නිදහස් හා විවෘත ප්රවේශය
රාජ්ය මූල්ය දත්ත හා විශ්ලේෂණයන් සඳහා
Sri Lanka’s long-term debt sustainability would not be impacted if any upside payout is triggered in the case of economic over-performance through the economic growth and governance-linked bond deal with the bondholders, according to the Finance Ministry. The Ministry stated that the negotiated Joint Working Framework with the Ad Hoc Bondholder group enables a fair sharing of upside or downside between creditors and Sri Lanka in case of an economic over-performance or under-performance by Sri Lanka. “Any upside payouts would only occur in a manner that does not compromise Sri Lanka’s longer-term debt sustainability,” it said. The Ministry also noted that the risk of higher payouts being triggered while capacity to pay is weak is mitigated by the inclusion of a control variable. “Therefore, any increased payments would to a great extent be balanced by enhanced capacity to pay,” it added.
The Finance Ministry further explained that the upside thresholds and payouts were adjusted to ensure a more balanced share of upside between creditor and debtor, while the upside/downside trigger is calculated based on average US dollar GDP during the years 2025-2027. In 2023, US dollar nominal GDP was $84.4 billion. Taking Sri Lanka’s nominal US dollar GDP average annual growth in the last 10 years, it was 1.5% per year. Taking the last 5 years pre-pandemic (i.e., 2015-2019), it was 2.4% per year (in 2015 GDP was $79.4 billion and in 2019 it was $89 billion). “Hypothetically, if US dollar GDP were to grow by 4% each year during the period 2024-2027, the resulting upside trigger, average USD GDP during 2025-2027, would be $95 billion,” authorities said. The baseline scenario results in a Net Present Value (NPV) effort of 40% at a discount rate of 11%, while the scenario with the highest payments by Sri Lanka (resulting from the most significant economic over-performance) would result in an NPV effort of 27% at a discount rate of 11%. The Finance Ministry concluded by stating that the position of the bondholders remains that Sri Lanka will outperform the IMF framework, primarily through a less depreciated foreign exchange rate trajectory, and such outperformance will create additional debt service payment capacity, which should be shared between the creditor(s) and debtor.
