SL seeks other options to raise US$1 blnView(s):
Says Not prepared to bow to conditional aid
By Bandula Sirimanna
Sri Lanka’s cash-strapped authorities, following the refusal by the IMF to lend US$1 billion, is considering raising a bond of the same amount in the international market.
On Wednesday, the IMF said they were unable to accede to a request from the Treasury for to US$ 1 billion as budgetary support.
The proposed bond issue is with a 10-year maturity and intended to raise funds to consolidate economic development initiatives, and continue tight monetary and fiscal policies adopted to curb the country’s fiscal and external deficits, a senior Finance Ministry source said.
Soon after the IMF refusal, the Finance Ministry decided not to pursue the plan to seek IMF assistance as the country needs financial assistance from foreign countries and foreign lending institutions within a short period and it should not attach unacceptable conditions, he disclosed. The ministry has not agreed with the conditions put forward by the IMF with regard to the spending of aid funds, he said adding that the Treasury has clearly indicated its requirements of getting the IMF facility and it is up to them to accept it or not. Sri Lanka’s foreign reserve position is sound at the moment and what the country needs is quick financial assistance with low interest and without strings attached to it, he added.
Sri Lanka is in a position to raise foreign bonds at negotiated interest rates and without any conditions, he said, adding that the Government will not compromise its dignity and sovereignty before any lending institution.
The Treasury plans to resolve foreign resource constraints through foreign borrowing. It will help in supplementing insufficient domestic savings for investment and undertaking large infrastructure projects in the country. It can also assist in overcoming balance of payments difficulties.
The main objectives of seeking new financial facilities are to rebuild the external reserves, strengthen the fiscal position, maintain monetary stability and reinforce the domestic financial system.
The risk indicators of Sri Lankan public debt have been improved and Sri Lanka qualified as a less indebted country in five out of six indicators and as a moderately indebted country in one indicator.
The government is expecting to cut foreign borrowings by 55.7 per cent to Rs. 86 billion from Rs.194 billion rupees in 2012. There are no commercial borrowings listed in the budget.
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