Sri Lanka is well on track to settle all debt repayment obligations in 2018 and 2019 and the present political climate would not have a negative impact towards this, Central Bank Governor Dr. Indrajit Coomaraswamy said.
He said that the first obligation would be the repayment of the US$1.5 billion international sovereign bond payment scheduled for January 15, 2019.
The People’s Bank, Bank of Ceylon and the National Savings Bank held talks recently with several Middle Eastern Banks to raise US$ 750 million to US$ 1 billion by the end of the year and this has been successfully concluded.
In addition, the Central Bank has US$ 675 million by way of the Hambantota Port lease agreement and this too would be diverted to settle the Sovereign bond.
Sri Lanka’s second obligation would be to settle the US$ 500 million dollar bond maturing in April. “We will come to an agreement with the China Development Bank to repay this.”
Commenting on the Foreign Reserves, he said Sri Lanka is also comfortably placed with foreign reserves increasing to US$ 7.2 billion. “We expect this to increase to US$ 7.8 billion by the end of 2018.”
The Governor however said that as per the available economic indicators, real GDP growth is likely to remain subdued and below the envisaged levels in 2018 due to drought and various other issues.
The significant growth in imports as well as recent capital outflows amidst the broad based strengthening of the US dollar exerted pressure on the exchange rate. Although the pace of depreciation has moderated recently, the Sri Lankan Rupee has depreciated by 12.9 per cent against the US Dollar during 2018 up to November 13.
Headline inflation, based on both the Colombo Consumer Price Index (CCPI) and the National Consumer Price Index (NCPI), decelerated below the desired mid single digit levels, largely driven by the decline in volatile food prices.