The effort to bring down the government’s cost of finance has yet to be achieved. But yields are expected to follow a downward trend in the long Interest rate structure passing through a vulnerable period after the completion of the first DDR postponed for the third time. CBSL failed to collect the target funds of LKR 150Bn in the first phase of the auction and only managed to sell LKR 108Bn.
The government’s fiscal deficit is growing. Limiting external finance pushes more weight on domestic finance ( T-bills and T-Bond).
The effort of pulling down the government’s cost of finance has yet to succeed. With inflation dropping further by the end of August G-sec yields are expected to follow a downward trend in months to come.