This week’s Treasury bill auction had seen a drop in the weighted average yield rate on Wednesday with the borrowing cost to be reduced for the government, supporting economic growth, State Minister of Finance Shehan Semasinghe said on Thursday.
Semasinghe said that the rates had come down significantly to 17.79 percent from 23.00 percent for 91 days, to 15.93 percent from 19.49 percent for 182 days and to 13.86 percent from 16.99 percent for 364 days.
Parliament recently approved the government’s domestic debt restructuring programme.
Fitch Ratings on Tuesday said that the Sri Lankan government’s domestic debt restructuring proposal was a significant step in resolving uncertainties in the local banking sector.
Currently, Sri Lanka’s total debt amounts to around 83.6 billion US dollars, according to official data. Foreign debt amounts to 41.6 billion US dollars. Out of the domestic debt, 25 billion dollars are in Treasury bonds, 11 billion dollars in Treasury bills, 5.6 billion dollars in Development Bonds.
Foreign Minister Ali Sabry regarded the latest development as a positive benefit of debt restructuring, saying that lending rates of commercial banks, cost of debt servicing and gross financing need will come down as a result.
“Economy will recover faster with low interest,” Sabry said on his Twitter on Wednesday.