Total borrowings by the Government have been completely used to repay debt, State Minister of Finance Eran Wickramaratne confirmed to Parliament yesterday rejecting Opposition charges of bad financial management and using money for consumption. The State Minister responding to a supplementary question held the Government was left with a considerable debt burden when they took power in 2015.
“We have continued with 100% debt servicing. It is true that we borrowed money but all were used to settle both capital and the interest borrowed during the previous Government. But the fact forgotten here is the interest rates coming down where the Government decided to keep the rupee on a free float.There is a gap between the income and expenses. For the first time in 70 years we’re able to report a positive balance in the primary account. This shows we borrowed to repay debt, not for consumption,” he explained.
However, United Peoples Freedom Alliance (UPFA) MP Bandula Gunawardane held the bond scam led the Government to borrow at higher rates. “The bond scam deteriorated the trust placed on government securities. The foreign investors withdrew their investments where the rupee was devalued by 9.3%. So you were compelled to enter the international markets with sovereign bonds. The international sovereign bonds were issued for the first time in 2007 during Mahinda Rajapaksa Government. By the end of the Mahinda Rajapaksa tenure, the total borrowings from the international sovereign bonds stood at $ 5.2 billion despite all global crisis. But now you have borrowed over $ 10.2 billion during the past four years without any global crisis,” he said.
“We had Rs. 2 trillion worth unpaid debt when the Mahinda Rajapaksa Government started. But the end of the Mahinda Rajapaksa era, the unpaid debt stood at Rs. 7 trillion. The increase was by Rs. 5 trillion for a period. But during your last four years, the increase is Rs. 5 trillion. You also borrowed $ 5.2 billion from the international sovereign bonds. You need to take this up with the Central Bank separately,” he added.
According to the State Minister, during the financial years 2015, 2016, 2017 and 2018 the net inflow of foreign investments in Government securities amounted to $ 1,094.40 million, $ 324.28 million, $ 440.58 million, and $ 990.07 million respectively.
“In attracting foreign investors to the government securities market, annual international investor awareness programs covering Asia, the Middle East, Europe, and the US are conducted. Continuous interaction with rating agencies and leading international investors on economic developments are maintained. We have listed our international sovereign bonds in international securities exchanges including London and Singapore. We are continuing with the IMF extended fund facility program to build market confidence and also engage with government agencies to continue reforms,” he explained.
(FT)