The governor of Sri Lanka’s Central Bank on Wednesday rejected demands to stop foreign borrowing until after the elections, scheduled to be held on August 17.
UPFA MP and former foreign minister GL Peiris in a letter to the secretary to the ministry of finance and the governor Arjuna Mahendran called on them to "act in the best public interest and ensure that the management of public finance, the economy and external debt will not be permitted to get further deteriorated during the ensuing 6-8 weeks."
Mr Mahendran, in a letter to The Island, responded that the continuing borrowing could save the treasury money.
"The Department of External Resources has solicited proposals on direct US Dollar term loans to the Government of Sri Lanka from reputed international financial institutions. These direct loans are expected to be contracted at, as the letter states much lower rates of interest than what the Treasury could reasonably obtain through the issuance of Sri Lanka sovereign bonds and thus save the Treasury considerable sums of money,” the letter said.
“It is in Sri Lanka’s economic interests to continue with government borrowings both onshore and offshore, in order to preserve the continued momentum of economic growth and to re-affirm the strong positive image in the minds of lending institutions that Sri Lanka is fast becoming a mature democracy where political events do not unduly affect the workings of her rapidly evolving economic structure," Mr Mahendran said.