The Central Bank of Sri Lanka (CBSL) has reiterated Sri Lanka’s commitment to service forthcoming debt obligations.
Issuing a statement, the CBSL said its attention has been drawn to certain recent media reports which have claimed that Sri Lanka is on the verge of a sovereign default.
The bank said such claims are totally unsubstantiated and also regrets that these reports carry many obviously factual inaccuracies despite the availability of credible official data published by the CBSL according to international standards.
“Therefore, the CBSL wishes to assure the local and international investor community and the public that the Government and the CBSL are committed to honouring all forthcoming debt obligations and thereby maintain Sri Lanka’s unblemished record of debt servicing,” the institution said.
Sri Lanka successfully settled the US dollars 500 million International Sovereign Bond (ISB) that matured in January 2022 despite the adverse speculation in certain quarters that such settlement would not be possible.
In fact, with the repayment of ISBs totalling USD 2.5 billion from January 2020 onwards, the total outstanding ISBs have now been reduced to USD 12.55 billion and will reduce to USD 11.55 billion by July 2022, broadly in line with the Government’s strategy to reduce ISB debt gradually to around 10% of GDP.
Towards that objective, the Government and the CBSL have already taken necessary measures to secure alternative forex inflows via a number of bilateral and multilateral funding arrangements to meet the upcoming debt obligations, including the US dollars 1 billion ISB maturing in July 2022.
The CBSL further said that in that background, with the realization of expected forex inflows and the resulting build-up of international reserves, the need for initiating discussions with investors on debt restructuring (as claimed by these media reports) does not arise, as the Government would be able to ensure the settlement of its sovereign debt without any interruption or default.
The bank added that thereby, the public and the investor community not to be misled by such inaccurate stories, misleading opinions, and deliberate misinterpretations spread by certain parties with vested interests who are fuelling speculation regarding Sri Lanka’s capacity to service its future debt obligations. (NewsWire)
