The total debt stock of Sri Lanka has gone up by 233% to Rs.7, 391 billion during the period from 2005 to 2014, the Finance Ministry said yesterday.
The total debt burden of Sri Lanka in 2005 was Rs.2, 222 billion and, within 5 years, it increased up to Rs.4, 590 billion in 2010. In addition there is another Rs 2,000 billion debt obtained by the Public owned Enterprises directly off the balance sheet.
Accordingly, the debt servicing (loan installments and the interest) to be paid by Sri Lanka to foreign financiers is also increasing constantly. The debt servicing of US$ 1,828 million paid in 2016 will be increased by more than double to US$ 3,992 million being the highest debt repayment to be paid by Sri Lanka in a year due to colossal borrowings by the previous government.This could be considered as the highest sum of debt servicing to be repaid by Independent Sri Lanka within a year.
Finance Minister Ravi Karunanayake said Sri Lanka is embroiled in a gigantic debt trap. The main reason is that the loans obtained by the previous regime for infrastructure development has not brought any returns on its investments. Further the national revenue and the export earnings constantly came down since 2011 up to year 2014. The previous government had obtained US$1,303 million for the Hambantota Port and the first phase of the credit of Rs.340 million was released on a 6% interest.
In addition, 6% insurance premium should also be paid for the loan. Another US$ 4.5 billion had been obtained through International Sovereign Bond during the period between 2010 and 2014. This sovereign bond should be repaid in full as one billion dollar per annum from its maturity in 2019. However, the repayment of all these project loans and bonds began after 2014.
Its unfortunate that the previous government did not have any strategy to turn such giant loss making entities in to profit making ventures.The current government has made arrangements to convert these credits in to equity under the Public Private Partnership concept thereby relieving the people from the debt burden. While the government is taking untiring efforts to convert these white elephants into profit making institutions, and generate income and employment for the youth in the country, an opposition group is engaged in sabotaging such efforts charging that the government is attempting to sell off national resources to foreigners.It is high time people thought rationally in response to such misleading remarks made by these rival groups.
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