(UDHAYAM, COLOMBO) – Better fiscal performance with favourable growth prospects:
The government will once again go to international capital markets to issue international sovereign bonds to obtain funds up to USD 1,500 million in order to meet its loan instalments and interest payments for 2017.
Cabinet this week granted approval to the above proposal put forward by Finance Minister Ravi Karunanayake. The 2017 Appropriation Bill had set the limit for government borrowings for 2017 at Rs.1, 579.11 billion, but the estimated amount required this year for payment of loan instalments and interest stood at Rs 1,480 billion. The 2017 Budget also set the limit for foreign commercial borrowings at Rs.220 billion or USD 1500 million and the Finance minister has suggested that this amount be raised through issuance of international sovereign bonds.
In March of last year, the Central Bank announced that it would issue international sovereign bonds up to USD 3 billion in 2016. In July they marked their return to the US dollar bond markets with an issuance of U.S.$500 million 5.5-year and US $1.0 billion 10-year International Sovereign Bonds (Bonds). It was the 10th US Dollar bond issuance and the first dual tranche offering in US dollars and Chinese Renminbi. The international credit rating agency, Fitch Ratings in the meantime announced last week that Sri Lanka’s ratings was at B+ and had revised the outlook to stable from negative. They noted that the country’s fiscal performance was better with more favourable growth prospects though the budget deficit should be narrowed.
The Country Ceiling and issue ratings on Sri Lanka’s senior unsecured foreign-and local-currency bonds were also confirmed at ‘B+’ and Short-Term Foreign- and Local-Currency ratings confirmed at ‘B’. Fitch however warned that Sri Lanka could once again receive a negative rating if it were to slide on its fiscal improvements which would lead to a failure to stabilise government debt ratios and deterioration in policy coherence and credibility, hence eventually resulting in a loss of investor confidence, or a derailment of the IMF programme. (Courtesy – DN)
