COLOMBO: Sri Lanka will be receiving a US$450 million syndicated loan next week for debt servicing and bridge government finances, Central Bank Governor Indrajit Coomaraswamy announced at a media conference in Colombo on Monday. This announcement was made by him amidst the delay in securing the International Monetary Fund’s third tranche of an Extended Fund Facility amounting to $168 million till next month. Bank of Baroda, Deutsche Bank, Indian Bank, Qatar National Bank, SBI and SMBC have arranged the three month loan at 384 basis points 160 points less than the previous loan facility. This was one of the lower rates for a syndicated loan now in the capital market, with commitments of lead managers, he said adding that it shows a sign of stronger investor confidence
Sri Lanka has planned to raise $1 billion from two separate syndicated loans and the country would be able to get the second loan of $550 within three months, Dr. Coomaraswamy disclosed. The country has no option other than to borrow externally for Balance of Payment (BoP) and fiscal support as it had been doing in the recent past. However Dr. Coomaraswamy noted that currently debt servicing is manageable but the challenge for the country is to increase non-debt creating foreign inflows. He said the country needs to do much better in terms of exports and FDI. If that happens, the reliance on external borrowings would be reduced, he added.
