Following the inability to complete the restructuring of cash strapped Sri Lankan Airlines, the government has sought to issue ‘letters of comfort’ to two-state banks - Bank of Ceylon and People’s Bank - for the fourth time for US $ 85 million (Rs.15 billion) as security for the loans granted to the national career for a further period of one year starting from October 8, 2019, Daily Mirror learns.
The government granted similar security for loan arrangements to the airline through these two banks in 2016 for one year. It was extended every year till 2019 pending restructuring.
Finance Minister Mangala Samaraweera presented the Cabinet memorandum where the government will give security for Bank of Ceylon and Peoples' Bank to issue loans up to US $ 42.50 million each to the airline, pending the restructuring process by the government.
In his paper, he sought an extension of such assistance for a period of one more year because the government is still in the process of restructuring the airline.
The total loss of SriLankan Airlines accumulated to Rs. 240 billion during the past decade and its total debt reached US $ 750 million, according to the mid-year Fiscal Position Report, 2019 of the Finance Ministry.
The total debt component of the airline is Rs.146 billion. A bulk of it is for the state banks and the Ceylon Petroleum Corporation. (Kelum Bandara)