The Treasury is planning to issue a fresh US$ 100 million of commercial bonds next year while giving up on cheaper program loans from lenders. The Treasury is planning to issue a fresh US$ 100 million of commercial bonds next year while giving up on cheaper program loans from lenders. The government has already issued US$ 275 million worth of development bonds at commercial rates of interest this year.
The Treasury has not budgeted any program loans from the World Bank or IMF for next year.
The Treasury was due to get US$ 225 million from the IMF and over US$ 100 million from the World Bank as program loans this year.
This committed money was not disbursed due to the suspension the IMF structural adjustment loan, the Poverty Reduction Growth Facility (PRGF), last year when the UNF was in power.
The policy U-turns of the current government means that low interest program loans have to be renegotiated.
Finance Ministry has budgeted a US$ 104 million in program loans for next year from the ADB (US$74 million) and Japan (US$ 30 million).
The Finance Minister said in the budget the government would approach donors with their economic policy next year.
Critics however say program loans which support the budget are unlikely to be given to a government that has an interventionist economic policy.
In 2003 the then UNF government attracted over US$ 250 million in program lending from the World Bank, ADB, Japan and India.
The development bonds according to the Treasury are meant to make up for the shortfall in the donor program loans.
But analysts say commercial loans will cost the government a lot more than concessional program loans, which typically come with thirty plus years’ repayment and very low rates of interest.
-LBR Newsdesk: LBOEmail@vanguardlanka.com