Oct 07, 2008 (LBO) – Sri Lanka has called proposals for a 300 million US dollar syndicated loan, with another 150 million US dollars now being negotiated, the government’s debt office said. The proposed syndicated loan would be about 32 billion Sri Lankan rupees.
“As envisaged in the Budget and approved by Parliament, the funds would be used for financing of the ongoing infrastructure projects,” the central bank said.
“With this additional borrowing, the Government is of the view that there will not be any further need for foreign currency borrowings this year.”
Analysts have previously warned that borrowing in 2-year foreign currency was an imprudent way of financing long term infrastructure, especially in the context of current condition in global credit markets.
Critics say there is also a dire need for investments in capacity building in infrastructure finance skills among fiscal managers in Sri Lanka.
The central bank says the national debt is expected to fall to 78.5 percent of gross domestic product by end-2008, from 78.5 percent in 2007.