Lowest public debt burden in 23 years says Central Bank

By Nizla Naizer

Handling Sri Lanka’s public debt was a challenging task in 2008, said Central Bank Governor Ajith Nivard Cabraal at the launch of the publication on Public Debt Management last week, but compared to developing nations hit by the economic crisis Sri Lanka has continued to commit itself to the track record of never defaulting on its loans and emerging as a less indebted country.

*Total Outstanding Debt Stock in 2008, 81.1% of GDP
*Total Outstanding Debt Stock Rs. 3578 billion
*73% of Domestic Debt maturing within 3 years

His optimism stems from the recently published data on Public Debt Management for the year 2008 where the country’s total debt increased by Rs. 536 billion to Rs. 3578 billion. As a percentage of the Gross Domestic Product (GDP) however, Sri Lanka’s total outstanding debt stands at 81.1%, which has declined from 85% in the previous year and is the lowest debt burden in 23 years. The domestic debt to GDP ratio increased to 48.3% while foreign debt to GDP decreased to 32.8% in 2008 while in 2007, it was 47.9% and 37.1% respectively.
Actual gross borrowings for the year amounted to Rs. 689 billion in 2008 which was within the Parliament approved limit of Rs. 708 billion for the year. The gross borrowing comprised of Rs. 559 billion and Rs. 130 billion from domestic and external (foreign) sources respectively. Central Bank Superintendent of Public Debt C.J.P.Siriwardene explained that while Sri Lanka’s debt burden is the lowest in 23 years changes to the debt structure emerged due to the depreciation of the rupee and the decrease in levels of external debt.

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