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Sri Lanka Eyes $5 Billion in Foreign Funds

Sri Lanka expects to raise about $5 billion in foreign funds over the next two years.

Sri Lanka Eyes $5 Billion in Foreign Funds

Ali Sabry, the Minister of Foreign Affairs of the mentioned country, said on Monday, February 5, that the specified financing can be obtained after it is possible to complete the restructuring of the external debt.

In May 2022, Sri Lanka defaulted on its overseas debt. This happened after the country’s worst financial crisis since independence from the United Kingdom in 1948 began amid a critical shortage of foreign exchange reserves. After declaring default, Sri Lanka managed to make progress in restructuring its bilateral debt by about $11 billion. Currently, the country’s leadership hopes to conclude agreements with all major creditors, including bondholders, no later than May. Ali Sabry talked about this during a conversation with media representatives.

Sri Lanka also has plans to launch major infrastructure projects, the implementation of which was suspended during the crisis. In this case, projects such as the construction of a highway, the expansion of the main airport near Colombo, and the construction of a railway with Japan for $2 billion are meant.

The Minister of Foreign Affairs of Sri Lanka, during a conversation with media representatives, said that the country expects the receipt of foreign currency for $5 billion over the next 12-14 months. He noted that this money will be raised mainly within the framework of projects. Ali Sabry also said that part of the funds will be received from the sale of some state-owned enterprises.

Sri Lanka’s Foreign Minister noted that the country’s private creditors account for about $16 billion in debt, including international sovereign bonds. Ali Sabry says that if successful in reaching an agreement with these creditors, it will be possible to decide on lifting the moratorium on payments on foreign debt. The implementation of this scenario would facilitate the flow of investment funds to Sri Lanka, including $1.5 billion allocated for the Chinese-funded port city of Colombo, and accelerate renewable energy projects and the port terminal of the Indian Adani Group.

Ali Sabry announced Sri Lanka’s plans to implement several major business initiatives, focusing on the need to complete debt restructuring in this context

Sri Lanka received $2.9 billion in financial assistance from the International Monetary Fund (IMF) in March last year. This support helped the country to contain the inflationary process, restore foreign exchange reserves, and increase government revenues.

Sri Lanka’s national telecom operator and the main telecommunications company are among the list of state-owned enterprises that will be modernized through private investment under the IMF program.

At the end of January, the central bank of the mentioned country maintained a constant deposit rate of 9% and a constant lending rate of 10%. The financial regulator stated that this decision is aimed at maintaining inflation at 5% while providing the economy with the opportunity to realize its potential.

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Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.