CB reiterates commitment to honour all debt obligations

• Rubbishes recent media reports spreading default narratives 
• Says no need to start debt restructuring talks with investors as amid expected foreign inflows 
• Says total outstanding ISB debt has now reduced to US $ 12.55bn
• Charges parties with vested interests of spreading speculative stories

The Central Bank yesterday reiterated that Sri Lanka is committed to honour all forthcoming debt obligations and thereby maintaining the country’s unblemished record of debt servicing.

It rejected recent media reports, which claimed that Sri Lanka is at the verge of sovereign default.

“The CBSL wishes to state that such claims are totally unsubstantiated and also regrets that these reports carry many obviously factual inaccuracies despite the availability of credible official data published by the CBSL according to international standards,” a Central Bank statement said.

“Sri Lanka successfully settled US $ 500 million International Sovereign Bond (ISB) that matured in January 2022, despite the adverse speculation in certain quarters that such settlement would not be possible. 

In fact, with the repayment of ISBs totalling US $ 2.5 billion from January 2020 onwards, the total outstanding ISBs have now reduced to US $ 12.55 billion and will reduce to US $ 11.55 billion by July 2022, broadly in line with the government’s strategy to reduce ISB debt gradually to around 10 percent of GDP,” the statement added. 

It further noted that towards that objective, the government and Central Bank have already taken the necessary measures to secure alternative forex inflows via a number of bilateral and multilateral funding arrangements to meet the upcoming debt obligations, including the US $ 1 billion ISB maturing in July 2022. 

“In that background, with the realisation of expected forex inflows and the resulting build-up of international reserves, the need for initiating discussions with investors on debt restructuring (as claimed by these media reports) does not arise, as the government would be able to ensure the settlement of its sovereign debt without any interruption or default,” the statement said. 

The Central Bank also alleged that it is those with vested interests who try to mislead the public and the investor community with inaccurate stories.