Short-term debt maturing within a year is considered by experts as a real index of a country’s vulnerability on the debt-servicing front. It is the sum of actual short-term debt with one-year maturity and longer-term debt maturing within the same year.The Central Bank Deputy Governor Nandalal Weerasinghe evaded a question raised by a Journalist on the government's cost on total loan instalment and interestcost for the government during the first half of this year at recent press conference in Colombo.
However Sri Lanka will have to repay at least US$ 2.5 billion this year for short term borrowings and the government should raise revenue for debt servicing rather than resorting to more borrowings for repayment of loans, official sources disclosed.
Finance Minister Ravi Karunanayake told a media briefing the present government has taken loans not to any other purpose but to pay the loans taken by the former regime.
He emphasised that they would not burden the people to pay the loans taken by the previous government.
According to Finance Ministry statistics, the government has borrowed a sum of around US$ 6.3 billion since it took over office in January 2015.
This amount included a $ 700 million currency swap from the Indian Central Bank on 08 March 2016 for just four months and another $ 400 million from SAARC (South Asian Association for Regional Co-operation).
The government has obtained another $650 million through a sovereign bond issue in May 2015 and $ 1.5 billion through a sovereign bond issue in October.
Between March 2015 and March 2016, the government issued short and medium term Sri Lanka development bonds on 12 different occasions borrowing over $2.7billion.
Sri Lanka’s gross official reserves were estimated at $ 6.6 billion at present and it is sufficient for 4 months of imports.
This was possible with the $ 700 million currency swap from the Indian Central Bank on 08 March 2016 for just four months and another $400 million from SAARC (South Asian Association for Regional Co-operation).
The Indian currency swap cannot be used for any payments but it will help to boost foreign reserves in order to secure more foreign funding.
Former President Mahinda Rajapaksa this week accused the government for issuing Sri Lanka Development Bonds with three and five month maturity periods to raise money.
Development Bonds are supposed to be long term instruments. But this government has been using them to raise short term funds, he claimed.
Finance Minister Ravi Karunanayake said that there were contradictions in the accounts submitted on the expenditures made by the Rajapaksa regime which took loans to build the Maththala airport and the Katunayaka highway.
