Basil confident of not defaulting on debt repayment

Monday, 15 November 2021 02:36 - - {{hitsCtrl.values.hits}}

Finance Minister Basil Rajapaksa

REUTERS: Sri Lanka is confident of not defaulting on its debt repayments and will work on gradually improving the quality of its foreign exchange reserves, Finance Minister Basil Rajapaksa said on Saturday, a day after presenting the 2022 annual budget.

The Government will reduce its Budget deficit to around 8.8% of Gross Domestic Product in 2022, the Finance Minister had said in his speech on Friday. The deficit target for 2021 was revised to 11.1%.

“Sri Lanka has never defaulted in its history and that record will be maintained,” Rajapaksa said.

“Even part of our reserves are borrowed but we will improve the quality of reserves gradually from next year till 2024. By 2024, we are confident we will be able increase reserves and put debt on a sustainable footing,” he added.

Debt repayment is one of the key challenges facing Sri Lanka with foreign exchange reserves having dropped to $ 2.27 billion as of end-October.

Rajapaksa said remittances and tourism, which are the top two sources of dollar inflows, have both been affected by the COVID-19 pandemic and it has been tougher to attract investors.

“But we want to reduce borrowings. I guarantee that the $ 1.54 billion up to July 2022 will be repaid,” he added.

Analysts are unsure if the announcements in the budget are enough to instil confidence in investors, ratings agencies and market participants.

“Overall, the Budget is unlikely to help the economic situation significantly and does not give a strong indication of how it expects to meet its debt obligations going forward or how it expects to address the plummeting reserves,” said Trisha Peries, head of economic research at Frontier Research.

“There is no clear indication of a move towards the IMF, as they continue to look for bilateral and multilateral support echoing the Central Bank of Sri Lanka roadmap,” she added.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.