12 January 2017 12:00 am
AFP: Sri Lanka announced yesterday it would raise US $ 1.5 billion through a domestic bond sale this year as it moves to rebuild its foreign exchange reserves.
The cabinet approved the borrowing through dollar-denominated bonds to be offered to banks and investors in the country, said government spokesman Gayantha Karunatileka.
The move to borrow locally came weeks after the International Monetary Fund (IMF) warned that the country’s foreign reserves were “below comfortable levels”.
Last June the government, which came to power in January 2015, received a US $ 1.5 billion bailout from the IMF after facing a balance of payments crisis.
The IMF, in a November review before releasing the second tranche of the funds, said Sri Lanka’s performance was “broadly satisfactory” but that it needed to build its dwindling foreign reserves.
Foreign reserves at the end of December were US $ 6.06 billion, up from US $ 5.64 billion a month earlier, according to government data.
Sri Lanka also secured in December a three-year US $ 1.34 billion loan from the World Bank to fund a range of projects. It is also selling part of a loss-making US $ 1.4 billion harbour to a Chinese company to help repay crippling debts.