CBSL Governor rules out outside assistance for debt sustainability
Outside assistance is not needed to resolve Sri Lanka’s public debt crisis, CBSL Governor Nivard Cabraal said.
He said the solution to the crisis could be found through the systematic management of existing debt and effective debt profiling.
He said when a private business faces a heavy debt burden, it seeks to extend maturity, reduce interest rates, reduce foreign debt, increase domestic debt and negotiate with lenders.
Cabraal said Sri Lanka was doing the same to reduce the risk of debt.
“We are now moving in that direction for debt sustainability,” Cabraal said. “We are changing our credit profile.”
He said Sri Lanka was moving away from borrowing and into a situation of non-debt inflows and moving towards a government debt path by reducing exposure to commercial loans.
Attempts were also made to improve transmission through a ‘carrot and stick’ approach.
“It is now partly full of unofficial remittances,” he said.