Money, Capital Markets and Public Enterprises Reform State Minister Nivard Cabraal declared yesterday that doomsayers of Sri Lanka will be disappointed when the country honours its foreign debt repayment track record.
He noted that Sri Lanka is an $ 85 billion economy and that it will generate forex Inflows of around $ 32 billion in 2021, and possibly about $ 2 -3 billion more than that amount each year, every year, thereafter.
He said as of now (February 2021), the total International Sovereign Bonds (ISBs) outstanding is $ 14 billion, which is only 16.7% of Sri Lanka’s total debt.
“None of the other creditors who hold 83.3% of Sri Lanka’s debt seem to show any sign of concern or stress about its repayment ability. Sri Lanka has to re-pay only around $ 1 to $ 1.5 billion each year until 2029 in its ISB amortisations for the next eight years,” Cabraal said.
In that background, the State Minister questioned “will the authorities be so foolish as to default on a payment of around $ 1 to $ 1.5 billion per annum and risk its entire economy and impeccable credit history?”
He recalled that in 2014 (when GDP was $ 79 billion), the amount of ISBs outstanding was $ 5 billion, the interest cost was $ 285 million, and the average interest rate was 5.4%. The rupee was at 131 to the dollar.
“By 2019 (GDP was $ 83 billion), the Yahapalanaya osthars had borrowed until the total ISBs outstanding had reached $ 15 billion, and the interest servicing had risen up to $ 1.1 billion at an average interest rate of 7.4%, and the rupee at 183 per dollar,” Cabraal recalled.
“That’s the challenge that we are sorting out. The same chaps who caused this are now hoping that we will fail, and trying very hard to take the country towards an economic crisis. But this time, too, like in 2007 to 2009, they will be disappointed,” he added.