Ajith Nivard Cabraal (CB Governor) met with newly-appointed Qatar Central Bank Governor Sheikh Bandar Bin Mohammed Bin Saiud Al-Thani, on January 4, 2022.
CB Governor Ajith Nivard Cabraal futher said, had ab excellent discussion with newly appointed governor of Qatar Central Bank Sheikh Bandar Bin Mohammed Bin Saiud Al-Thani about CBSL & QCB collaboration and SL- Qatar economic relationship.
- It appears that CB is positive of wrapping up US $ 1.9bn Indian funding within this month
- CB is also hopeful of US $ 1bn worth of swap line from Qatar
- Leading economist advises govt. not to settle upcoming US $ 500mn bond to save dollars required for essential imports
- He instead suggests govt. to engage with bondholder to negotiate a debt restructuring while only making interest payments
Sri Lanka has set aside the funds required for the upcoming international bond settlement due in less than two weeks, just weeks after Fitch Ratings downgraded the sovereign deeper into the junk category, on the heightened debt default concerns amid razor thin foreign exchange reserves.
Sri Lanka is due to repay two International Sovereign Bonds (ISBs) maturing this year.
- The first one worth of US $ 500 million falls due on January 18,
- And the next one worth of US $ 1.0 billion is coming for settlement in July.
According to CB Governor Ajith Nivard Cabraal, the country has already allocated the required funds to retire the bond this month.
Earlier this week, the country’s Finance Minister Basil Rajapaksa called a press conference to announce a mega Rs.229 billion worth of stimulus package, consisting of all freebies but did not say how the government was going to pay for it. Meanwhile, Dr. Nishan De Mel, an economist and Executive Director at Verite Research, an independent policy think tank based in Colombo, said during the weekend that the country shouldn’t settle the upcoming bond payment on January 18, instead must engage with the bondholders for debt restructuring.
Explaining the rationale behind why Sri Lanka should tread on the suggested path, he said it would leave the country with foreign exchange for critical needs such as imports, which would be less calamitous than lacking dollars for imports.
According to him, Sri Lanka is already living a post-default-like way of life as the essential imports are curtailed to save reserves to pay ISBs, which according to him, is a poor strategy with no end in sight.
