Treasury plans to finalise US$ 500mn FCTFF after parliamentary polls

By Nishel Fernando 
The Treasury is planning to finalise the announced foreign currency term financing facility (FCTFF) to raise up to US$ 500 million after the conclusion of the parliamentary polls next month, having received five proposals from domestic banks incorporated in Sri Lanka and international banks/investment houses.

The Treasury has received proposals from Hong Kong and Shanghai Banking Corporation Limited and/or its affiliates; State Bank of India, Singapore Branch; Credit Suisse AG, Singapore Branch and/or its affiliates; Industrial & Commerce Bank of China (London) PLC; and Acuity Partners Ltd. of Sri Lanka.

The proposals have been submitted in response to the RFPs called on June 17th this year for the proposed FCTFF.

The government plans to raise up to US$ 500 million through this instrument, which is to be utilised for the purposes of financing the expenditure as approved in the Vote on Account (VoA) for the current fiscal year.

The FCTFF is expected to be raised at a fixed rate or a floating rate, linked to the 6-month LIBOR or its successor with a maturity period of one year or more.

Speaking to Mirror Business, Secretary to the Ministry of Finance, Economic and Policy Development S. R. Attygalle said the Treasury is likely to select the entity/entities for the task, after the end of the upcoming parliamentary elections.

However, he added that there will be negotiations with these intuitions in the meantime.  The Treasury notified that the government reserves the right to reject any or all the proposals without assigning any reason, as the RFPs are not a commitment on the part of the government to accept any proposals.

Further, according to RFP, the government also reserves the right to negotiate the terms of the proposals with the revenant bank(s)/investment house(s) and to engage with one or more entities for the proposed FCTFF.