As Sri Lanka nears completion of its debt-restructuring process, and has demonstrated strong fiscal performance under the International Monetary Fund’s (IMF) Extended Fund Facility, its re-entry into international capital markets should be viewed as a pragmatic step forward, rather than one that is time-bound, Central Bank of Sri Lanka (CBSL) Governor Dr Nandalal Weerasinghe has said, speaking to international news outlet: Global Finance Magazine recently.
Responding to a question on the expected timeline on which Sri Lanka is to regain routine access to international capital markets, Weerasinghe was quoted as saying: “Following the completion of the debt restructuring process, the IMF’s recognition of the progress achieved under the EFF-supported programme, the Government’s strong fiscal performance and continued commitment to reforms, together with improvement in Sri Lanka’s sovereign credit ratings, provide a stronger foundation for rebuilding investor confidence and gradually restoring access to international capital markets.”
In September, IMF Mission Chief for Sri Lanka Evan Papageorgiou, speaking to media said that Sri Lanka is on track to re-enter international capital markets roughly around in 2027, and welcomed the sovereign ratings upgrade by Fitch.
The IMF in 2023 had originally projected that Sri Lanka was to gain international market access by 2027, and raise $ 1.5 billion through the issuance of International Sovereign Bonds (ISB).
Speaking of the need to be realistic in moving ahead with the re-entry, Dr Weerasinghe said: “Nevertheless, Sri Lanka’s re-entry into international capital markets should be viewed as a market-driven process rather than being tied to a predetermined timeline.”
He further emphasised that since Sri Lanka has outperformed expectations on the fiscal consolidation front, there is no “urgency” for access into international capital markets, which may depend on a host of factors, including the global market condition.
“With the ongoing fiscal consolidation process, which has been faster than envisaged, there is no urgency to access international capital markets, and the Government’s decision will depend on multiple factors, including global market conditions.”
In his interview with the outlet, Dr Weerasinghe had not responded to the query on what kind of sovereign issue the CBSL anticipates when Sri Lanka eventually prepares to regain routine access to international capital markets.
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