Lanka’s external debt repayment at $4 bln in 2019-2022
Sri Lanka’s large external debt repayments total US$ 4 billion per year between 2019 and 2022, a top economist told the Business Times. Sri Lanka’s total net external debt exceeded $50 billion in 2017, he added.
The Central Bank (CB) has been quite active since the second half of 2017 and progressing towards raising bonds and keeping a buffer in place, getting ready to sort the local domestic debt that needs to be redefined within the second half of 2018. “The key is that from 2019 onwards on average there will be an external debt repayment of $4 billion,” said Shiran Fernando, Chief Economist at the Ceylon Chamber of Commerce.
The CB is also looking at getting the sovereign bond done, getting a buffer built on it including reserves that will be the key to navigate the 2019 budget, he added.
Mr. Fernando elaborated on the inflation of the country saying there is a divergence between co-inflation and headline inflation. “If the inflation is between 7-8 per cent, you are looking at the core dipping that indicates the underline demand pressure. Even if you look at the national index it’s at its lowest point. It strips away what can be affected by big shots, price changes in liquid petroleum gas and so on. The underlining demand is not that much,” he added.
He also mentioned that interest rates might stabilise at the current levels or reduce this year. “It’s difficult for the Central Bank to even hike the interest rates because growth is so low and the economy has not stabilised yet.”
On the tourism sector, Sri Lanka didn’t pick up in numbers last year while arrivals from China contracted. “We need some of these numbers to grow. The biggest tourist markets for Sri Lanka are India and China. It’s a healthy sign to see a lot of foreign direct investments coming into Sri Lanka while delegations from India, Malaysia, Singapore and Japan visited Sri Lanka since the beginning of the year. With the Colombo Port City, we will see a lot of investment inflows in infrastructure,” noted Mr. Fernando. Export manufacturing has to grow in terms of ICT services, he added.
Mr. Fernando also stated that last year Sri Lanka benefitted by the increase in the tea prices with the demand side looking better in the global picture. The tea production side needs to be more looked at while the industry is going through bits of challenges and labour reforms, he noted.