Central Bank expects more foreign inflows soon
Sri Lanka will be receiving US$450 million syndicated loan next week for debt servicing and to bridge government finances, Central Bank Governor Indrajit Coomaraswamy announced at media conference in Colombo this week.
This announcement was made by him amidst the delay in securing International Monetary Fund’s (IMF) third tranche of Extended Fund Facility amounting to $168 million till next month.
Bank of Baroda, Deutsche Bank, Indian Bank, Qatar National Bank, SBI and SMBC have arranged the three month loan at 384 basis points, 160 points less than the previous loan facility.
Sri Lanka plans to raise $1 billion from two separate syndicated loans and the country would be able to get the second loan of $550 within three months, Dr. Coomaraswamy disclosed.
The country has no option other than to borrow externally for Balance of Payment (BoP) and fiscal support as it had been doing in the recent past.
However Dr. Coomaraswamy noted that while currently debt servicing is manageable, the challenge for the country is to increase non-debt creating foreign inflows.
He said the country needs to do much better in terms of exports and FDI. If that happens, the reliance on external borrowings would be reduced, he added.
The Central Bank, on behalf of the government, has successfully sold a new $ 1.5 billion 10-year International Sovereign Bond, he revealed, adding that this will boost investor confidence in Sri Lanka.
These inflows, along with other expected financial inflows to the government and the likely disbursement of the 3rd tranche under the IMF Extended Fund Facility (EFF), would support the balance of payments and the country’s reserve position.
As at end April, gross official reserves were estimated at $5 billion, down from $6 billion at end 2016, while the Sri Lankan rupee depreciated by 1.5 per cent against the US dollar during the year up to May 5, 2017.The Monetary Board, at its meeting held on May 8 was of the view that the current monetary policy stance is appropriate and didn’t change interest rates.
According to the latest monetary policy review, the Colombo Consumer Price Index, decelerated on a year-on-year basis to 6.9 per cent in April 2017 from 7.3 per cent in March 2017, and CCPI based core inflation also decelerated to 6.8 per cent in April 2017 from 7.3 per cent recorded in the previous month.
It is expected that inflation based on the National Consumer Price Index, which edged up in March 2017, will also display a similar decline in April 2017.
| Asst. Governor, another official transferred over EPF fiasco | |
| Two Central Bank (CB) officials including an Assistant Governor have been transferred from the Employees Provident Fund (EPF) department of the bank to another section pending the conclusion of investigations into the alleged loss of Rs. 9.5 billion through its investment transactions, CB Governor Indrajit Coomaraswamy said. He disclosed that an internal inquiry has been instigated after a preliminary probe revealed alleged misdeeds in investing EPF monies in the government’s securities secondary market. The report of the probe had been leaked to media. While responding to questions by reporters, Mr. Coomaraswamy noted that disciplinary action will be taken against CB officials if they found guilty of charges leveled on them.The bank will have to find out as to whether there was a loss of Rs. 9 or 10 billion incurred during investment transactions, he said, adding that without finding out actual details the bank cannot take any action against its employees. A committee headed by a retired judge would be appointed soon to carry out the relevant inquiries, the Governor said. |