Unless foreign, domestic debt obligations are addressed
Unless Sri Lanka comes up with a cut and dry plan to address both the domestic and foreign debt obligations which are in large volumes, Sri Lanka would soon be at an economic deadlock, Superintendent of the Public Debt Department T.H.B. Sarathchandra said.
Sarathchandra also said the Central Bank of Sri Lanka would have no choice but to bear the brunt with the bunching of large dollar repayments for the International Sovereign Bonds (ISB) which are reaching maturity in 2019 and the following years.
He said these international sovereign bonds have been issued in the years 2007, 2010, 2011, 2012, 2014 and 2015.
“The ISBs are maturing in 2019 for $1.5 billion and we also have a payment of over $500 billion as well. We need more than $2 billion in 2019, while we would have to pay a similar amount of dollars in 2020 to 2024 as well,” Sarathchandra said.
He also said that there was an outstanding of $8 billion worth of standing stock at the moment.
“For these years, we have to raise $2 billion to pay these debt payments. If the government has additional requirements, we may have to raise another $ 1 billion. So how could we go to the market and ask for $3 billion?” he questioned.
“During the latter part of June 2016, we raised $1.5 billion through an ISB. During the time of the former Governor, we raised $2.1 billion in 2015. Almost in every year the ISBs were issued.” Sarathchandra also said.
Speaking on domestic debt obligations SPD Sarathchandra mentioned that there was Rs.100 billion to be raised for the payment of bond maturities. “I spoke with the former SPDs at the PDD and they have thought our economy would grow by the time these bonds would reach their maturity. They have thought a hundred billion would not be a problem to manage. But still, I feel, this is my personal feeling, a hundred million would be a problem even after another five years,” SPD Sarathchandra said.
“But to handle those things, there are some other techniques. At the moment the CBSL and the Finance Ministry is trying to introduce buy back facilities. If we have other funding arrangements, we could buy back those maturities. If we had $ 100 billion, we could buy 50 billion and allow it to mature. There are other facilities which are like buy back facility,” he further explained.
SPD Sarathchandra also said the CBSL was attempting on a new system to conduct auctions.
“This new system would help to stop bunching in future,” he observed.
SPD Sarathchandra was testifying before the Presidential Commission to Investigate and Inquire into the Issuance of Treasury Bonds yesterday.
Former ASPD U.L. Mutugala will appear before the Commission to testify today.