Wednesday June 19, 2024

Sri Lanka pleads for debt rollover as economy falters

January 13, 2021

Colombo: Recession-hit Sri Lanka appealed on Tuesday for international investors to roll over bonds maturing this year, a further indication of the island nation´s dire financial situation.

The South Asian nation´s tourism- and trade-dependent economy is reeling from the twin impacts of the deadly 2019 Easter bombings and the fallout from the coronavirus pandemic.

International rating agencies have already slashed Sri Lanka´s creditworthiness after raising fears over the island´s ability to repay its debt.

Government spokesman Udaya Gammanpila said capital and interest repayments on foreign debt this year was $6.86 billion.

"We encourage investors to roll over (bonds) and if they do that, it would be a great help for our country," Gammanpila told reporters at the weekly cabinet briefing.

Gammanpila stressed that the country had honoured its debt commitments last year.

China owns about 10 percent of Sri Lanka´s foreign debt, according to official figures from August. The government did not say how much of the maturing debt was Chinese.

Sri Lanka´s economy contracted by 3.9 percent last year, its worst-ever slump.

The country has imposed restrictions on foreign exchange and banned non-essential imports, including most vehicles.

The island is battling a new wave of coronavirus infections with the number of cases nearing 50,000 from 3,300 in October, with 240 deaths.

Late last year Fitch downgraded Sri Lanka’s sovereign credit rating to CCC and warned that the country’s debt levels were set to soar past 100 percent of GDP and that it was increasingly at risk of default.

Sri Lanka relies on tourism and garment exports for foreign exchange reserves. It’s been hit hard by the pandemic, which has undercut consumer demand and curtailed almost