Economy

Foreign commercial debt jumps 36.2% in 18 months

28 Nov 2013 - {{hitsCtrl.values.hits}}

Sri Lanka’s outstanding foreign commercial loan has jumped 36.2 percent within 18 months through end-June this year, an official document showed yesterday, as the island nation has been increasingly borrowing for post-war infrastructure revival.

Total outstanding foreign commercial loan has risen to more than Rs.1.04 trillion (US $ 7.93 billion) by end-June 2013 from Rs.764.5 billion (US $ 5.83 billion) at the end of 2011, a parliament document seen by Reuters showed.

The US $ 59 billion economy’s total debt in the same period has risen 27 percent to Rs.6.52 trillion, while the total foreign debt including the commercial loans had risen 23.7 percent 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 debtto-GDP ratio of around 80 percent 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 island nation, however, has aimed to reduce the debt-to-GDP ratio to 65 percent by 2016.

Sri Lanka has been borrowing from the international capital market since 2007 besides other commercial borrowing, mainly from China, to revive longneglected 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.

(REUTERS)

Economy

Foreign commercial debt jumps 36.2% in 18 months

Most Popular Articles

Sri Lanka’s IMF reserve target comes under pressure: KPMG

Sri Lanka explores local gold refinery as IMF regulations delay import tax relief for jewellers

CSE ends lower as turnover falls to year’s lowest, ASPI holds key support

HMD introduces latest range of feature phones to Sri Lanka

CSE opens the week lower as broad-based selling offsets strong institutional activity

Crossings dominate market activity as ASPI extends decline

Latest News

Wildlife holiday bungalows to be upgraded

Toxic alcohol addiction changes brain chemistry: Psychotherapist

Sri Lanka passport rises to 94th in 2026 Henley Index

Strong wind advisory issued for several areas

DAPH calls for coordinated plan to eliminate rabies by 2030