SL domestic debt won’t be restructured: CB Governor

While external debt restructuring remains a top priority for the Sri Lankan government, domestic debt in the form of Government securities and Sri Lanka Development Bonds will not be restructured, Central Bank Governor Dr. Nandalal Weerasinghe said on Thursday.

He made these comments while addressing a meeting of the Committee of the Ceylon Chamber of Commerce at which he was the Guest Speaker, during which he also provided an update on the progress made during the recent discussions with the International Monetary Fund and World Bank last week. 

Noting that encouraging progress had been made towards establishing a macro-fiscal policy framework and initiating structural reforms, he expressed confidence that a staff-level agreement with the IMF is likely to be reached within the next two months, the chamber said in releasing these comments to the media

Dr. Weerasinghe also announced that additional measures will be implemented in order to address urgent economic concerns. The measures include introducing regulations to encourage USD flows currently transacting in the informal market to be channeled through the formal banking system. As a result of policy measures already introduced by the Central Bank and the government, he was of the view that expenditure on imports will be declining further to more sustainable levels.

The Governor also highlighted the need to strengthen the social safety net with the rising cost of living. To this effect, multilateral agencies such as the World Bank will be looking to reallocate funds committed for projects towards assisting vulnerable segments of the population, he stated.

While expediting IMF negotiations and implementing sustainable economic policy reforms being the main priority, he added that IMF action will continue irrespective of the political landscape, and also stressed that all creditors will be treated equally in the debt-restructuring process. The Governor sought the assistance of the private sector in successfully implementing measures to stabilise the economy.

According to other sources, the Governor is also reported to have said that there won’t be a need to increase (interest) rates to 30 per cent, inflation is being closely monitored, the increase in interest rates is temporary and would ease in three months, there are plans for a social safety net for the masses and there are plans to reduce the import bill to US$1.5 billion per month.