'External debt: Long-term outlook stable'
The Sri Lankan economy is on a strong, sustainable growth path and
external debt of the country as a percentage of the GDP is declining
gradually and is at a healthy position, said Private Transport Service
Minister C.B. Rathnayake.
He said that allegations against government policies and the state of
the economy based on the debt ratio is irrational and misleading.
“In 1948, our external debt was only 4.4 percent of the GDP and it
increased with the development of the country as we had to finance
various development programs. There were some periods when the external
debt ratio exceed 100 percent.
In 2003, our foreign debt was 102 percent of GDP and by 2013 it had
come down to 78 percent of GDP. Our target is bring it down to 65
percent by 2016,” the Minister said.
International financial institutions such as the IMF and other
independent analysts do not share the politically biased, baseless
criticism of our foreign debt position, he said. Economists recommend
maintaining the external debt ratio at below 80 percent.
“According to classifications of independent rating agencies such as
Fitch, S and P and Moody's, our external debt long-term outlook is
stable. According to the UNESCAP Debt Management Manual none of our
financial institutions have been placed at extreme risk positions,”
Minister Rathnayake said.
Critics should look at how the government uses dollar loans. The
Government invests these monies on crucial infrastructure development
projects and the benefits are long-term. Borrowing capacity of a person
or a country depends on economic feasibility. In the recent past, Sri
Lanka has been achieving a high economic growth rate close to 7 percent
and inflation has been maintained at below 5 percent. The strong
external reserve position and the strength of the financial sector too
should be considered before criticising the external debt position. Sri
Lanka successfully manages its external debts and there is no issue with
regard to debt servicing, he said.