COLOMBO Aug 7 Sri Lanka's government has
improved its debt management, reaching its debt-to-GDP goal for
year's end by mid-year, data released on Thursday by the central
However, analysts said the government has been encouraging
state-owned banks to borrow on international capital markets.
And a week ago, the International Monetary Fund said medium-term
sustainability depended on Sri Lanka's "judicious use of foreign
The ratio of debt to gross domestic product has fallen to
74.3 percent, which was the year-end target set by the central
bank. The indicator stood at 78.3 percent at the end of 2013.
The average maturity of domestic debt extended to six years
in mid-June from last year's 4.8 years. Foreign-debt maturity
increased to 10.4 years from 9.8 years in the same period.
In absolute terms, Sri Lanka's total debt stood at 7.18
trillion rupees ($55.19 billion) at the end of March this year,
compared with 6.79 trillion rupees by the end of 2013.
Since the end of its civil war with Tamil separatists in May
2009, Sri Lanka has increasingly been borrowing through
expensive commercial loans instead of bilateral credit to fund
its massive infrastructure projects.
It has also been borrowing through state banks and those
loans, mainly for government spending, are not reflected in the
latest numbers, analysts say.
In the 17 months ended in September 2013, state banks have
borrowed $1.85 billion from international markets at commercial
rates. The IMF last week urged a cautious approach to such
The IMF said a Market Access Debt Sustainability Analysis
indicated the sensitivity of Sri Lanka's debt sustainability to
growth and foreign exchange shocks.
(1 US dollar = 130.1700 Sri Lankan rupee)
(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Larry