Overall debt levels likely to improve – Central Bank governor

Overall debt levels likely to improve – Central Bank governor

Overall debt levels likely to improve – Central Bank governor

Written by Staff Writer

09 Aug, 2014 | 12:12 pm

Central Bank Governor Ajith Nivard Cabraal has said that overall debt levels are likely to improve further after data showed the nation managed to hit the debt-to-GDP goal months ahead of the year-end target.

Cabraal told Reuters in a phone interview that emerging signs point to debt levels continuing to fall.

His comments were made after Central Bank data on Thursday, August 7, showed the ratio of debt to gross domestic product has fallen to 74.3 percent, which was the year-end target set by the bank.

Recently, analysts have pointed to the stepped-up borrowing by state-owned banks on international capital markets, adding that it could place a burden on the government’s ability to finance them down the road.

The concerns were echoed a week ago by the International Monetary Fund, which said medium-term sustainability of growth depended on Sri Lanka’s “judicious use of foreign borrowing.” These loans are not counted in the overall debt figure.

However, Cabraal said the offshore commercial borrowings by banks is very small as a proportion of the official debt load, suggesting that policy makers are sanguine about the economy’s exposure to such debt.

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