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Government explores multiple options to boost foreign reserves

Targeting debt repayments of USD 4.5 billion in 2021, the Government is exploring multiple options to boost foreign exchange reserves.

These options to be explored in the new year includes a USD 1 billion SWAP agreement with India, attracting investment to the securities market and possible Panda and Samurai bonds, as well as receiving $ 700 million in a syndicated loan from China.

State Minister of Finance Ajith Nivard Cabraal has insisted that the Government had taken steps well ahead of time to restrict imports and protect reserves precisely to meet debt obligations.

He pointed out that according to Central Bank estimates the resultant reduction in the import and fuel bills would save Sri Lanka about $ 2 billion, which would also help top up reserves.

He noted that t private sector participation has been facilitated even in the COVID-19 environment by maintaining stable macroeconomic fundamentals.

Referring to debt management and the foreign reserves position, he revealed that USD 2.5 billion could be achieved as the latest investment for the Port City alone amounts to USD 1 billion.

The Hambantota tyre factory is expected to attract USD 300 million, with at least USD 175 million in 2021.

Investments in pharmaceuticals and education should be in the range of $200 million, he said adding that other investments are also flowing in, and realisation of these inflows would attract further investments.

The Government will also revisit a USD 500 million Samurai bond, which the Central Bank began laying the groundwork for in 2018, and possibly a Panda bond as well, Cabraal said. Sri Lanka could offer these bonds “sooner rather than later,” depending on market conditions, the State Minister added.

 A USD 1 billion repurchase arrangement with the US Federal Reserve, announced in July, also made the list.

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