Sri Lanka’s state debt expands amid currency fall, forex loans

L to R: Samantha Ranatunga, Chairman, HVA Foods PLC; Jan Müggenburg, Chief Executive Officer, Müggenburg Group; Graham Stork, Chief Executive Officer, HVA Foods PLC; Sarva Ameresekere, Group Chairman, George Steuart & Co. Ltd.

Oct 02, 2012 (LBO) - Sri Lanka's state debt has expanded by more than a trillion rupees to 6,161 billion rupees up to July 2012 from 5,133.3 billion rupees in December 2012, as the currency depreciated and foreign borrowings increased. Domestic borrowing had fallen to 53.02 percent from 59.6 percent over the same period.

In July 2012, the share of foreign debt rose to 48.2 percent of total debt and domestic debt fell to 51.


7 percent.

Sri Lanka has been borrowing in commercial markets through sovereign bonds and also getting large volumes of money from China's Exim Bank and Development Bank of China.

Most of the Chinese loans however are long-term, with some having tenures as much as 20 years with annual repayments. Commercial loans however are bullet repayments though Sri Lanka has sold 10-year bonds.

Sri Lanka's debt burden measured as a percentage of gross domestic product has fallen from 87.


8 percent in 2006 to 78.4 percent in 2011.

Unlike actual debt numbers however GDP is an estimate based on a methodology where state expenses such as salaries are also counted as output.


By June 2012, based on the 6,982 billion rupe

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