* Jan-Apr 2013 data: Govt. domestic debt 75% of budget limit for full year, foreign borrowings 44%

July 15, 2013, 8:50 pm

Total out standing public debt grew 5.9 percent from Rs. 6 trillion as at end December 2012 to Rs. 6.35 trillion as at end April 2013, up 8.53 percent from Rs. 5.85 trillion a year earlier, latest data released by the Central Bank showed.


Total outstanding domestic debt of the government amounted to Rs. 3.55 trillion as at end April 2013, up 9.8 percent from Rs. 3.32 trillion as at end December 2012 and up 13.7 percent from Rs. 3.12 trillion a year ago.


According to the 2013 budget, the government’s domestic borrowing requirement is Rs. 421.4 billion. During the first four months of this year the government has already borrowed Rs. 315.9 billion or 75 percent of the budgeted limit for the entire year.


The government’s total outstanding foreign debt amounted to Rs. 2.8 trillion as at end April 2013, up 1.4 percent from Rs. 2.76 trillion as at end December 2012 and up 2.64 percent from Rs. 2.73 trillion a year ago.


The government’s foreign debt requirement this year is estimated at Rs. 86 billion according to the 2013 budget and during the first four months of this year foreign loans amounted to Rs. 38.1 billion, 44.3 percent of the full year requirement.


The budget deficit for the first four months of this year amounted to 3.9 percent of GDP against a full year target of 5.8 percent.


Moody’s recently downgraded Sri Lanka’s rating outlook from ‘positive’ to ‘stable’ because not enough was done by authorities to support a positive rating amidst a slowdown in fiscal consolidation, high debt burden and increasing foreign liability positions of the banking system.


"The fiscal deficit has narrowed from a peak of 9.9% of GDP in 2009 to 6.4% in 2012. The debt/GDP ratio has also been on a generally declining trajectory, falling from 86% of GDP in 2009, the year the civil war ended, to 78% of GDP in 2011, although it edged higher to 79% of GDP in 2012 due to currency depreciation. While progress has been made in reducing both debt and deficits, much of this consolidation took place between 2009 and 2011, and since then, the pace of improvement has slowed. As a result, Sri Lanka’s debt burden remains considerably higher than the 44% of GDP median in 2012 for Sri Lanka’s B-Caa rating peers," Moody’s said.


Sovereign ratings agency Fitch flagged concerns over the country’s weak fiscal and external balance sheets in a recent report.


"Sri Lanka’s external finances remain a source of concern due to a heavy external debt refinancing schedule, where an average of USD 1.9bn per annum in sovereign debt is projected to mature during 2013-2015. Foreign reserves, however, remain at a healthy level, standing at USD 6.9bn at end-April 2013. Progress on fiscal consolidation has been slow as the budget deficit fell to 6.4% of GDP in 2012," Fitch said.


Fitch has given Sri Lanka a ‘BB-’ sovereign foreign and local currency rating with stable outlooks.


The state gobbled up 85 percent of the Rs. 278.2 billion issued by the domestic banking sector by way of new loans during the first four months of this year with new loans increasing in the month of April and the private sector experiencing a sharp decline in new loans, official data showed.

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