Sri Lanka plans to reduce debt to GDP ratio to 70-pct by 2020

Nov 16, 2017 (LBO) - The government has endeavored to reduce its debt to a risk-free and manageable level through revenue enhancement and mobilization efforts, the Finance Ministry says.

The debt to GDP ratio increased to 79.

3 percent in 2016 from 77.6 percent in 2015 reflecting the debt financing of budget deficit, lower nominal GDP growth rate and the significant rupee depreciation on the stock of foreign currency denominated debt. According to the finance ministry’s Fiscal Management Report – 2018, however, a the ratio will gradually reduce to 70 percent in 2020 with the expected lower fiscal deficit supported by a higher economic growth. The government will implement a forward looking liability management strategy for domestic and foreign debt portfolios under the Medium Term Debt Management Strategy (MTDS) as a measure of resolving high debt stock, the report adds. The MTDS will use an appropriate composition of domestic and foreign debt instruments and maturities to meet requirements of the government’s cash flow.