Sri Lanka will not go after global lending agencies such as the World Bank (WB) the IMF and the Asian Development Bank (ADB) because Sri Lanka is categorized as a Middle Income Nation, Central Bank Governor Ajith Nivard Cabraal said yesterday

He said the strategy for future foreign funding would be through bilateral agreements with friendly countries.

Mr. Cabraal said Sri Lanka had been able to maintain a single digit inflation level for the last 50 months and this reflected the macroeconomic management of the country.

“Though some politicians say otherwise, Sri Lanka is not vulnerable where debt is concerned. The foreign reserves have been more than US$ 6 billion over the past couple of years and therefore there is no risk in debt servicing and is sustainable,” he said.

Mr. Cabraal said Sri Lanka still had access to IMF, WB and ADB funding as these global lending agencies had a reasonable appetite to fund Sri Lanka despite the fact that Sri Lanka was capable of supporting the growth momentum from deferent sources.  

He said Sri Lanka had qualified under the “less indebted” category in five out of six external debt indicators in accordance with the parameters defined in the manual on Effective Debt Management of the UN-ESCAP, to assess the external debt vulnerability of a country.

“The only indicator in which Sri Lanka is placed in the “moderately indebted” category is “the disbursed external debt outstanding to Gross national income” category, where Sri Lanka’s indicator value is 37%, which is marginally above the threshold level specified for the ‘Less indebted category’. In this context, it is noted that these values have been recorded by Sri Lanka at a time when public debt risks emanating from the global economic slowdown has been rising in many economies,” Mr. Cabraal said.

“In fact the GDP level over the foreign debt ratio has improved over the past 10 years from 105% in 2002 to 80% by 2012, which is a quite an achievement. Our target is to bring this down further in the next couple of years,” Mr. Cabraal added. (Sandun A. Jayasekera)