ECONOMYNEXT – Addressing the prevailing crisis of the country requires a focus on economic solutions, and political measures would be inadequate, minister of transport, highways and mass media, Bandula Gunawardena said.
“The existing national debt stands at approximately 36 billion US dollars. Only 37 percent of this debt is slated for payment within the next 5 to 6 years,” Gunawardena said at a media briefing at the presidential media centre on Wednesday.
“51 percent of the loan amount scheduled for repayment between 6 and 20 years. The remaining 12% is earmarked for settlement after the 20-year mark.
“Irrespective of the governing party, the country is obligated to service this debt until the year 2048. Failure to meet these financial commitments would result in a governing party’s ability to administer the government for only a two-week duration.”
Avoiding loans from global entities and defaulting on payments poses a critical challenge, as the current international system relies on this financial mechanism, Gunawardena pointed out.
“Refusal of other nations to accept letters of credit issued by Sri Lanka would hinder the importation of vital commodities such as petroleum, gas, medicines and essential food items.
“Consequently, political solutions prove ineffective in addressing this predicament; instead, the imperative lies in implementing an economic solution to navigate through these challenges.
To navigate the country out of the current crisis, a strategic approach involves focusing on four key aspects, Gunawardena said.
“Firstly, there is an imperative to enhance government revenue. Secondly, it is essential to curtail both recurrent and capital expenditures of the government.
“The third element involves boosting foreign exchange inflows while concurrently minimizing foreign exchange outflows. Lastly, the goal is to establish a current account surplus in the balance of payments.
“The budget presented by the President for the year 2024 is aligned with these crucial objectives.”
Following the budget, the International Monetary Fund is expected to issue the second loan tranche.
“Successful refinancing of the debt would provide ample resources to execute all the proposals outlined in the budget. Subsequently, the revival of all stalled development projects becomes feasible.” (Colombo/Nov16/2023)