ECONOMYNEXT – Sri Lanka’s main opposition has questioned in parliament whether a state bank has delayed payment on a contract as the country struggles with foreign exchange crisis triggered by money printed to maintain low interest rates.
“With great sadness we are saying this,” Samagi Jana Balawegaya legislator Harsha de Silva told parliament.
“We have heard that a state bank has defaulted. Please look into this immediately. ”
Sri Lanka banks have faced counterparty limit cuts since a downgrade of the sovereign credit which have tightened in recent times making it harder to roll-over contracts.
De Silva said a few months ago he warned in parliament about state banks borrowing dollars a high rates through swaps where premiums were negative.
Authorities have also forced dollars coming into the country to be converted to rupees, further hurting dollar deposit building.
State banks have funded dollar loans to the Ceylon Petroleum Corporation in particular.
De Silva said the Monetary Board of the central bank has been asked to come to the committee on state accounts at the parliament this week but they have not turned up. (Colombo/Mar24/2022)