Govt. to borrow fresh Rs.480bn to repay debt

The government will borrow up to Rs.480 billion more this year from both local and foreign sources, under the Active Liability Management Act (ALMA), for future debt repayments between 2020 and 2029.

A Cabinet memorandum in this regard submitted by Finance Minister Mangala Samaraweera, under the recommendation of the Monetary Board of the Central Bank, was approved by the Cabinet of Ministers on Tuesday.  

Central Bank Governor Dr. Indrajit Coomaraswamy earlier this month said Sri Lanka may raise up to US $ 2 billion under the ALMA, in addition to US $ 2.5 billion expected to be raised from international capital markets.

As per the ALMA, the government has the provision to borrow up to 10 percent of the outstanding debt in the previous year for the debt management of the following year. Central Bank Deputy Governor S.R. Attygalle noted that Rs.480 billion (US $ 2 billion) or 4 percent of the debt stock is sufficient for liability management, which falls in October, next year.

The ALMA was enacted in March 2018 to allow borrowings above the ceilings of the annual Appropriation Act.

The Appropriation Act for 2019 had allowed raising of US $ 2.5 billion in sovereign bonds to meet budgetary cash flows.