Opposition tells govt. to present debt repayment plan amid rating downgrades

SJB MPs Harsha de Silva at the media conference flanked by Eran Wickramatne  and Kabir Hashim 
Pic by Kithsiri de Mel

• SL’s total debt liabilities estimated at US$ 6.9bn; Foreign reserves as at Dec.31, 2021 was US$ 3.1bn
• Questions why govt. so keen on paying US$ 500mn sovereign bond maturing on Jan. 18
• Says SL’s debt situation worse than expected according to IMF debt sustainability analysis 
• Says China has agreed only to restructure interest-free loans and not commercial loans in response to President’s recent request

By Yohan Perera
The government should tell the nation as to how it is going to service the massive debt liabilities falling due for this year, as all the three global rating agencies have downgraded Sri Lanka’s sovereign rating deeper into junk territory—latest being the Standard & Poor’s (S&P) this week—citing heightened external financing risks, the main Opposition Samagi Jana Balawegaya (SJB) said yesterday.

SJB MP Harsha de Silva told a press conference that the government should tell the country as to how it is planning settle the total debt liabilities estimated at US$ 6.9 billion for this year with rating agencies continuing to downgrade Sri Lanka. 

“The statement made by Central Bank Governor Ajith Nivard Cabraal that Sri Lanka would not face any issue in meeting debt services as the country would settle the US$ 500 million on January 18 is unacceptable,” the MP said.

“As per the information we have received, the IMF has done a debt sustainability analysis and Sri Lanka’s situation is worse than expected,” he alleged. “Also, one wonders as to why the government is so keen on settling the US$ 500 million bond on January 18  at a time when there are no funds to purchase fuel and other essential items,” he said.

Referring to the recent request made by President Gotabaya Rajapaksa to the Chinese Foreign Minister to reschedule the loans from China, 

 de Silva said China had indicated that it is willing to reschedule only the interest-free loans and not the commercial loans.

  “This situation will not help Sri Lanka as the percentage of interest-free non commercial loans due to China is little compared to commercial loans,” he pointed out.

Central Bank Governor this week dismissed calls for debt deferment and said Sri Lanka would honour all external debt falling due this year with strategies already in place to secure dollar funding from friendly nations and institutions. 

The government is also pinning its hopes heavily on tourism inflows as a revival in tourist arrivals is expected this year.