Sri Lanka’s foreign reserves fell 32% after repaying its offshore bond last month, according to data published by Sri Lanka’s Central bank on Friday. With the repayment of its $1bn 6.25% 2021s the nation’s forex dipped to a 12Y low of $2.4bn in July from $3.6bn in the previous month, according to CEIC data.
The island nations dwindling reserves led Moody’s to put the sovereign’s rating under review for downgrade last month. It was downgraded to CCC+ by S&P, to CCC by Fitch and to Caa1 by Moody’s late last year. Despite the hardships, the nation has met all its debt obligations till now by tapping its friendly nations including China, India and South Korea to spur up its liquidity. The opening up of the economy and tourism is likely to boost the reserves of the nation in the future. The nation has also undertaken many steps including raising $600mn-700mn through forex surrenders. The sovereign has the following offshore debt repayments till 2023: