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CB reiterates SL’s commitment to service forthcoming debt obligations 

Sri Lanka is fully committed to honour forthcoming debt obligations and there was no sovereign default what so ever, the Central Bank reiterated.

It has assured the local and international investor community and the public that the Government and the CB are committed to maintain Sri Lanka’s unblemished record of debt servicing.

Sri Lanka successfully settled the US $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 $ 2.5 billion from January 2020 onwards, the total outstanding ISBs have now reduced to $12.55 billion and will reduce to $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 CB 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 $1 billion ISB maturing in July 2022.

In that background, with the realisation 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.

Accordingly, the CB informs the public and the investor community not to be misled by such inaccurate information, 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.

Former Deputy Governor of the Central Bank and eminent economic expert Dr.W.A. Wijewardena has claimed that the CB has paid a sum of $1.03 billion in parallel to $ 500 million ISB maturity repayment.

This additional payment included the $ 14 million interest for the $ 500 million ISB and another $ 515 million to pay for Asian Clearing Union settlement.

Meanwhile parliamentarian and economic expert Dr. Harsha de Silva revealed that the CB has to pay around $ 250 million on February 09 and February 17.

He noted that the country’s official foreign reserves have dwindled to $ 700 million by the end of January. The Central Bank is yet to announce the official foreign reserve position as at the end of January this year.

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