Con­trol­ling Debt

Southasia - - Briefing -

The In­ter­na­tional Mon­e­tary Fund (IMF) has ad­vised Sri Lanka to take no­tice of its mount­ing ex­ter­nal li­a­bil­i­ties and re­serve ad­e­quacy. Sri Lanka’s na­tional debt is grad­u­ally in­creas­ing, amount­ing to 80% of gross domestic prod­uct. The debt to GDP ra­tio has risen in 2012 mainly be­cause of the bal­ance of pay­ment cri­sis, which trig­gered when the coun­try took loans to sub­si­dize en­ergy tar­iffs. The IMF sug­gests that the Sri Lankan government should ad­dress the fis­cal con­sol­i­da­tion. Statis­tics show that nearly 47 per­cent of Sri Lanka’s debt was for­eign while for­eign in­vestors hold 12 per­cent of the Ru­pee dom­i­nated debt.

Au­thor­i­ties sug­gest that Sri Lanka must not com­pare its na­tional debt with other coun­tries be­cause the bud­get com­mit­tee passes most of the funds in Sri Lanka. How­ever, in other coun­tries the spend­ing agen­cies bor­row di­rectly from the government. The spend­ing agen­cies in Sri Lanka in­clude road and ur­ban devel­op­ment agen­cies that bor­row on their own ac­count out­side the bud­get, which un­der­states the over­all bud­get deficit and the na­tional debt. Sri Lanka needs to main­tain its fi­nan­cial health to de­velop its in­dus­tries. With a decade long civil war against the Tamil forces end­ing in 2008, Sri Lanka is slowly be­com­ing a pros­per­ous coun­try. It must take nec­es­sary steps in its bud­get struc­ture to fa­cil­i­tate growth.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.