Concessionary loans study

Sri Lanka may have been duped into taking concessionary loans in the past when there was nothing ‘concessional’ about it, according to a top Central Bank official.

“The Central Bank is currently concluding a study where concessional loans are analysed in detail. There is nothing concessional about some of them,” Nivard Cabraal, Governor Central Bank told The Sunday Times FT on the sidelines of an event on the bond market development in Sri Lanka recently.

He said that the Bank’s Public Debt Department together with other relevant departments have analysed in detail these concessional loans and some do not have a concessionary nature about them. “Sometime soon we want to publicise the study,” he said.

Cabraal said the study was done in a bid to ‘watch out’ when accepting such future loans, while taking stock of the past. When queried whether the donor agencies will take offence to the outcomes in the study, he responded saying that it is a transparency issue. “It has been very damaging to the country and we need to be transparent about what we have done in the past, while learning lessons from that for the future,” he stressed.

Cabraal also said the government may if the need arises consider another dollar bond.

“The international bond sale for US$500 million held in October, in a bid to fund infrastructure development projects was 3.2 times oversubscribed and we have come to realise that the Sri Lanka story sells on the market and as such we may reflect on another bond in the future,” he said.