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Sri Lanka’s borrowing soars just before parliamentary poll

(Adds government increasing t-bill threshold)

COLOMBO, April 6 (Reuters) – Sri Lanka’s government borrowing has risen sharply considering that January, central bank information showed on Monday, as the new government seeks to woo voters and strengthen its grip on energy at a parliamentary election.

The government has sharply elevated state sector wages and lowered duties on key commodities, placing pressure on government finances and pushing yields on Treasury bills up by in between 76 to 82 basis points (bps) considering that Jan. 7.

Possessing won a presidential election on Jan. 8, President Maithripala Sirisena appointed Ranil Wickramasinghe as prime minister, although he lacks a majority in the 225-seat parliament.

Sirisena has pledged to hold parliamentary elections, which could take location prior to the finish of June – a year ahead of schedule.

The total outstanding stock of T-bills and T-bonds rose by 216.six billion rupees ($ 1.63 billion) in the 1st three months of this year – equivalent to about 90 % of total net borrowing through T-bills and T-bonds in 2014.

Total outstanding dollar-denominated Sri Lanka Improvement Bonds (SLDB) jumped 18 percent in the first 3 months with the government borrowing a net 70 billion rupees worth SLDBs.

Finance Minister Ravi Karunanayake said he will seek parliamentary approval on Tuesday to raise the threshold limit in treasury bill borrowing to 1,250 billion rupees ($ 9.4 billion) from an earlier 850 billion rupees. As of Wednesday, outstanding treasury bills totalled 829.two billion rupees.

Government spokesman Rajitha Senaratne told Reuters on Friday that the government demands to borrow more to spend contractors who took on debt in order to complete ambitious infrastructure projects for the duration of the previous administration’s tenure.

Sirisena has ordered a evaluation of all infrastructure projects under the previous government, alleging corruption.

Market analysts mentioned the pressure on government finances was also due to a delay in a planned sovereign bond situation of up to $ 1.5 billion.

Roadshows to test investor appetite identified some fund managers have been reluctant to purchase the bond prior to the election, according to analysts, although there had been nonetheless some who favoured a eurobond problem this month.

(Reporting by Shihar Aneez and Ranga Sirilal Editing by Simon Cameron-Moore/Ruth Pitchford)

Very first Published: 2015-04-06 06:28:35 Updated 2015-04-06 18:37:49

Supply: http://www.sharenet.co.za/news/Sri_Lankas_borrowing_soars_ahead_of_parliamentary_poll/233983ab1b2e470e168cdfa073cbf8fd

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