Foreign commercial debt jumps 36.2% in 18 months

Thursday, 28 November 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka’s outstanding foreign commercial loan has jumped 36.2% within 18 months through end-June this year, an official document showed on Wednesday, as the country has been increasingly borrowing for post-war infrastructure revival. Total outstanding foreign commercial loan has risen to more than Rs. 1.04 trillion ($ 7.93 billion) by end June 2013 from Rs. 764.5 billion ($ 5.83 billion) at the end of 2011, a Parliament document seen by Reuters showed. The $ 59 billion economy’s total debt in the same period has risen 27% to Rs. 6.52 trillion, while the total foreign debt including the commercial loans had risen 23.7% to Rs. 2.88 trillion, the data showed. Rating agencies and economists have warned of a potential risk due to increasing external commercial debt. But the International Monetary Fund last week said the current debt-to-GDP ratio of around 80% was not alarming, though the Government needed to strengthen a “policy buffer” to face contingencies. Government critics say corruption has contributed to expensive infrastructure projects, resulting in heavy commercial borrowing. The country, however, has aimed to reduce the debt-to-GDP ratio to 65% by 2016. Sri Lanka has been borrowing from the international capital market since 2007 besides other commercial borrowing, mainly from China, to revive long-neglected infrastructure since the end of a 26-year war against Tamil separatists in 2009. Sri Lanka is not eligible for concessional financing since it had been graduated to a lower middle income country status in January 2010, according to an IMF classification.

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