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Verite Research Economist and Research Director Deshal de Mel[/caption]
Sri Lanka faces a key macroeconomic challenge in 2021 in the aftermath of the Covid pandemic in managing to pay maturing external debt without depleting foreign reserves to a critical level. In order to anchor credibility while facing difficulty in servicing its external debt, entering into an International Monetary Programme (IMF) is the conventional mechanism, says Verite Research.
Speaking to The Morning Business, Verite Research Economist and Research Director Deshal de Mel said that the Government needs to outline a macroeconomic plan which global lenders would consider to be credible.
“Credibility is secured by a robust analytical framework that withstands the scrutiny of global lenders, who are concerned about the risks they will face in lending to Sri Lanka,” De Mel said.
“Sri Lanka records an external sovereign debt maturity to $ 4.3 billion and $ 1.4 billion to mature in 12 months, with a gross official reserve amounting to $ 5.6 billion,” he added.
Sri Lanka recorded $ 5.7 billion of gross foreign reserves by December 2020 and key repayments from February to July 2021 includes a $ 1 billion bond payment, $ 980 million of Sri Lanka Development Bonds and interest payments of $ 482 million.
Sri Lanka has requested IMF’s support under its Rapid Financing Instrument (RFI) last year. According to the IMF a country can borrow up to 100% of its quota under the RFI, and Sri Lanka’s quota is $ 578.8 million.
Verite Research Economist and Research Director Deshal de Mel[/caption]
Sri Lanka faces a key macroeconomic challenge in 2021 in the aftermath of the Covid pandemic in managing to pay maturing external debt without depleting foreign reserves to a critical level. In order to anchor credibility while facing difficulty in servicing its external debt, entering into an International Monetary Programme (IMF) is the conventional mechanism, says Verite Research.
Speaking to The Morning Business, Verite Research Economist and Research Director Deshal de Mel said that the Government needs to outline a macroeconomic plan which global lenders would consider to be credible.
“Credibility is secured by a robust analytical framework that withstands the scrutiny of global lenders, who are concerned about the risks they will face in lending to Sri Lanka,” De Mel said.
“Sri Lanka records an external sovereign debt maturity to $ 4.3 billion and $ 1.4 billion to mature in 12 months, with a gross official reserve amounting to $ 5.6 billion,” he added.
Sri Lanka recorded $ 5.7 billion of gross foreign reserves by December 2020 and key repayments from February to July 2021 includes a $ 1 billion bond payment, $ 980 million of Sri Lanka Development Bonds and interest payments of $ 482 million.
Sri Lanka has requested IMF’s support under its Rapid Financing Instrument (RFI) last year. According to the IMF a country can borrow up to 100% of its quota under the RFI, and Sri Lanka’s quota is $ 578.8 million.