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MP Rajapaksa misrepresents past reduction of debt burden

1 February 2024 09:39 am - 15     - {{hitsCtrl.values.hits}}

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In his statement, the MP claims that Sri Lanka’s debt-to-GDP ratio reduced from 90% at the end of 2005 to 69% by the end of 2014.


To check this claim, FactCheck.lk referred to the Annual Reports of the Central Bank of Sri Lanka (CBSL) and the Ministry of Finance. 


The accounting of national debt involves (1) Central Government Debt (CD), which is limited to debt held by the government Treasury, and (2) Public Debt (PD), which, in addition to CD, includes the debt in the books of State-Owned Enterprises (SOEs). Globally, including by the IMF, the debt burden of a country is evaluated based on PD, not CD only, because it is PD that gives a fuller accounting of a nation’s debt obligations.

The PD-to-GDP ratio at the end of 2005 was 92.1% and was 76.5% at the end of 2014. This does not align with the MP’s figures. However, his figures align with the CD-to-GDP figures of 90.8% and 69.5% in 2005 and 2014, respectively. 


By citing only the part of the debt that is accounted for as CD, the MP (a) misrepresents the overall debt exposure in 2014, and (b) suggests a larger reduction in debt-to-GDP ratio (of 21.3 percentage points) from 2005 than the actual decrease of 15.6 percentage points in terms of PD.


The MP’s use of CD figures is further misleading because former President Mahinda Rajapaksa’s administration was found to manipulate and understate CD by transferring debt that was originally in the books of the central government into the books of SOEs. This accounting manoeuvre artificially reduced the reported CD without making any reduction in PD. For instance, in 2014, the loan balances for the Puttalam Coal Power Plant, Hambantota Port Development, and Mattala Rajapaksa International Airport, amounting to LKR 309 billion (or 3 % of the GDP in 2014), were removed from the books of CD and moved to the books of various SOEs (see Additional Note).


The MP’s figures on debt-to-GDP reduction are not only citing a partial accounting of total debt by using CD figures instead of PD figures, but he is also citing a CD figure that was manipulated during his presidency to report a lower figure in 2014. The actual reduction of debt-to-GDP in that time period was significantly less (less than three-fourths in percentage points) than what the MP had claimed. However, the reduction in PD-to-GDP by 15.6 percentage points does support perhaps the larger claim of the MP that there was a substantial reduction in debt-to-GDP during that period.


Therefore, we classify the MP’s statement as PARTLY TRUE.


Additional Note: For more details on this manipulation of debt reporting refer to Verité Research, ‘Navigating Sri Lanka’s Debt: Better reporting can help – a case study on China debt’, 2021, p.5.


*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.

FactCheck is a platform run by Verité Research. 
For comments, suggestions and feedback, please visit www.factcheck.lk.   


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  Comments - 15

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  • Rajapaksa Supporter Friday, 02 February 2024 06:49 AM

    At least Rajapaksas did not waste public money although they stole public money. The stolen money of over US$50.0 billion is safely deposited in foreign banks.

    L Jaya Wednesday, 07 February 2024 05:14 AM

    Robbing public funds is a waste, for not having used for productive public gain. Debt to GDP ratio had been manipulated allowing individual state organisations to borrow funds which doesn't reflect in the state finances

    Gunapala Sundaram Saturday, 03 February 2024 05:20 PM

    This man mislead all SL people thinking that they are foolish bulls! Now MaRa, NaRa, BaRa, GoRa have no places to hide except the jail!

    ANNECUNT Monday, 05 February 2024 08:11 PM

    MR D.A RAJAPAKSA SCREWED SIDE WAYS TO PRODUCE THESE CHILDREN

    Jeewaka Appuhamy Tuesday, 06 February 2024 03:14 PM

    Myna misrepresent whole Sri Lanka since going the parliament after kicking from Nalanda! Then Stealing law from the Law College! Now a billionaire in US dollars from an OLD BICYCLE!

    ANNECUNT Thursday, 08 February 2024 02:57 AM

    Me Mahinda why don't you give us our stolen money before you die

    Jeewaka Rajapassa Saturday, 10 February 2024 01:45 PM

    Myna mislead all! education DEKA Then paas at Nalanda. Paha paas at Thurstan. Nothing pass beyond that except Pin LAW!

    D,A RAJAPAKSA Sunday, 11 February 2024 01:48 PM

    HE IS A BOGUS LAWER

    Adwani Monday, 12 February 2024 09:24 AM

    Although he stole local currency, he had the control on local currency printing machine. But his thief brother Gota stole from the reserves of USD and banned all imports driving the economy to a totall standstill.

    Rohini Wijetilleke Tuesday, 13 February 2024 01:13 AM

    He can boast how he and his brothers emptied the treasury and displayed to the world what a pathetic condition the country is in.

    UMAS Thursday, 15 February 2024 01:28 PM

    WHY DID GOD PRODUCE A CRIMINAL LIKE MAHINDA?

    D.A.RAJAPAKSA Thursday, 22 February 2024 05:48 PM

    god was having a sleep ,then MAHINDA came out to the world, bad luck to sri-lanka

    Sambo Saturday, 17 February 2024 08:18 AM

    You think he has the brains to represent anything correctly.

    Rohini Wijetilleke Saturday, 17 February 2024 09:57 PM

    Even a fool is considered Wise if he keeps his lips sealed.When the Ex president/Prime minister opens his mouth and utters lies he should check the length of his nose ,it may be like PINOCCHIO'S growing with every lie..Enough harm is done now rest in PEACE.

    Sambo Monday, 19 February 2024 07:47 AM

    This family only knows to steal and nothing else.


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