Foreign commercial debt increases to 52%

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The Government’s foreign commercial debt (FCD) as a percentage of overall foreign debt (OFD), including debt owed to multilateral institutions, such as the World Bank (WB) and the Asian Development Bank (ADB), increased from 51 per cent to 52 per cent, 2020 to 2021, Central Bank of Sri Lanka’s (CBSL’s) 2021 Annual Report released on Friday (29 April) showed.

The Government’s  FCD as a percentage of OFD has been at least 50 per cent or over for the past 10 years to last year (2021), the cause of Sri Lanka’s current economic crisis. However, up to 2005, this ratio didn’t exceed six per cent, with the balance (94 per cent, minimum), being concessional loans such as those from the WB and the ADB, where, in certain cases the repayment period is as much as 40 years, while the interest charged may be as low as one per cent.

However, in the case of FCD, the repayment period may be as little as a maximum of 10 years, while the interest charged by such creditors may be as high as eight per cent.  

CBSL data also showed that the economy grew by 3.7 per cent last year from a historically low base of minus (-) 3.6 per cent of gross domestic product (GDP) in the previous year 2020.  It further showed that the budget deficit, 2021 over 2020 expanded to 12.2 per cent from 11.1 per cent.

Further, ‘revenue and grants’, 2021 over 2020 decelerated to 8.7 per cent from 9.1 per cent, while expenditure accelerated to 21 per cent, from 20.2 per cent in the review period.

CG’s foreign debt doesn’t include guarantees given by the Government for foreign borrowings made by institutions such as Government corporations and boards.

By Paneetha Ameresekere