Sri Lanka seeks to borrow $673m to pay some project costs

Sri Lanka called on banks and investment houses on Wednesday to propose terms for a foreign currency term financing facility as it seeks to raise up to US$500 million (S$673.26m) to meet the costs of some externally-funded projects stated in its 2015 budget.

This comes after the government raised nearly US$1 billion via a 10-year sovereign and development bond on May 28.

The ministry of economic affairs said in a statement the foreign currency term financing facility (FTFF) was likely to be at a fixed or floating rate "linked to U.S. dollar six-month LIBOR with a maturity period not less than three years".

Finance Minister Ravi Karunanayake said last week some international banks have offered unsolicited proposals to lend at 325-375 basis points and the country could collect about US$1 billion soon.

Karunanayake has said the borrowing of the new government, which came into power after a Jan. 8 election, has been on the rise because it is compelled to pay off heavy debts built up by the previous administration, mainly for infrastructure projects.

The new administration has slowed many infrastructure projects mainly financed by China amid allegations of corruption and over-estimation of projects by the previous administration headed by Mahinda Rajapaksa, who has rejected such allegations.

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