Central Bank vows to meet debt service obligations without default

The Central Bank has reiterated that Sri Lanka has no intention of defaulting debt service obligation this year as it hopes to get more foreign inflows while strengthening the external sector performance, Central Bank Governor W.D. Lakshman told a media conference in Colombo on Thursday.

Addressing the monetary policy review media conference, he disclosed that the external sector performance is being closely monitored by the Central Bank.

Several successful meetings were held by the Central Bank with the stakeholders of the external sector to discuss ways and means to increase foreign exchange inflows, he added.  

The government will be offering several concessions and incentives to these stakeholders considering a case by case basis to achieve this objective, he revealed adding that the outcome of these meetings was very positive.

Positive sentiments fuelled by the COVID-19 vaccination drive in the country and the impact of growth promoting policies are expected to support the economic revival over the short to medium term, Prof. Lakshman pointed out.

The trade deficit contracted by US$2 billion in 2020 benefiting from the notable decline in expenditure on imports, which more than compensated for the decline in earnings from exports, he told journalists. 

The trade deficit is expected to remain compressed in 2021, supported by appropriate measures taken by the Government.

Negotiations are underway with international agencies donor countries for rapid financial instruments and necessary funding to strengthen foreign reserves, he said expressing optimism on fulfilling debt servicing obligations.

Answering a question raised by a journalist, he said that the Central Bank will not expect any hike in government securities yield as the bank follows a guided yield policy by issuing directions prior to auctions.

Discussions are continuing on securing foreign financing. Furthermore, increased non-debt creating foreign exchange inflows are expected, supported by the measures introduced by the Government and the Central Bank,

In spite of adverse speculation, all debt service obligations of the Government have been duly met thus far in 2021, and the Government remains committed to maintaining its impeccable debt service record in the future as well. (BS)