Sunday May 19, 2024
Sunday May 19, 2024
Monday, 28 November 2022 00:08 - - {{hitsCtrl.values.hits}}
Sri Lanka’s debt spree persists despite being declared unsustainable judging by latest data released by the Central Bank.
Outstanding domestic debt crossed the Rs. 13 trillion mark in July and since the end of last year it has swelled by Rs. 2 trillion.
Foreign debt amounted to Rs. 11.6 trillion, which is higher in comparison to Rs. 10.8 trillion by end April when Sri Lanka declared bankruptcy and suspended servicing of external debt as of 12 April.
Total Central Government debt is nearing Rs. 25 trillion mark as of July. It is higher by Rs. 7 trillion in comparison to the end of last year. A part of the increase could be attributed to re-pricing following the sharp fall (40%) of the Sri Lanka Rupee since March this year.
The International Monetary Fund (IMF) has declared Sri Lanka’s public debt (122% of GDP as at end June 2022) as unsustainable and is discussing support to shore up foreign reserves via a four year Enhanced Fund Facility (EFF) worth $ 2.9 billion.
The Government is in talks with bilateral and private creditors on suspended external debt which as at end June was $ 46.6 billion.
The debate on whether the domestic debt should be restructured or not continues, though the Central Bank and the Government has insisted it isn’t necessary whilst analysts think otherwise.
In release latest data, CBSL said they are highly provisional as the outstanding central government debt excludes several overdue debt service payments after 12 April 2022, the date of which the Interim Policy regarding the servicing of Sri Lanka’s external public debt was announced by the Ministry of Finance, Economic Stabilization and National Policies. These debt service payments include overdue interest payments of affected debt which are deemed to be capitalised as per the Interim Policy, CBSL added.
To address ballooning domestic debt, the Government has announced a raft of new tax measures as well as reforms to public sector and state-owned enterprises.
