Sri Lanka cash crusade

Sri Lanka wants to raise
$500 million through
new projects
NEW YEAR CHEER: Sri Lanka wants to raise $500 million through new projects


SRI LANKA aims to raise $500 million this month via development bonds and is in the process of divesting two state-owned ho­tels, the central bank and a ministry said on Monday (8), as the government faces unprecedented debt repayment this year.  

Maithripala Sirisena

President Maithripala Sirisenea’s admin­istration must repay an estimated `1.97 trillion ($12.85 billion) in 2018 – a record high – including $2.9bn of foreign loans, and a total of $5.36bn of interest.  

The central bank announced plans to raise $500m in two-year, three-year, four-year, and five-year Sri Lanka Development Bonds (SLDB) out of planned $3bn for this year at both fixed and floating rate arrange­ment, the central bank said in a posting on its website.  

The cabinet last week approved plans to borrow some $5bn in 2018, including $2bn of sovereign bond sales and $3bn of devel­opment bonds to refinance big debts that fall due this year. A total of about $2.5bn worth of SLDBs mature this year.  

The government has also called for a re­quest for proposal (RFP) to find investors for `45bn ($293m) worth of Grand Hyatt Colombo property that includes a 458-room, 5-star hotel and 100 apartments.  

The government has offered 100 per cent shares in Grand Hyatt Colombo property and said an investor would be selected through a competitive process, the Ministry of Public Enterprise Development said.  

The government has entered into a 20-year management contract with the Hyatt Group to run the hotel, which is due to be completed and begin operations this year.  

The Hilton hotel

The government also said that it was seeking investors for a 51 per cent control­ling stake in a 350-room five-star hotel in the heart of the capital, Colombo, which Hilton International runs under a management contract.  

The ministry said Hilton Inter­national had indicated its desire to renew the contract after the cur­rent one ends in 2019.  

The divestment of state-owned hotels comes as the re­payment of expensive infrastructure for­eign loans starts this year, which has left the is­land nation fac­ing a growing debt crisis.  

Central bank gover­nor Indrajit Coomaraswamy said last week that the government should go for the sovereign bond as early as pos­sible as there was ample money in global capital markets ahead of expected rate increases by the US Fed­eral Reserve.  

The government is trying to pass a Liabil­ity Management Act that would allow it to borrow more than budget limit as it tries to manage debt repayments over the next two years. It also plans to reschedule some oth­er loans.  

The $81bn economy expected foreign currency outflows of $5.6bn in the next 12 months including loans, securities, and de­posits, compared with a current $8bn in foreign exchange reserves, according to central bank data.