Sri Lanka's government aims to pay off its record-high debt by raising $500 million this month through development bonds and selling off two state-owned hotels.
Sri Lanka’s president Maithripala Sirisene and his administration reportedly owe a total of $12.85 billion, including $2.9 billion in foreign loans plus another $5.36 billion in interest. To pay some of that down, the government requested to seek out investors to buy the Grand Hyatt Colombo for $293 million. The members will choose the winning investor following a competitive process. Hyatt Group will manage the hotel with 458 guestrooms and 100 apartments for a 20-year term once construction is completed this year.
The Sri Lankan government is also looking for an investor to buy a 51-percent stake in a hotel operating under a Hilton Worldwide brand in the capital city. Hilton Worldwide, who currently operates the property under a management agreement, aims to renew the contract in 2019 when the current one ends. The divestment of these two hotels is just the start of the government's repayment of hefty foreign infrastructure loans this year, which has left the country swamped in debt.
The central bank will also raise $500 million in 2-, 3-, 4- and 5-year Sri Lanka Development Bonds out of the $3 billion allotted for the year ahead of the looming due date.
The government is pushing for a Liability Management Act to borrow more funds than the budget allows to repay its debt over the next two years. Meanwhile, it will reschedule some loans as part of its repayment process.