Govt. debt tops Rs.6 trillion

30 October 2012 10:59 pm - 33     - {{hitsCtrl.values.hits}}

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Sri Lanka's total outstanding government debt stood at Rs.6161 billion at the end of July 2012 against Rs.4975.2 billion reported during the same period of the previous year, the latest data from the Central Bank showed.
The data further showed that a month ago (end of June), the total outstanding debt stood at Rs.5951.6 billion. The key reason that can be attributed to the hike in debt in July was the US $ 1 billion sovereign bond, of which US $ 500 million will be utilized to repay a maturing bond.
The total domestic debt by the end of July 2012 stood at Rs.3185.7 billion. The government had borrowed Rs.651.5 billion on Treasury bills and Rs.2, 114 billion on Treasury bonds. Rupee loans amounted to Rs.58.4 billion.
Government’s total foreign debt reported at the end of July 2012 stood at Rs.2975.3 billion, touching almost the three trillion rupee mark, against Rs.2, 220.2 billion reported in the first seven months of 2011.
As of July 2012, the share of foreign debt rose to 48.2 percent of total debt and domestic debt fell to 51.7 percent.
Sri Lanka has been borrowing from international commercial markets through sovereign bonds and also is at the receiving end of large volumes of money from China's Exim Bank and Development Bank of China.
According to independent economists in the country, the pile of foreign debt is expected to increase with the proposed foreign borrowings in the future.
They further note that the danger of more borrowings will be a severe strain on the balance of payment situation of the country's economy. In 2011, Sri Lanka faced a severe balance of payment crisis and had to seek the help of International Monetary Fund (IMF) to get out of it.
Given the high amount of foreign debt, the foreign debt servicing costs (capital+interest) is also expected to surge substantially.
According to some economists, high debt servicing costs amidst slowing down export earnings can lead the country into a foreign debt trap situation, as the country may need to opt for further foreign borrowing to service earlier debt.
Sri Lanka’s exports in the first seven months of 2012 dropped 5.7 percent Year-on-Year (YoY) to US $ 6,592 million while the balance of trade widened 6.3 percent YoY US $ 6266.8 million.
Although expenditure on imports is also slowing down in tandem with exports due to the tight monetary policy the Central Bank has adopted, the imports are decelerating at a significantly slower rate.
Further, with increased foreign inflows to the stock market, worker remittances and tourism earnings being positive, economists point out that the cushioning effect of these inflows will be considerably hindered by the high foreign debt obligations the country is inherited with. (Indika Sakalasooiriya)
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  Comments - 33

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  • nicky karunarathna Wednesday, 31 October 2012 04:27 AM

    Oh no is it 6 trillion only and it is in rupees -isn't it? Listen to this: America, most wealthiest country on the planet, is indebted to the tune of $16 trillion guys. And it is in American dollars and counting. They owe, China alone $ 3trillion. And there is no way of paying such a huge sum of money. So they are printing machines. I mean money printing machines are doing overtime and they call it in economic terminlogy as Quantitve Easing. Did you hear that?

    Moda wangsa Wednesday, 31 October 2012 04:56 AM

    SL govt makes about Rs. 3000 million in import duty of ONLY wheat flour. Imagine how much money it will be making considering all the other taxes.

    the big question is how all this money ens up in Swiss bank accounts. Swiss govt has admitted Sri Lankans have been the biggest depositors of money in Swiss banks for 2 years in a row.

    SL Wednesday, 31 October 2012 05:06 AM

    Only the UNP can repay this loan

    SL Wednesday, 31 October 2012 05:21 AM

    America on the other hand is a huge country, Does a lot of research in Space technology, military etc. Can you compare America with Sri Lanka?

    ukkuna Wednesday, 31 October 2012 05:36 AM

    It should be Rs.300,000 OR 3 Lakhs,

    kasi Wednesday, 31 October 2012 02:57 PM

    we were better off under British.

    Kane Tuesday, 30 October 2012 11:28 PM

    Miracle of Asia...? Sri Lankans who live abroad praising the present government, please take a note.

    Tokyo Tuesday, 30 October 2012 11:57 PM

    The root cause is ver clear. It has been known for 2500 years. Even a grade 5 can explains this very well.

    Janaki Kalansuriya Wednesday, 31 October 2012 12:48 AM

    So, where is this $2500/= + per capita income the CB has been swooning about?

