Sri Lanka’s Central Bank said recent indicators reflect positive sentiment expressed by external foreign parties regarding the performance of the Sri Lankan economy and its prospects.
Central Bank’s response came at a time when serious concerns have been expressed regarding the performance of the Sri Lankan economy.
“It is instructive to gauge the level of external support for the Sri Lankan economy from international capital markets,” the bank said.
“This would be an independent barometer of the health of the Sri Lankan economy as international capital markets are hard-nosed in their assessments.”
According to Central Bank, reproduced below are the foreign sentiment signals.
An International Sovereign Bond (ISB) amounting to USD 2.5 bn (the largest ever) was successfully issued. It was 2.6 times over-subscribed. Large orders were placed by some of the world’s largest and most reputed investment funds.
With the receipt of ISB proceeds, gross official reserves have increased to US$ 9.9 billion which is historically the highest level.
There has been a very favourable response to the RFP for a term loan of USD 1 bn. The Government is considering up scaling this loan and to utilize the incremental proceeds to repay more expensive existing debt.
Despite outflows from emerging markets in the wake of normalization of US interest rates as well as synchronized growth in US, Europe and Japan for the first time since the Global Financial Crisis, there have been net cumulative inflows both to the stock market as well as the rupee denominated Government Securities market.
o There have been foreign portfolio investments in equity, through primary and secondary market investment in the Colombo Stock Exchange to the tune of USD 9. 6 mnto-date in 2018. In 2017, inflows amounted to USD 278.5 mn.
o Net inflows into the Government Securities market amounted to USD 6.05 mn so far this year. In 2017, net inflows amounted to USD 441 mn. FDI flows of USD 1.9 bn in 2017 were an all-time record, albeit from a low base.
