A misleading news item has been disseminated in relation to Sri Lanka’s foreign reserves and external debt servicing.

The contents of the news item portray a misleading picture of the country’s external position. While stating that around USD 8.9 billion of borrowings by the government were absorbed to Central Bank reserves during 2015-2018, the article provides no consideration on the significant debt repayment effected by utilization of reserves during the period, which the Central Bank is obligated to as the official debt manager of the government.  

Since 2015, the government has serviced external debt of around US$ 7.5 bn as capital and interest payments utilizing external reserves.  Simply put, gross official reserves as at end 2014 amounted to US$ 8.2 bn. If there were no further borrowings or non-borrowed increase of reserves, the external debt servicing of around US$ 7.5 bn would have resulted in gross official reserves depleting to US$ 0.7 bn by now. 

This is further to the Press Release dated 02.01.2018 relating to ETI Finance Limited (ETIFL) and Swarnamahal Financial Services PLC (SFSP).

The Monetary Board of the Central Bank of Sri Lanka (CBSL), having considered the critical financial conditions of ETIFL and the possible implications to the financial system, decided to permit and facilitate ETIFL to sell its holding of shares in subsidiary and sub-subsidiary companies and investment properties, based on a proposal submitted by the Board of Directors of ETIFL, for a net amount of USD 75 million subject to compliance with the applicable laws and regulations.