The new Government has said the real total debt at the end of 2014 including State-Owned Enterprises’ borrowing was 88.9% of Gross Domestic Product (GDP), over the previous Government’s official figure of about 75% of GDP.

Finance Minister Ravi Karunanayake has planned to cut the $76 billion economy’s fiscal deficit to 4.4% of GDP this year, the lowest since 1977, lower than last year’s 5.2% with Rs. 258 billion ($1.94 billion) foreign borrowing.

“Maybe $1 billion to $1.5 billion, which we are contemplating and looking at,” Karunanayake told Reuters in an interview when asked if the Government was contemplating a sovereign bond.

He said Sri Lanka would go to the market within the 100 days set out in the new Government’s program. The Government’s first 100 days are up on 23 April.
Sri Lanka has borrowed $5.5 billion through seven sovereign bonds since 2007 and it has tightened its yields. It last went to the market in April 2014 and raised $500 million by selling five-year euro bonds at a yield of 5.125% a year.

Heavy commercial borrowing for infrastructure, most of it from China, under former President Mahinda Rajapaksa has put the new Government under pressure to pay debts.

(Reuters)