News

“Current govt. forced to borrow heavily to repay previous debts”

Published

9 months ago

October 18, 2024

editor

Senior Professor Wasantha Athukorala of the Department of Economics and Statistics at the University of Peradeniya revealed that the previous government had borrowed approximately Rs. 800 billion per month from the domestic market without any repayment plan. The current Government is compelled to borrow to repay these loans, he added.

Professor Athukorala emphasised that the current Government is paying off a significant amount of debt accumulated through Treasury Bills and Bonds by previous administrations. The Government will have to borrow to repay Rs. 4,859 billion in Treasury Bills and Bonds maturing over the next year.

Responding to allegations of large-scale borrowing by the current Government since assuming office, Professor Athukorala stated that the majority of the funds the Government is borrowing now is to settle previous loans. The former governments had no concrete plans to repay these loans, which forced the current Government to continue borrowing to meet these obligations.

Highlighting the scale of previous borrowings, he said that around US$ 12 billion of the US$ 17 billion borrowed through International Sovereign Bonds was taken between 2015 and 2019. This accounts for nearly 70 percent of the total foreign borrowings during that period. With Sri Lanka’s credit rating downgraded by agencies like Fitch, the country has lost the ability to borrow from foreign markets.

He also noted that even though foreign loans have decreased, Sri Lanka is still borrowing from bilateral and multilateral institutions. Even if foreign loans are restructured, the country will eventually have to repay them. Domestically, the government raises funds through Treasury Bills and Bonds every week to meet its financial needs.

Looking ahead, the Government will need to repay Rs. 3,774 billion in Treasury Bills from November this year to November next year. Additionally, Rs. 13,237 billion in Treasury Bonds must be settled by March 2045, and Rs. 1,125 billion in Bonds will mature next year. In total, Rs. 4,859 billion will mature between this November and the next.

These loans, borrowed from local banks and financial institutions, cannot be avoided. Failure to repay them could plunge the banking system into crisis. Therefore, the Government will continue to borrow from the market every week to meet the maturing debt obligations.

While previous governments borrowed to repay loans without any long-term plan to reduce the debt burden, the current Government needs a strategy to address this ongoing debt. Each month, the Government borrows approximately Rs. 400 billion to meet debt repayments. From January to August of this year, the Government borrowed about Rs. 800 billion per month from the domestic market, compared to last year.

Professor Athukorala stressed the importance of establishing a plan to reduce borrowing gradually. Over the next five years, the Government should aim to reduce monthly domestic borrowings to around Rs. 200 to 250 billion to ensure sustainable debt management. Such a plan would help avoid future debt crises. He also observed that while previous governments often wasted borrowed money, there are signs that wasteful spending is decreasing under the current administration, which is a positive development.

(Daily News)

(Except for the headline, this story, originally published by Daily News has not been edited by SLM staff)

News

IMF Executive Board approves Sri Lanka’s fourth review

Published

54 minutes ago

July 2, 2025

editor

The Executive Board of the International Monetary Fund (IMF) completed the Fourth review under the 48-month Extended Fund Facility (EFF) Arrangement, allowing the authorities to draw about US$350 million, said Evan Papageorgiou, IMF Mission Chief for Sri Lanka.

This brings the total IMF financial support disbursed so far to about US$1.74 billion.

“The EFF arrangement for Sri Lanka was approved by the Executive Board on March 20, 2023 in an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion). The program supports Sri Lanka’s efforts to durably restore macroeconomic stability by (i) restoring fiscal and debt sustainability while protecting the vulnerable, (ii) safeguarding price and financial sector stability, (iii) rebuilding external buffers, (iv) strengthening governance and reducing corruption vulnerabilities, and (v) enhancing growth-oriented structural reforms.”

News

Cabinet approval for online traffic fine payment system – Bimal

Published

11 hours ago

July 1, 2025

editor

Minister of Transport and Highways Bimal Rathnayake has said that Cabinet approval has been granted to implement an islandwide online traffic fine payment system.

He made this statement during a media briefing near the Kottawa Expressway entrance, following a public awareness programme on mandatory seat belt use for vehicles travelling on expressways.

“The Cabinet approved the proposal today. At present, the online fine payment system is available only between Kurunegala and Anuradhapura. Now, we’re providing all police units with mobile devices, so that from this year, traffic fines can be paid from anywhere via mobile phones… Rather than paying fines, we urge everyone to drive carefully, wear seat belts, and avoid violations. Our core message is simple, travel safely,” the minister has said.

News

Indian entrepreneur delegation meets President AKD (Pics)

Published

11 hours ago

July 1, 2025

editor

Indian entrepreneurs state that they are currently directing their attention towards new investment prospects in Sri Lanka, particularly in sectors like energy, infrastructure, the digital economy, tourism and agriculture, as well as on enhancing entrepreneurial capacity.

A delegation of around 20 Indian entrepreneurs, comprising heads of several prominent Indian companies, is currently engaged in an active programme in Sri Lanka, coordinated by the Confederation of Indian Industry (CII), with the aim of further developing existing investment opportunities and exploring new prospects. These comments were expressed during the delegation’s meeting with President Anura Kumara Disanayake this afternoon (01) at the Presidential Secretariat.

The delegation is visiting Sri Lanka following an invitation extended by President Anura Kumara Disanayake during his recent official visit to India. The Indian delegation held discussions with several Sri Lankan Ministers and with officials from key government institutions, including the Board of Investment of Sri Lanka.

President Disanayake emphasized that the country has now established a more favourable environment for investors, owing to the current economic stability.

The President briefed the Indian business representatives on the constructive measures implemented by the government to create a supportive economic climate and conditions conducive to investment. He further noted that the government has strengthened the legal framework and institutional system necessary to attract and sustain large-scale investments. He assured that under the present administration efforts have been made to eliminate the losses and corruption previously associated with investments.

The President also emphasised that special attention has been given to attracting regional investors and providing them with the necessary facilities. He pointed out that numerous new business opportunities have opened up between India and Sri Lanka across various sectors.

The Indian entrepreneurs stated that Sri Lanka’s strategic location is of great appeal to investors. They appreciated the President’s explanation regarding the current situation of the country, noting that it had inspired confidence and renewed hope in them.

Minister of Labour and Deputy Minister of Economic Development Professor Anil Jayantha Fernando, Senior Additional Secretary to the President, Roshan Gamage, and Indian High Commissioner to Sri Lanka Santosh Jha, along with officials from the Indian High Commission, were present at the occasion. Also in attendance were former Chairman of CII and Chairman and Managing Director of ITC Limited, Sanjiv Puri, and heads of several other major Indian companies.

(President’s Media Division)