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Sri Lanka has ‘clear plan’ to deal with debt crisis: CB
October 19, 2017
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NEW YORK/COLOMBO: Sri Lanka has a ‘clear plan’ to manage its debt, with proceeds of any divestment and privatization to be used to repay loans the island nation has borrowed, central bank (CB) chief Indrajit Coomaraswamy told Reuters.

Sri Lanka is facing a debt crisis with the repayment cycle of expensive infrastructure foreign loans starting next year.

The $81 billion economy has to repay over $5 billion in the next 12 months while the country has just over $7 billion in foreign exchange reserves, official central bank data showed.

“We don’t see it as a (sovereign default) risk,” Coomaraswamy told Reuters in an interview in New York on the sidelines of an investor forum. He said the government has “committed itself” to using divestment proceeds “for liability management.”

“We are an outlier on our debt metrics, but we’ve never missed a single debt repayment commitment, and we certainly don’t intend to do that,” he said. “We feel we have a clear plan to manage the situation.”

Moody’s Investors Service on Tuesday said Sri Lanka’s significant borrowing requirements and heavy reliance on external and foreign-currency funding expose the sovereign to material liquidity and external financing risk, which weighs on Sri Lanka’s credit profile.

The total external debt was about $47 billion, or 57 per cent of gross domestic product as of 2016, of which approximately 68 per cent was public sector debt, Moody’s said.

Reuters

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