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Sri Lanka gets five proposals for foreign currency term loan

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

Three banks and two investment houses had submitted proposals by October 05, Attygalle said.

Sri Lanka had earlier extended the deadline at the request of some prospective lenders who had wanted more time for internal approvals.The Expressions of Interest was originally expected to close on September 22.

In a 2018 call for proposals there were three proposals.

Banks, investment houses or institutional investors could submit proposal for fixed or floating rate term loans in minimum tranches of 50 million US dollars or equivalent.

The loans will have to be a minimum of one year.

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

Exporter dollar deposits in banks have also allowed some lines of credit for banks to be repaid.

However excessively low interest rates enforced by liquidity injections have led to high imports and inability to collect dollars (foreign exchange shortages) leading to run-down on foreign reserves.

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