US$ 2.4 bn international sovereign bond issue at astronomically high interest rates

Colombo (News 1st): Several comments were made in parliament today (March 12), regarding the recently issued international sovereign bonds. The comments reveal that the ISB's were issued at higher interest rates when compared with several other countries. Minister Ravi Karunanayake noted that it is the officials of the Central Bank who can help Sri Lanka get back on track. He noted that recently Sri Lanka received US$ 3 billion. However, he noted even though they are happy about it it must be said that Sri Lanka has been misguided in such situations. The minister noted that bonds with a maturity period of 10 years have been issued at an interest rate of 7.81% and during the same period, Malaysia had issued bonds at 3.87%, Thailand at 2.51%, Vietnam at 4.87%, Greece at 3.84% and Botswana at 5.27%. He noted that  Sri Lanka was able to issue the same quantity of bonds at a much lower interest rate five years ago. JVP Leader Anura Kumara Dissanayake responding asked Karunanayake if he could provide information regarding the Central Bank's decision to issue such a large quantity of treasury bonds at an interest rate of 7.85%. Minister Karunanayake noted that the Central Bank had made certain decisions that go against the development of our country. He said when they make hasty decisions, the country must repay the loans, along with its interest. He went onto note that the debt burden may include loans which were obtained by the present government and regardless of who obtained these loans, as a country they must go forward. He noted that despite the IMF's existence, policies are implemented by Sri Lankans. MP Mahindananda Aluthgamage noted that firstly, Karuanayake must recall that the agreement with the IMF was signed by him and the governor of the Central Bank at the time. Reacting to this Karuanayake noted that Aluthgamage must not speak on unknown matters. He noted that the former president is aware in this regard and the sinful debts that were obtained during his government are what the UNP is now paying. Adding to this the JVP leader said that the international sovereign bonds worth US$ 1 billion and US$ 1.4 billion, with maturity periods of five years and ten years, respectively were issued recently. He noted that during the past week, Vietnam had also issued ISB's at an interest rate of 4.78% while Thailand and Greece had issued ISB's at 2.51% and 3.84% respectively. Dissanayake went onto note that the Central Bank and the present government had issued a five-year maturity ISB at an interest rate of 6.85% and the US$ 1.4 billion ISB maturing in 10 years  at an interest rate of 7.81%. He questioned the purpose of establishing a government. The parliamentarian noted that the government must forecast the crisis that the country may face in the future and must prepare a plan that would solve these issues. However, he said due to the non-existence of such plans the country's debt has increased, deteriorating the economy and ultimately it is the public that must bear the burden. The JVP leader added that it is clear that a scam similar to the famous bond issue that took place on February 27th 2015, has taken place and therefore, the government must be transparent in this regard, and keep the public informed. Making remarks regarding the issue Minister Mangala Samaraweera noted that as a result of the former president's hunger for power that led to the 52-day political turmoil in Sri Lanka, the country was downgraded by international rating agencies. He noted that as a result Sri Lanka has to pay higher interest rates by approximately 3% and under the present government interest rates have normalized. However, he added that interest rates are still higher than normal by about 1% and because of the 52-day conspiracy, Sri Lanka has approximately lost Rs. 6.4 billion. Minister Samaraweera noted that they should recover these losses from those responsible.