went to. Some $500 million was raised during the latter part of last year for the first phase of the Weeras Ganga Development Project implemented by the UDA, and the construction of the $202 million Werahera Teaching Hospital of the General Sir John Kotelawala Defence University.
The ministry this week called for proposals from banks and investment houses to raise a foreign currency term financing facility (FTFF) of up to $500 million.The government also raised $988 million via a 10-year International Sovereign Bond and Sri Lanka Development Bonds on May 28.
Foreign borrowing of the new government has been on the rise as it has to service debts taken by the previous regime, mainly for infrastructure projects. Meanwhile the Central Bank opened bids this week to sell US$ 100 million worth of development bonds to foreign and local investors.