Foreign debt rose US $3.5bn on rupee depreciation: FinMin

REUTERS: A 10 percent fall in the rupee since Sri Lanka’s government took office in January last year has increased the country’s foreign debt by Rs.507 billion (US $3.48 billion) in 17 months, Finance Minister Ravi Karunanayake told the parliament yesterday.

 Sri Lanka’s state finances are shaky, partly because of heavy borrowing by the previous government. However a group of parliamentarians led by former leader Mahinda Rajapaksa has accused President Maithripala Sirisena’s government of also borrowing heavily since it came to power in January 2015.

 Karunanayake told parliament that the rupee depreciated 10.1 percent from January last year toMay 31. In dollar terms, the total foreign debt increased by 3.5 percent to US $24.59 billion in that time.

Sri Lanka allowed the rupee to fall last year in the face of a balance of payments crisis, but the depreciation pressure has eased since the International Monetary Fund approved a US $1.5 billion, three-year loan for Sri Lanka in May followed by inflows from sovereign and syndicated loans.
 Prime Minister Ranil Wickremesinghe said on August 10 the previous government hid debts of at least Rs.1.36 trillion on the books of some state and semi-government institutions, aggravating the debt crisis. Rajapaksa has denied hiding debts.