Cabinet approves Foreign Currency Term Financing Facility for Budget

Cabinet has approved the Government proceeding with a Foreign Currency Term Financing Facility with the appointment of a steering committee and a technical evaluation committee jointly proposed by Prime Minister Ranil Wickremesinghe and Finance Minister Ravi Karunanayake.

The Cabinet decision was made public via a short notification on the official Government news portal www.news.lk as the customary weekly Cabinet briefing was not held. The short statement said the Cabinet paper noted that a Foreign Currency Term Financing Facility would “enable low cost financing and will allow access to different investor communities who wish to invest in Sri Lanka.”

The joint proposal made by Prime Minister Ranil Wickremesinghe, in his capacity as the Minister of National Policies and Economic Affairs, and Finance Minister Ravi Karunanayake, to appoint a steering committee and a technical evaluation committee comprised of officers from the Treasury, Ministry of National Policies and Economic Affairs, and the Central Bank of Sri Lanka, to proceed with a Foreign Currency Term Financing facility within the approved borrowing limit for 2017, was approved by the Cabinet of Ministers.

Budget 2017 documents tabled in Parliament by Finance Minister Ravi Karunanayake and available on the Treasury website note that the Government intends to borrow Rs. 450 billion as gross foreign borrowings next year of which total foreign financing is expected to be Rs. 272 billion. The Government aims to cut the fiscal deficit to 4.6% in 2017.   

In June 2015, the Finance Ministry published a Request for Proposals to establish a Foreign Currency Term Financing Facility for the Government. The aim was to raise a Foreign Currency Term Financing Facility denominated in US dollars up to a limit of $ 500 million with a maturity period of no less than three years. It is unclear whether the proposal went forward but at the time the Government intended for the raised funds to be used for “purposes of meeting corresponding, import elements of external funded projects specified in the Budget for the fiscal year 2015.”