Sri Lanka wants $500 m for post-war construction
COLOMBO: Sri Lanka may tap international lenders for 500 million dollars to fund post-war rebuilding following an IMF bailout that has boosted investor confidence in its finances, the central bank said Friday.
The International Monetary Fund last week approved a 2.6-billion-dollar loan to help Sri Lanka weather a severe balance-of-payments problem and the effects of the global economic downturn.
"The IMF money will help us to access cheaper sources of funding lines," central bank governor Nivard Cabraal told AFP by telephone. "We may look to raise about 500 million dollars."
The central bank hopes that the IMF injection, aimed at bolstering the island's finances, and the end to the country's civil war will boost confidence and help it raise debt at cheaper rates.
Sri Lanka's reserves now stand at 2.1 billion dollars -- enough to cover two-and-a-half months' worth of imports. Near the end of February before the government forces crushed the separatist Tamil Tiger rebels, the island's currency reserves were sufficient only to cover six weeks of imports.
The reserves have been swelled by the first IMF loan tranche of 322.2 million dollars which came on Tuesday, higher remittances, donor funds and foreign investors buying rupee-denominated treasury bills and bonds.
The bank has also raised cash by selling dollar debt.
The Sri Lankan government had requested the bailout package in March to help stave off its first balance-of-payments deficit in four years.
"The end of the war was a huge plus point for us -- that is going in our favour right now," Cabraal said, referring to the defeat in May of the Tiger rebels, ending a 37-year civil war in which tens of thousands of people died.
"With the IMF loan, it will make it easier for us to tap international debt markets," he said.
The remaining IMF tranches will be disbursed in six instalments over the next 20 months.
The Central Bank of Sri Lanka has had meetings in London, Boston, New York, Hong Kong, Dubai, India and Los Angeles in recent weeks in an attempt to woo investors.
"Investor sentiment remains, but we have not decided yet whether to go for a sovereign bond or a syndicated loan to fund post-war reconstruction. We will decide, perhaps in mid-August," he said.
Sri Lanka first tapped the international debt markets in October 2007 with a 500-million-dollar five-year sovereign bond. The island also raised 300 million dollars through a syndicated loan in March 2008.