The government has paid 65 percent of this year’s debt obligations and the Central Bank was looking at all possible options to go in for more borrowings to raise money as much as possible to meet necessary commitments, Central Bank Governor Dr Indrajit Coomaraswamy told the third Monetary Policy Review media briefing on Friday.
The Cabinet has approved raising USD 1.5 billion from international markets for the government’s cash flow requirements and another USD 2 billion will be raised separately to meet debt obligations.
The market conditions seems stable at the moment and due to the fact that the country has not missed any of its debt repayments up to now, the international markets are still open to carryout trade activities.
Further, the Executive board of the IMF has recently passed the fifth review of the Extended Fund Facility (EEF) which is also another positive point. ”They would not have done so if our macro-economic fundamentals are not in good shape,” the governor said.
With the Easter Sunday explosions and the disturbances that took place afterwards there had been a slight negative impact on the financial market. The exchange rate is broadly stable which has been appreciated to 3.6%. However prior to April 18 the rupee had appreciated to about 4% which marks depreciation to some extent afterwards, he said.
There also had been some capital outflows. On a net basis the capital outflow for this year is USD 77million, where the last year outflow was about a billion. “This year given the circumstances again, a fair amount of stability in capital flows into our government securities market,” the Governor said.
In terms of worst case scenarios, the tourism industry, which expects to bring in revenue of USD five billion would likely miss its target. Also the foreign direct investment which was USD 2.7 billion at the beginning of 2019 will likely to get affected for the next year if new investments are not received.
Thus the expected revenue of USD 8.2 billion for this year will not be achieved if worst case scenarios come to effect.
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