Sri Lanka receives five foreign currency term loan proposals

ECONOMYNEXT – Sri Lanka has received responses from five parties to a request for proposals for foreign currency term loans, said Treasury Secretary Sajith Attygalle.

Three banks and two investment firms had submitted proposals on October 5, Attygalle said.

Sri Lanka had previously extended the deadline at the request of some potential lenders who wanted more time for internal approvals. Expressions of interest were originally scheduled to end on September 22.

In a 2018 call for proposals, there were three proposals.

Banks, investment firms or institutional investors could submit proposals for fixed or variable rate term loans in minimum installments of US $ 50 million or equivalent.

Loans should be for a minimum period of one year.

Sri Lanka is unable to raise dollars through sovereign bonds due to steep discounts, but continues to raise funds in the domestic dollar market.

The exporters’ dollar deposits in banks have also made it possible to repay some lines of credit for the banks.

However, the excessively low interest rates imposed by the liquidity injections led to high imports and an inability to collect dollars (foreign exchange shortage) resulting in depletion of foreign exchange reserves.
(Colombo / Oct06 / 2021)

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