Central Bank suspends issuance of Treasury Bonds
View(s):Sri Lanka’s Central Bank appears to have suspended the issue of Treasury Bonds (T-bonds) since January this year owing to multiple reasons including ongoing negotiations relating to debt restructure under the International Monetary Fund (IMF)’s Extended Fund Facility (EFF) of US$2.9 billion.
No official announcement has been made of any suspension however the Business Times was alerted to this development this week when the latest calendar of Treasury Bills (T-bills) for issue in April-May 2023 was issued.
According to bankers, normally the calendar includes both T-bills and T-bonds but the calendar issued on April 28 only had the schedule for T-bills.
“I am told that although there was no formal announcement by the Central Bank of a suspension of T-bonds, this has been the case since January 2023. The reason behind this move is likely to be the ongoing negotiations on debt restructuring which would affect T-bonds as investors would be cautious to invest while a second reason would be that with interest rates likely to fall the Government may be uncomfortable to issue long tenor T-bonds at current high rates,” one banker said.
Negotiations on debt restructuring with foreign creditors are likely to end this month.
The April 28 list of scheduled T-bill auctions contained auction dates from April 1 to May 31, 2023.
The last time T-bonds were issued was detailed by the Public Debt Department of the Central Bank on an issuance/ settlement Calendar No. 15 of 2022, published on December 27, 2022 the tenor (term) being between two years to four years.
That gave auction dates for T-bonds from November 29, 2022 to January 12, 2023 and T-bills’ auctions from November 30, 2022 to January 25, 2023.
| IMF mission team here in 2 weeks | |
| An International Monetary Fund (IMF) mission team will arrive in the island within two weeks to review the progress of Sri Lanka’s economic reform programme, Finance Ministry sources said. The team will look into the progress made by the government in the implementation of the IMF-sponsored economic reforms programme including the whole issue of debt restructuring A senior official of the ministry said that Sri Lanka is fully committed to expedite all major socio economic reforms, fast-track the proper implementation and finalise debt restructuring by September this year. The economy will be on a path to recovery from 2024 and the immediate next step in the process for Sri Lanka is to engage in good faith with all creditors and complete it before the first review, in September, he disclosed. The programme itself is a very ambitious one, in terms of fiscal, monetary, governance and social safety net reforms. It compels the government to diagnose governance and corruption issues in Sri Lanka as the first country in Asia to conduct a deep problem-solving initiative on this matter under of its commitments stipulated in the IMF package. |
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