Sri Lanka's airline unable to repay $1bn debt

Sri Lanka's loss-making national carrier will not be able to repay its debt of nearly $1 billion, Prime Minister Ranil Wickremesinghe told parliament Wednesday.

With its own finances in a rocky state, the government will decide within six weeks whether it can afford to take over SriLankan Airlines' debt repayments, the premier said.

State enterprise development minister Kabir Hashim, who oversees the carrier, earlier this month put its debt at $933 million but on Wednesday it emerged the figure could be higher.

"The minister says the actual debt is likely to be much more than what we initially feared," Wickremesinghe said during a parliamentary debate on the economy.

"SriLankan Airlines will not be able to repay this debt. We will have to take a decision on this."

A mounting debt crisis of its own has forced the government to request a bailout of its own from the International Monetary Fund.

The beleaguered national carrier has drawn controversy in recent years after an independent investigator last year found evidence of serious corruption in a $2.3 billion deal to buy Airbus aircraft.

Wickremesinghe said Wednesday he was still reviewing the deal, reached under the  administration of former President Mahinda Rajapakse despite huge losses at the airline.

The deal is also being probed by the police Financial Crime Investigation Division.

Last month ratings agency Fitch cut Sri Lanka's credit rating by one notch to B+ with a negative outlook over its debt crisis.

Negotiations are also under way for a $1 billion currency swap with a Chinese state-owned bank to shore up the country's dwindling foreign reserves.
Source: AFP