Sri Lanka has had peace for seven years, and a new president and prime minister have been in office for the past 15 months, but the much-awaited dividend from an end to more than two decades of civil war seems to have disappeared somewhere in the South Asian island's sandy beaches. The tea- and tourism-driven economy is heading for a rescue by the International Monetary Fund, and its top companies are struggling to earn the cost of now-expensive capital:
It's the government's refinancing risk that's starting to hurt companies. Between now and the end of 2019, Colombo needs to repay $28 billion in bonds and loans, of which $9 billion is due this year, according to data compiled by Bloomberg. Fitch cut its rating on Sri Lanka last month to B+ -- the same level as Angola, Rwanda and Uganda -- and has pegged the government's external debt-servicing requirement for the rest of this year at $4 billion. That's more than three-fifths of the country's foreign-exchange reserves in January.
Read the Full Article Here : http://www.bloomberg.com/gadfly/articles/2016-03-10/sri-lanka-s-peace-dividend-is-being-swallowed-by-debt-costs
It's the government's refinancing risk that's starting to hurt companies. Between now and the end of 2019, Colombo needs to repay $28 billion in bonds and loans, of which $9 billion is due this year, according to data compiled by Bloomberg. Fitch cut its rating on Sri Lanka last month to B+ -- the same level as Angola, Rwanda and Uganda -- and has pegged the government's external debt-servicing requirement for the rest of this year at $4 billion. That's more than three-fifths of the country's foreign-exchange reserves in January.
Read the Full Article Here : http://www.bloomberg.com/gadfly/articles/2016-03-10/sri-lanka-s-peace-dividend-is-being-swallowed-by-debt-costs
