Sri Lanka May Tap Over US$ 4.5 Bn via Oman, Qatar

By Ishara Gamage | Published: 2:00 AM Oct 21 2021
FT Sri Lanka May Tap Over US$ 4.5 Bn via Oman, Qatar

By Ishara Gamage 

Steps to strengthen Sri Lanka’s balance of payments (BoP) via Qatar and Oman governments has been launched under the leadership of Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal, a senior Government official told Ceylon FT. He said a CBSL delegation led by the Governor had left for those countries this week. It is also said that agreements will be reached between the Government of Sri Lanka (GoSL) and these governments revolving round currency swap and petroleum loan facilities and investment opportunities. 

It also learnt that the GoSL plans to borrow about US$ one billion, mostly through Qatar and another $ 3.6 billion in long-term loans from Oman for fuel purchase. At present, GoSL owes the Bank of Ceylon and People’s Bank nearly $ 3 billion on behalf of the Ceylon Petroleum Corporation. It is also stated that if the money is received, it will help to increase US dollar liquidity of State banks. Sri Lanka, which is currently facing a BoP crisis is due to settle a US $ 500 million sovereign bond that matures in January. About US $ 100 million of this money has been invested by local banks. 

GoSL has announced that the bond will be paid on time. Sri Lanka is also due to settle another US $ 1 billion sovereign bond in July. GoSL currently has only about $ 2.5 billion in gross foreign reserves to settle all of its future import bills as well as loan instalments. This week, the CBSL released about US $ 50 million worth of reserves to the two State banks to settle fertilizer import bills. Over the next three months of this year CBSL will have to settle about $ 1.6 billion in foreign payments. 

CBSL plans to convert about US $ 600 million into reserves through export earnings and remittances. Cabraal recently told bankers that he plans to increase reserves by about US $ 4.5 billion over the next three months of this year. It is also planned to bring down the US dollar exchange rate to Rs 180 from the current Rs 203 level.

By Ishara Gamage | Published: 2:00 AM Oct 21 2021

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