Govt. tightens domestic borrowing
The Finance Ministry has tightened domestic borrowing while controlling expenditure of ministries, departments and state institutions owing to its rising debt payments this year.
As per the existing budgetary estimates, the government debt to GDP ratio is to decline to 101.7 per cent of GDP in 2022 from 102.8 per cent in 2021.
The Sri Lanka Government debt is projected to trend around Rs. 1.95 trillion in 2022 and Rs. 2.2 trillion in 2023 from Rs.1.65 trillion in 2021, according to econometric models and provisional estimates of the Finance Ministry.
The domestic debt service payment this year is around Rs.80.72 billion and it is expected to increase to a high level if the government fails to control its domestic borrowings.
Therefore ministries, departments and state institutions have been directed to control spending for development projects by cutting down overheads throughout 2022, ministry guidelines revealed.
A ceiling on domestic borrowing is now under consideration due to adverse effects on economic growth and effective usage of public debt is essential for Sri Lanka at present, a senior official of the ministry said. A large amount of funds was mobilised from the domestic money market by the Central Bank (CB) on behalf of the government to meet debt service requirements as well as to meet essential expenditure of the government.
The CB also provided required financing to the government arising from the shortfall in government revenue and increased expenditure. Total domestic borrowings will be raised by way of issuing Treasury Bonds, Treasury Bills, Sri Lanka Development Bonds ( SLDBs) and Provisional Advance of the CB.
According to the latest data released by the Finance Ministry and published by the CB, the country’s total debt stock had ballooned to Rs.17.05 trillion by the end of October 2021, from Rs.15.12 trillion at the end of 2020, an increase of Rs.1.93 trillion during the nine months.
A ceiling on domestic borrowing is now under consideration due to adverse effects on economic growth and effective usage of public debt is essential for Sri Lanka at present, a senior official of the ministry said