Govt debt increases by 8.8 percent in 2014 - By Disna Mudalige
Ceylon Daily News
25 May 2015

The total outstanding government debt increased by 8.8 percent to Rs. 7,390 billion by end of 2014 from Rs. 6,793 billion at the end 2013, stated the Central Bank Annual Report 2014 tabled in Parliament last Tuesday.

Out of the total government debt, Rs. 4,277 billion was domestic debt, while Rs. 3,113 billion was foreign debt.

The total outstanding foreign debt increased by 5.2 percent compared to 2013. Among them 1,164 billion had been obtained as commercial loans. Compared to 2011, the amount of commercial loans had increased by Rs. 400 billion by the end of last year. The concessionary loans amounted to Rs. 1,490 billion while non concessionary loans amounted to Rs. 457 billion.

The report stated the appreciation of the Sri Lanka rupee against major currencies during the year resulted in a reduction in the debt stock by Rs. 89.3 billion.

The domestic debt stock had increased by Rs. 445 billion in 2014 compared to 2013 due to greater reliance on domestic sources to finance the budget deficit. Domestic debt held by the non bank sector was Rs. 2,607 billion and the outstanding debt obligation of the government to the domestic banking sector was Rs. 1,669 billion as at the end 2014. As of the maturity period, Rs. 941 billion of domestic debt had been raised as short term loans, while 3,336 billion had been raised as medium and long term loans. The outstanding debt of major public non financial corporations had increased by 17.8 percent to Rs 754.7 billion at the end 2014. As a percentage of the GDP this was 7.7 percent. The domestic debt of the Ceylon Electricity Board was Rs. 47 billion, while this amount at the Ceylon Petroleum Corporation was Rs. 245 billion, Road Development Authority Rs. 58 billion, Ceylon Fertilizer Corporation Rs. 30 billion and Sri Lanka Ports Authority Rs. 11billion.

In addition, the Ceylon Electricity Board had a foreign debt of Rs 160 billion and Sri Lanka Ports Authority had a foreign debt of Rs. 122 billion. The report stated a notable deviation from the fiscal targets was observed with the budget deficit in 2014 rising to six percent of the GDP as against the target of the government to reduce it to 5.2 percent. The report attributed it as an outcome of the decline in government revenue to GDP ratio due to the shortfall in tax revenue. Out of the total government revenue of Rs 1,195 billion, Rs. 1,050 billion had been tax revenue, while the non tax revenue amounted to only Rs. 144 billion.

As of the GDP total government revenue was 14.5 percent and out of that 12.8 percent had been collected as the tax revenue. The expenditure on salaries and wages in 2014 had been Rs. 441 billion while Rs. 436 billion had been spent on foreign and domestic interest payments.