Sri Lanka fears balance of payments under pressure
Posted on February 18th, 2017
Courtesy The Gulf Today
COLOMBO: Sri Lanka could face balance-of-payments pressure due to foreign outflows from government securities, a government document showed, even as the island nation is in the process of raising up to $2.5 billion from foreign borrowing.
The central bank is aiming to tap the international market for up to $1 billion through a syndicated loan and up to $1.5 billion via a sovereign bond.
A document submitted by the Finance Ministry this week for the approval of the sovereign bond said a possible US rate hike, exchange rate volatility, and rising domestic interest rates could induce foreigners to sell government securities prematurely to minimise any capital losses”.
The total net foreign outflow from the government securities in 2016 was $324.3 million, while offshore investors have sold a net 22 billion rupees ($146 million) worth of securities in January alone, the document seen by Reuters showed.
If this continues expected level of foreign investment in T-bills and T-bonds would not be materialised,” it said. As a result, foreign investment in T-bonds and T-bills is expected to be further withdrawn by foreign investors in 2017, creating pressure on the balance of payments by a net foreign currency outflow.”
Finance Minister Ravi Karunanayake said the foreign outflow was mainly due to sell off by a single US-based foreign fund.
The Finance Ministry has said the economy has recovered after facing BOP and debt crisis in 2015 with $1.5 billion loan from the International Monetary Fund (IMF) approved last year.
February 18th, 2017 at 6:11 pm
What a joke! So the Finance Ministry says Sri Lanka recovered from a balance of payment crisis in 2015 by borrowing $1.5 billion. If so why borrow $2.5 billion for the same purpose in 2017?
On the contrary, the balance of payment crisis has worsened. Now we need to borrow $2.5 billion to bridge it which includes repayment of the earlier $1.5 billion with interest. In another year we will be borrowing $3.5 billion to repay the $2.5 billion and interest and to overcome the continuing balance of payment crisis.
The last time Sri Lanka had a continuing balance of payment crisis was in 1981 and 1982. Hopefully the nephew will not follow the “ingenious” tactics his uncle used to overcome it.
February 18th, 2017 at 6:21 pm
“Elephant with a tie” is useless running economy, his budget is based on how much money he himself can steal. Increasing of BOP is proportial to the money the country being robbed by minister of finanace from 1987 todate.
February 19th, 2017 at 6:03 pm
The Yamapalanaya government is living on a credit card!
The Yamapalanaya is paying yesterday’s loans with today’s loans while borrowing even more money for current expenses!
Like people who live on credit cards, this approach will end when the lenders determine that you are so overextended with debt that the risk of a default is TOO HIGH FOR THEM TO BEAR!
Then Sri Lanka will no longer be able to float increasingly bigger loans, and will have to sell national resources, including its land, to foreigners!
Meanwhile, the Yamapalana goons are living it up high giving themselves luxury vehicles, doubled salaries, and Rs 100,000 per month bonuses, and stripping every public institution of its assets using highly placed scammers like the Bond Scam expert Arjun Mahendran!
While Wimal Weerawansa languishes in remand and denied bail, the Bond Scammers who looted nearly 1/3 the national debt from the Central Bank are running around scot free, even earning even higher pay as an Advisor to the PM!
Aiyooooo Sirisena ….. ARE YOU TOTALLY BLIND?
You too will have to pay for turning a blind eye to all these crimes …. VERY SOON! SLEEP while you can!