Central Bank releases “Public Debt Management Report”: Debt service payments in 2012,103 per cent

debt     The Central Bank, releasing its annual publication on “Public Debt Management in Sri Lanka, Performance in 2012 and Strategies for 2013 and beyond” Friday said it aims to reduce foreign currency debts to 30 percent of total outstanding debt by 2016 from 43 percent in 2012.

The Central Bank intends to implement a Medium Term Debt management Strategy (MTDS) over the next five-year (medium) term in order to achieve a ‘desired’ composition of the government debt portfolio.

The Central Bank reported that the total debt stock of the government increased by Rs. 866.7 billion in 2012 and stood at Rs. 6.0 trillion (US$ 47.4 billion) at the end of 2012. The debt amount comprised Rs. 3.2 trillion domestic debt and Rs. 2.8 trillion foreign debt.

The Central Bank of Sri Lanka (CBSL) continued servicing of the public debt that includes payment of principal and interest as well as other contractual obligations in relation to the debt obtained by the Government of Sri Lanka (GOSL) while upholding the country’s unblemished record of debt servicing in 2012. The total debt service payment in 2012, amounted to Rs. 1,017.5 billion recording an increase of Rs. 122.1 billion (13.64 per cent) compared to Rs. 895.4 billion in 2011.

Of the total debt service payments in 2012, Rs. 609 billion or 59.85 per cent represented amortization payments while the balance of Rs. 408.5 billion or 40.15 per cent represented payments of interest compared to the amortization payments of Rs. 538.7 billion (60.16 per cent) and interest payments of Rs. 356.7 billion (39.84 per cent) in 2011.

Total debt service payments as a percentage of total government revenue in 2012 stood at 103 per cent compared to 95.79 per cent in 2011. In addition to the aforementioned increase in debt service  payments,  the slow growth in government revenue contributed mainly to the deterioration in the ratio of debt service payments as a percentage of total government revenue. The government revenue grew only at 5.68 per cent in 2012 compared to 14.38 per cent growth in the previous year. However, total debt service payments as a percentage of Gross Domestic Product (GDP) improved to 13.42 per cent in 2012 compared to 13.68 per cent in 2011.

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