ECONOMYNEXT – Sri Lanka is borrowing abroad mostly to roll-over Rajapaksa era loans which are coming up for maturity, Finance Minister Mangala Samaraweera said.
Sri Lanka started borrowing in commercial markets from around 2007, when cheap funding from friendly countries reduced with weakening international relations officials said.
Sri Lanka first borrowed 500 million dollars at 8.25 percent and borrowings rapidly ballooned, Samaraweera said.
“In 2018 we had to repay 4.200 billion US dollars in foreign debt, which was the highest Sri Lanka had ever repaid,” Samaraweera said.
“Those loans were taken before 2015. In January 2019 we had to repay a billion dollar bond.”
In 2017 foreign loan repayments were 2.4 billion, which climbed to 2.6 billion dollars in 2018 and 4.2 billion in 2019. In 2020, foreign loans of 3.5 have to be repaid.
He said a statement made by ex-President Rajapaksa that the new administration had borrowed heavily was false as most of the borrowings were made to repay old loans.
He said not just the Treasury but banks were also forced to borrow, which had to be repaid.
The National Savings Bank was forced to borrow when then Chairman Sunil Sirisena objected he was replaced, Samaraweera said. (Colombo/Oct05/2019-sb)