Sri Lanka overborrowed ‘cash buffer’ interest cost 2-pct

ECONOMYNEXT – The cost of maintaining a domestic cash buffer by overborrowing, which was said to have been around 1.2 trillion by November costs about an extra 2 percent to maintain, the parliament’s Committee on Public Finance was told. “There is a margin of about 2 percent between the borrowing and the return we get,” Additional Director General, Treasury Operations, Damitha Rathnayake said. “So we are downsizing it.” It was not clear whether the 2 percent was an average cost or the marginal cost of over-issuing longer term bonds and under-selling cheaper Treasury. In Sri Lanka there is more money…

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