Sri Lanka seeks low-cost financing for heavy infrastructure debts
Friday, 30 May 2014 00:33
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Reuters: Sri Lanka is seeking low-cost funding to help to reduce pressure on its finances after a big jump in the cost of servicing debts related to infrastructure projects, the Finance Ministry said in its 2013 Annual Report on Wednesday.
The Finance Ministry’s report said the country was in negotiation with development partners to obtain foreign financing at the lowest cost. The country’s development partners include China and Japan and the World Bank and Asian Development Bank.
Sri Lanka’s ability to borrow via ‘soft’ loans with easier terms has greatly reduced following its elevation by the International Monetary Fund to lower-middle income nation status from lower-income country.
The country’s total outstanding foreign debt to finance infrastructure projects stood at $ 18.9 billion by end of 2013, latest Finance Ministry data showed, out of a total outstanding debt of Rs. 6.79 trillion ($ 52.10 billion).
It had borrowed $ 15.38 billion during the 2008-2013 period for priority development projects.
The country’s loan repayments are distributed to minimise the pressure on cash flow, the Ministry said.
Out of the $ 18.9 billion foreign debt for infrastructure, 5% will mature in the next five years, 25% in five to 10 years, 19% in 10-15 years and 21% in 15-20 years.
The country has estimated it will need more than $ 6 billion for debt service payments in the four years through 2017.
Sri Lanka has borrowed in the past few years from international capital markets and from China to repair infrastructure neglected during its 26-year war against Tamil Tiger separatists, which ended in 2009.
