Lanka envinces interest in Renminbi - CB Governor

Sri Lanka has an interest in the Chinese Renminbi, Central Bank (CB) Governor Ajith Nivard Cabraal told Jackie Horne of FinanceAsia.

“We've been investing in the renminbi for the past six years and the amount has been increasing. It was quite modest to begin with but there's a lot more interest in the currency today and this will continue,” he said.

Excerpts of the interview.

The Rmb 10 billion swap line we set up with China in September will enable us to draw down any time we wish to. It's an additional buffer, which is helpful given how much trade we do with China. It should hopefully send a good signal to foreign investors and the rating agencies.

You're obviously unhappy with your B+/B1/BB- rating. What should it be?

We should be at least two notches higher. We've never defaulted on a single loan in our entire history and the direction we're moving in is clear. If you take these factors into consideration, I don't think we've been given our due place.

And it's unfortunate because certain investors can't buy our debt because of the rate ceiling.

They seem fixated by your debt-to-GDP ratio, which is twice the double-B rating average.

They seem to fixate on a different indicator every year. They're entitled to their opinion and we respect that. But at the same time the most important thing should be the trend. A country can have a low debt-to-GDP ratio, but be on a rising path. We're going in the opposite direction.

Has Sri Lanka been upgraded since the end of terrorism?

Actually, we had a funny situation a few years ago where we were on a positive outlook, but it was reduced to stable. Moody's had the choice of moving us up or down, but preferred to go down.

There's been no acknowledgement of the changes we've made.