Governor of the Central Bank of Sri Lanka (CBSL) Ajith Nivard Cabraal demonstrated how Sri Lanka is planning to repay the US$6.9 billion in foreign debt due this year, joining live with Squawk Asia (CNBC) this (26) afternoon.
Out of the US$6.9 billion of debt, most debts are Sri Lanka-based debts, which have already been negotiated for rollover, as well as certain multilateral debts, which are also being funded with new receipts that are coming in, Cabraal said. Accordingly, these areas may not be much of a risk in debt repayment, he added.
Commenting on the risk areas of settling debt, the CBSL Governor added that the only area in which certain concerns are raised were the International Sovereign Bonds (ISBs), out of which US$1.5 billion has to be paid this year. Nevertheless, as Sri Lanka has already paid US$500 million, only US$01 billion is due to be paid, he revealed.
Overall, a further debt of US$12.5 billion in ISBs is to be paid over the next seven years, Cabraal went on, adding that in that context, the country has already made arrangements to settle the next debt, which at present is being funded via what he described as ‘alternative’ sources.
The strategy of channeling alternative sources for financing is because it is difficult to reach out the market at this stage, the CBSL Chief added, revealing that by doing so, Sri Lanka has slashed its ISB exposure by seventeen per cent over the last two and a half years and by twenty three per cent during last July.