Sri Lankan economy remains vulnerable: IMF

Colombo (News 1st): The latest review report of the IMF states the Sri Lankan economy remains vulnerable to shocks, given high public debt, large refinancing needs, and low external buffers. According to the IMF, public debt is estimated to have increased significantly to about 90% of GDP at the end-2018, reflecting weaker economic performance and the sizable depreciation of the rupee. Sri Lanka’s debt to GDP ratio remains higher than the median for emerging economies, and gross funding needs are the third largest among them. Based on the latest available data, as of end-2017, the financial obligations of non-financial state-owned enterprises are estimated to be 11.8% of GDP. The report adds that Sri Lanka has more than 200 state-owned enterprises, while the Ministry of Finance only publishes the financial performance of 42 non-financial SOEs. Three major SOEs—the Ceylon Petroleum Corporation (CPC), the Ceylon Electricity Board (CEB), and SriLankan Airlines (SLA)—recorded a combined loss of 1.3% of GDP in 2018. External debt is estimated at 59% of GDP at end-2018 while the ratio of external debt to exports of goods and services was high, at 258% in 2018. The report adds that fiscal consolidation envisaged under the EFF-supported program is projected to bring down the ratio of public debt to GDP from 90% in 2018 to 75.4% in 2024