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Sunday Nov 24, 2024
Wednesday, 20 January 2021 00:28 - - {{hitsCtrl.values.hits}}
The decision on a $ 1.5 billion swap with the People’s Bank of China will be notified within the next week or two, Central Bank officials said yesterday, while talks for a $ 1 billion swap with the Reserve Bank of India were also proceeding.
Negotiations with the People’s Bank of China have reached the final stage with a decision already made by China Central Bank.
The decision is expected to be conveyed to the Sri Lanka Central Bank within the next two weeks, Deputy Governor Dhammika Nanayakkara told reporters during an online press conference yesterday.
“They have indicated that their internal discussions are almost over and we will be informed shortly,” Nanayakkara said.
Deputy Governor K. M. K. Siriwardene added that negotiations with the Reserve Bank of India, which also began last year, have also been progressing.
“To my knowledge they need to get some approvals from India’s Finance Ministry,” Siriwardene said, indicating that the approval process may be longer. In early 2020 the RBI approved a $ 400 million swap and subsequently negotiations were started on a separate $ 1 billion swap.
Governor Prof. W.D. Lakshman told reporters that the Government had also not held any discussions with the International Monetary Fund (IMF) on signing up for its Rapid Financing Instrument, which assists countries facing balance of payments crises.
“The Government is focused on self-reliance in dealing with its economic needs and will engage with institutions, organisations and countries willing to help on a non-interventionist policy,” he said, adding that focus was also on keeping foreign debt contained where possible.
Getting at least one swap facility will be crucial for Sri Lanka to meet $ 4.3 billion worth of debt repayments in 2021. Payments including domestic foreign exchange requirements puts the figure at about $ 7 billion.
Multiple sovereign rating downgrades in 2020 have all but ended prospects of Sri Lanka raising funds from international capital markets, though Central Bank officials said they were still monitoring the situation in case a window appears this year.
The Government has repeatedly slammed the downgrades and insisted they were premature.
The Governor added that Sri Lanka’s economic performance had disproved the rating agencies prognosis.
“The Government and the Central Bank are also continuing discussions with bilateral and multilateral partners, internationally and locally, and we are confident the Sri Lankan economy will continue to display its reliance despite unfounded sovereign rating downgrades that the country experienced in 2020.”
