Sri Lanka government is compelled to pay Rs 1,100 billion as debt service amidst dwindling revenue amounting to of Rs 894 billion in the first 6 months this year.
The short fall is Rs 206 billion even after the debt and interest are paid off and it has to be offset by further domestic borrowings, official sources said.
Accordingly, the Government plans to borrow Rs.1, 944 billion from local and foreign sources for its debt servicing including the financing of the budget deficit in 2019, Central Bank announced.
Sri Lanka, with a persistent current account deficit of the balance of payments has had to rely on external borrowings to build up foreign reserves and internal borrowings to service local debts, a senior official said.
The Government has allocated Rs. 2 057 billion for debt servicing in 2019 he said adding that this was the largest amount of money, the government should bear in the upcoming election period.
Fiscal operations of the Government moderated during the first four months of 2019 amidst the Government’s efforts towards a revenue-based fiscal consolidation.
Total revenue declined slightly by 3.9 per cent to Rs. 598 billion in the first four months of 2019 from Rs. 623 billion in the same period of 2018
The total government expenditure was Rs. 962 billion during this period. This was an increase of 10.1 per cent compared to the same period of 2018.
The utilisation of Government borrowings for the period from 01st of January to 30th April 2019 was recorded as Rs. 944.2 billion.
Approximately 46.0 per cent of domestic borrowing consisted of short-term borrowing in the first four months of 2019.
Treasury Bonds and Treasury Bills were the main sources of domestic borrowings of the Government.
Accordingly, around 48 per cent and 28 per cent of the total domestic borrowings were raised by way of Treasury Bonds and Treasury Bills, respectively in the first four months of 2019.
In addition to the domestic borrowings, the proceeds from the International Sovereign Bonds (ISBs) issued in the first quarter of 2019 was utilised to finance the foreign currency debt service payments.
(LI)