Govt invites proposals for US$ 300m Syndicated Loan

COLOMBO: According to the Government funding programme of 2008, as approved by Parliament in the Appropriation Act in December 2008, the Government is empowered to borrow Rs. 708 billion to finance the Budget 2008. Of such amount, Rs. 460 billion (Rs. 323 billion from domestic sources and Rs. 80 billion from foreign sources) amounting to approximately 65 per cent has been raised by the Government so far.

At the same time, a few other loans amounting to approximately Rs. 16 billion are presently being negotiated.

Accordingly, a further amount of Rs. 232 billion is available to be borrowed within the approved limits, states a Central Bank press release. The Government now plans to raise Rs. 32 billion (US$ 300 million) by way of a syndicated loan in US$ or any major reserve currency from international markets. As envisaged in the Budget and approved by Parliament, the funds would be used for financing of the ongoing infrastructure projects.

With this additional borrowing, the Government is of the view that there will not be any further need for foreign currency borrowing this year.

After taking the above foreign currency borrowing, as well as the other expected borrowings during the rest of the year, into consideration, the Debt/GDP ratio is estimated to be the level of 78.5 per cent at the end of the year 2008, as against the ratio of 85.8 per cent at the end of the year 2007.

The Central Bank of Sri Lanka (CBSL), as the Agent of the Government has yesterday invited proposals from selected banks/investment banks to offer their services to function as the Lead Manager for raising the proposed loan.

The proposed syndicated loan US$ 300 million is expected to have a maturity period of two years or more with a floating or fixed rate of interest.