Govt. to bring in new Fiscal Liability Management Act to tackle debt problem

23 October 2017 10:09 am - 0     - {{hitsCtrl.values.hits}}

A A A

The government is fast-tracking new regulations for better liability (debt) management to service the country’s massive debt pile, under which the restructuring of state-owned enterprises (SOEs) take centre stage.  


“We will introduce a comprehensive secondary market trading platform and a liability management fund. 


“These reforms and future reforms will come into effect under the new Fiscal Liability Management Act that provides legal framework for a prudent debt management strategy”, Prime Minister Ranil Wickremesinghe told Parliament last week, making a policy statement on the country’s economy. 
Moody’s Investors Service last week said this new framework is likely to have a material impact on Sri Lanka’s management of the large external debt repayments due through 2022. 


“As such, it is also likely to have a material impact on the sovereign credit profile”, Moody’s said. 
Sri Lanka’s foreign debt servicing schedules look daunting as the country is tasked with settling US $ 2.7 billion in 2018 and US $ 3.6 billion on average per year over the four years from 2019 to 2022.
“As a result, we expect Sri Lanka’s External Vulnerability Indicator (EVI) to remain elevated and significantly above the 100 percent threshold for reserve coverage and almost three times higher than B-rated peers. 


We expect EVI to rise from around 150 percent in 2016 to about 180 percent in 2017 and remain near that level through 2019,” Moody’s said.


Sri Lanka’s Foreign Direct Investment (FDI) record remains dismal, so that not much respite is expected from that front. 


 The cornerstone of the upcoming new Liability Management Act/fund is the proceeds from the divestments and the privatization of national assets, people who are familiar with the designing of the new framework said. 


The US $ 1.1 billion receivable on the sale of the Hambantota sea port is also planned to be placed in this said fund for future debt repayments.


The new Act will be forward-looking and will have more transparency in raising funds for government, Wickremesinghe said. 


“Our policies will be targeted on forward-looking liability management strategies. Accordingly, the funds required by the government will be raised with transparency and predictability”, he said.

 
Sri Lanka has never defaulted any sovereign bond. But there are sovereign bond maturities every year from 2019 onwards for four years consecutively. 


The Central Bank Governor, Dr. Indrajit Coomaraswamy last week said 2018 would provide them with some latitude to accumulate buffers as there isn’t a bond repayment next year. 


But he plans to sell a billion dollar bond early next year, for which the type of currency is yet to be decided. 

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




US Vice President-Elect Kamala Harris’s Key Sri Lankan Tamil Aide

An overwhelming feeling of relief has descended upon the world-not merely th

The virus may be spreading much faster than official data suggest

The daily case reports from the Epidemiology Unit are the only data we have t

Credentials of official raise controversy

Amila Ishan Kankanamge, the Government appointed non-Executive Director to Mo

How the SLAF killed the LTTE’s “Smiling Cobra” in an air strike

More than eleven years have passed since the war between the Sri Lankan Armed

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.