Infrastructure bonds to be a reality
Government-backed Infrastructure Bonds will soon be a reality, to draw both domestic and international investors to confront the funding challenges in the country, a top official said.
“We plan to introduce infrastructure bonds,” Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando told the Sunday Times Business on Wednesday. It will be done in the medium term, he said, noting that the government is considering this option very seriously.
He said engaging the capital market for capital formation is high on the government’s agenda. He added that instruments such as infrastructure bonds will give opportunities for private companies to contribute to capital formation in the country. “We are focusing on rules and regulations, opportunities for investment, and demutualisation in the Colombo Stock Exchange in this regard as well.” He added that the Ministry of Finance is working in this regard with the Securities and Exchange Commission, as well as the stock market operator.
Industry officials have been calling for larger funding amounts, starting from US$30-40 million up to $500 million noting that traditional fundraising methods are deficient for the scale of the damage after the devastating Cyclone Ditwah late last month.
They said the ‘Rebuild Sri Lanka Fund’ is a suitable platform for the bond issuance, highlighting the urgency of activating this mechanism to confront the funding gap and speed up recovery efforts.
A Rs. 500 billion Supplementary Estimate was presented in Parliament on Thursday, to provide urgent relief and recovery assistance to those affected by Cyclone Ditwah. Dr. Fernando said Rs. 100 billion would be channelled towards rebuilding around 5,000 damaged homes as well as partially damaged homes.
He added that Rs.250 billion would be committed towards restoring critical infrastructure, such as roads, railway lines, bridges, and Rs.150 billion towards reviving livelihoods, including support for small and medium-sized enterprises (SMEs), farmers, and entrepreneurs affected by the disaster. Dr. Fernando stated that the Rs. 500 billion package will be financed through using underutilised capital expenditure from ministries, utilising excess revenue, accessing funds from the Treasury Operations Department, and mobilising external assistance. He pledged that this additional borrowing would stay within the Rs. 3,740 billion debt ceiling established for 2026.
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