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Govt. to raise US$1,000 Mn from sovereign bonds

20 December 2013 01:13 am - 14     - {{hitsCtrl.values.hits}}

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Amid growing pressure for foreign exchange for debt servicing and development projects, the Government has obtained Cabinet approval to raise US$1,000 million next year through international sovereign bonds under the supervision of the Central Bank, Daily Mirror learns.  

This amount is likely to be increased to US$1,500 later. These bonds will have a maturity period of ten years.  

President Mahinda Rajapaksa, in his capacity as Finance Minister, submitted the Cabinet paper on Monday.  The Cabinet paper empowers the Central Bank Governor to sign the agreements and other relevant documents after approval by the Attorney General.   The Central Bank will be authorised to pay the US$7 million associated with the bond issuances.

The Cabinet memorandum also mentions that the US dollar interest rate in the international markets is on the rise.

So far the government has issued five international bonds amounting to US$4,000 million -- US$ 500 million each in 2007 and 2009 and US$1,000 million each in 2010, 2011 and 2012. The government has repaid the first international sovereign bond which matured in 2012. The bond of US$500 million issued in 2009 will mature in 2015.

The proposed bond issue will be in line with the 2014 budget proposals to support several development initiatives. The Central Bank is of the view that it will help finance development projects without having a major impact on the domestic securities market.

The total cost of debt servicing is expected to rise to Rs.1,070 billion next year while external borrowings and debt service payments in foreign currency is expected to be around US$1,500 million.     

“It will aggravate the pressure on the domestic foreign exchange market and the official reserves of the country if these foreign currency requirements are to be met by the Government through borrowings in the domestic market and converted to US dollars,” the Cabinet paper stated. (Kelum Bandara)
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  Comments - 14

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  • Modaya Friday, 20 December 2013 04:48 AM

    Dr. Harsha de Silva, over to you!

    Truth Friday, 20 December 2013 05:04 AM

    Where are the deshapremiyas ??? This is real patriotism !!

    mercy Saturday, 21 December 2013 12:48 PM

    Sonali those countries in US and West follow a very strict financial regime of check and penalties for any intended or unintended frauds . The critical issue is not issuing bonds in the in the light of the current regime members really unaware of the rules and regulations of the international market s rising USD interest rate and the professional loophole corruption rampant in the state sectors and whether this cash inflow would be really used for the intended CAPEX flow regime is questionable?

    Sonali Friday, 20 December 2013 06:18 AM

    NO country in the world now survives without debt. If you have ever run a company, you raise debt for CAPEX while you manage OPEX from P&L. There is nothing wrong for the government to issue bonds but given balance of payments can be met. Even the world super powers like US heavily depend on debt. China has invested over USD 3 TRILLION in US treasury bonds.

    Aaaa Friday, 20 December 2013 03:56 PM

    Finance minister game lawyer

    Goofy Friday, 20 December 2013 06:54 AM

    Part of these loans are for debt servicing. Not all for CAPEX.

    Concerned citizen Friday, 20 December 2013 07:06 AM

    Must be the decision of the able CB Monitory Board.

    Goofy Friday, 20 December 2013 01:34 AM

    For the "so called patriot" who mocked at the US for the massive loans, they too were "bond issues" ,

    Chaminda Friday, 20 December 2013 08:03 AM

    1000 Mn = 1 Bn

    Sinhaya Friday, 20 December 2013 11:25 AM

    Most of these funds are used Sonali for pet projects which have no financial returns!

    Xfernando Friday, 20 December 2013 11:32 AM

    Simple.... Nothing to fear! Dr. Nonis would be able to talk Sri Lanka out of the debt situation as well.

    Lanka Shantha Friday, 20 December 2013 03:29 AM

    Editor, DM. What's going on?
    No milk powder in the shops.
    Today no Highland fresh milk too.
    No News?

    taurus Friday, 20 December 2013 03:49 AM

    Never in the history of Sri Lanka did we have a regime that sold the country to these levels.

    Mason Friday, 20 December 2013 04:23 AM

    DEBTS. More and more for the luxury life of the politicos. Nobody seems to care two hoots for the common man.


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