    Big Ears Wednesday, 31 October 2012 01:10 AM

    As expected, borrowing from Peter to pay Paul. What happens when Peter refuses to lend. Borrow from Noodles?

    MagodisThuma Wednesday, 31 October 2012 01:20 AM

    Govt cant solve our problems, because Govt is the problem !

    Nishantha Wednesday, 31 October 2012 12:00 AM

    After indefence this is the think that we have hardly acheived. Oh... Poor mother lanka via DM Android App

    Balck Mamba Wednesday, 31 October 2012 01:30 AM

    Welcome to this cruel world ye unborn future generations!!!

    Tharaka Chanaka Wednesday, 31 October 2012 01:38 AM

    of which 20% is in Swiss bank accounts...

    sam Wednesday, 31 October 2012 01:32 AM

    We are not paying it. Thank you for the loan.

    Yoga Wednesday, 31 October 2012 12:00 AM

    So on behalf of each one of us the old the new born the rich the poor the govt has borrowed 3 lakhs
    Can most of our people borrow 3000 on their own
    We are becoming a land of paupers via DM Android App

    Cynic Wednesday, 31 October 2012 09:55 AM

    Congratulations Cabraal.

    Premalal Wednesday, 31 October 2012 01:53 AM

    It looks like we are heading for disaster at break-neck speed. Very soon the foreign debt service cost would overtake worker remittances, Then God help the ordinary citizens of this country. The people who lead us there would be enjoying their loot.

    Rohan Wednesday, 31 October 2012 10:12 AM

    Current President, Finance Minister and even the Head of Central bank does not know economics. God Bless SL

    sarath Wednesday, 31 October 2012 01:54 AM

    Our future generation will curse us when they get to know all these. Neither the people nor country has benefited from these loans. There will not be a country for our children to be inherited.

    Minister Wednesday, 31 October 2012 01:56 AM

    It may go up to 10 trillion before the budget as 4 more is required to balance it.

    ANTON Wednesday, 31 October 2012 01:56 AM

    WHO IS GONNA SETTLE THIS ?

    ab Wednesday, 31 October 2012 12:00 AM

    The habit of borrowing and economist must plan for contries economy. Unprofitable project should be stopped. via DM Android App

    warra8 Thursday, 01 November 2012 01:10 AM

    Rs 285.715.28 for each SL to be precise. and why do most SL's use the word Lakshs? there no such word as this its an Indian thing. just say hundreds or thousands or Rupees.

    Nina Kamal Wednesday, 31 October 2012 04:01 AM

    Is this knowledge known to our little known 'voters'........

    warra8 Thursday, 01 November 2012 01:11 AM

    all construction should be put on hold. specially if it consists borrowing to build a road. this is bad prediction. if the debt is going up. tenders or bonds should be raised for inverters to flood the market with revenue. or even through bills. what are all the finance people and treasurers doing approving all theses loans. the way the country should move is attract more inverters. or invest is research and technology.

    Krishni I Wednesday, 31 October 2012 04:03 AM

    This government is going to take all of us down, borrow more ??? FOR WHAT ???? Build more roads and airports and useless harbours, that ships dont dock ??? Cost of living is spiralling, and the government isnt doing anything to help the people !!! MIRACLE OF ASIA ALRIGHT !!!!

    Dent Inheritor Wednesday, 31 October 2012 03:56 AM

    your grand kids and their kids but definitely not HIS kids or his grand kids or their kids... chin up its us the ignorant population who is to blame ... we just cant be bothered to put our foot down and oppose or protest that laziness is what has created this monster of a Gov

    ANTON Wednesday, 31 October 2012 03:57 AM

    EACH SRILANKAN OWED NEARLY 300 laks of SLR.

    Tintin Wednesday, 31 October 2012 04:10 AM

    You mean cruel country...? As its our foolishness of electing such 'qualified' politicians that we had ended up like this.

    Al Rasa Wednesday, 31 October 2012 04:13 AM

    Every govt will have to take loans and entertain the public
    in Sri Lanka who aspire to eat bread for cheaper prices, Drink Alcohol in every nook and corner (this has now become a menace) ,see cricket matches, unruly, eat and wait not commit ed for the country, lethargic, want fuel to operate Motor cycles and vehicles even for a walking distance, every time raising Human Rights first . What to do the govt.
    will have to cater to these needs. Otherwise they will not vote in favuour of them.

    gayan Wednesday, 31 October 2012 04:16 AM

    testy


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