Wednesday, 20 May 2020 07:19

CB focuses on silver linings in COVID-19 recovery

Taking an optimistic view, the Central Bank yesterday dismissed recent volatilities in sovereign bond yields insisting that the Government was focused on swap arrangements and syndicate financing rather than international financial markets to finance debt for this year and expressed confidence that despite the COVID-19 setback Sri Lanka would grow by 1.5% in 2020.

Releasing a statement yesterday, the monetary authority said the Government was “dismayed” by inferences that Sri Lanka is at risk of falling into a sovereign debt crisis by comparing Sri Lanka with other sovereigns which are said to be in similar situations.

“The Government wishes to categorically deny such baseless claims, and would like to reiterate to all stakeholders that Sri Lanka will duly honour all its debt service obligations in the period ahead.”

The statement argued the recent volatilities in yield levels of Government of Sri Lanka’s International Sovereign Bonds (ISBs) during the COVID-19 pandemic period were no different to what has been observed across a majority of emerging and frontier market economies.

“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.”

The Government also stressed the unintended delay in holding the General Elections and the submission of the Government budget should not be considered as leading to any policy uncertainty or procedural standoff, but a result of the health policy response to contain the COVID-19 pandemic.


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