Sri Lanka explores SWAP facilities with regional Central Banks

May 19, 2020 (LBO) – Sri Lanka is in the process of exploring SWAP facilities with regional central banks, while arrangements are also being made for syndicate financing with identified foreign sources, the Central Bank said.

While reiterating its commitment to meeting all its financial obligations, the Central Bank said in a statement that the government has taken proactive measures in mobilising funds from multiple sources of market based and official sources of financing to effectively improve the terms and conditions of financing.

“Given volatile market conditions across the globe, the issuance of an international bond by the Government is not anticipated in the near term, thereby rendering the current yields observed in the international bond market irrelevant,” the Central Bank said.

“The focus of financing will be to further explore bilateral and multilateral sources to benefit both risk and cost considerations of debt management, and these discussions are well underway.”

The stimulus measures announced by the Government and the Central Bank are expected to help a fast revival of businesses and support the individuals affected by the outbreak.

The Central Bank said that the Sri Lankan economy is expected to record a growth of around 1.5 percent in 2020, with much of that growth expected to occur in the second half of the year.

The Government also reiterates to all stakeholders that Sri Lanka will duly honour all its debt service obligations in the period ahead.

“The recent volatilities in yield levels of Government of Sri Lanka’s International Sovereign Bonds (ISBs) during the Covid-19 pandemic period are no different to what has been observed across a majority of emerging and frontier market economies,” the Central Bank said.

“It is noteworthy that despite such volatility, global institutional investors, fund managers and analysts recommend Sri Lankan debt instruments for investment, while remaining confident of Sri Lanka’s credit quality.”

Full statement

PR-Response-to-DSP.docx