IMF lifts Sri Lanka foreign borrowing ceiling

Chandi Dharmaratne

June 30, 2010 (LBO) – The International Monetary Fund has lifted a ceiling on foreign commercial borrowing placed on Sri Lanka in 2009, in a new deal agreed with the government this month.

Earlier this month, a part of a maturing 2-year dollar bond tranche was extended to 3-years.

Meanwhile the budget presented to parliament Tuesday said in 2010 the government hoped to raise 93.5 billion rupees from foreign sources but net new commercial borrowings would be 30 billion rupees.

Sri Lanka had to repay 71 billion rupees of foreign debt. The government would also raise 34.5 billion rupees through rupee Treasury securities sold to foreigners.

The IMF released 400 million US dollars to Sri Lanka with the resumption of its program, which boosted foreign reserves to 5.5 billion US dollars.

In the new program the Central Bank is not required to collect anymore foreign reserves this year.

It could even run down reserves by more than a 115 million US dollars by December from an IMF defined net international reserve stock of end-December 2009 which was 4.1 billion US dollars.

Sri Lanka struck the original deal in May 2009 after foreign reserves hit a low of 1.2 bill