State debt position improves

The Sri Lanka State debt position has improved according to this year's midyear statistics, Central Bank sources said.

The report issued last week said that the public debt portfolio is rapidly improving and by mid 2014, total public debt as a percentage of GDP had declined to 74.3 percent from 78.3 percent at the end of 2013.

Foreign debt has fallen to 32.9 percent from 34.1 percent in 2013 and domestic debt has fallen to 41.2 from 44.2 percent of the GDP.

The data indicates significant improvement from 2005 and the total debt as a percentage of the GDP was 90.6 percent in 2005 and the foreign debt and domestic debt in the same year were at 39.0 percent and 51.6 percent.

Average time to maturity of domestic debt was 6.0 years, up from 4.8 years by end of 2013. Maturity of the longest dated Treasury bond was now 30 years, up from 10 years in 2009.

Meanwhile interest rates on domestic debt has also fallen with three-month Treasuries down to 6.51 percent by June 2014 from 7.54 percent in December, six-month Treasuries down to 6.69 percent from 7.85 percent and 12-months down to 6.99 percent from 8.29 percent.

Five-year bond yields were down to 8.93 percent by June from 10.64 percent in December, 10-year yields were down to 10.00 percent from 11.80 percent and 30-year bonds were down to 11.75 percent from 12.50 percent. There have been concerns over Sri Lanka State debt, especially arising from foreign commercial debt. Several State agencies have also begun to borrow outside the Budget, through Treasury guarantees which are not counted in the overall debt.