Sri Lanka is expecting to tackle debt servicing issue by borrowings of more than a billion US dollars from China Development Bank, which may be finalized within weeks, Central Bank Deputy Governor Nandalal Weerasinghe told a media conference in Colombo today Thursday 05.
Discussions held to get a loan of 1 to 2 billion US dollars, but could be around 1.3 billion US dollars, he said.
The loan could be finalized within weeks; he said adding that it could amount to around 1.3 billion US dollars.
The loan would be within the borrowing limits approved in a vote on account up to April, Weerasinghe said.
However according to Vote on account allocations, a sum of Rs. 757.6 billion has been set aside for the maintenance of public services in the first four months of 2020, and Rs. 711.8 billion has been allocated for expenditure already fixed by various acts while Rs. 5 billion is allocated for government advance accounts.
Under this set up US$1.3 billion is very much greater than Vote on Account’s borrowing limits, economic analysts said adding that Dr .Weerasinghe’s should explain to the people as to from where he has derived this borrowing limit.
Sri Lanka’s budget deficit is expected to rise to 7.5-7.9 percent of the gross domestic product in 2020, after value-added taxes were slashed.
The new administration has to come up with a short and medium term debt raising plan, but financing for the first part of the year can be made comfortably, he said.
“About 1.5 billion US dollars comes in every year from project financing from multilateral lenders, he added.
Sri Lanka also had the options of going for a Samurai bond, syndicated loans or Sri Lanka Development Bonds. There is a bullet repayment on a sovereign bond due in October.
(LI)