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Govt. decides to freeze foreign loans for at least 3 years
View(s):Saddled with a debt repayment of US $ 5.6 billion by 2018, the Government has decided to stop taking any new loans for at least the next three years, Finance Minister Ravi Karunanayake told the Sunday Times.
Institutions like the Road Ddevelopment Authority (RDA), Urban Development Authority (UDA) have been asked to put mega projects on hold if they entail taking fresh loans, he said.
Instead the Government will encourage Public Private Partnerships (PP) and Build, Operate and Transfer (BOT) based projects. “We will only lease the land and keep a share in these projects but no new loans will be taken,” he said.
The Minister said that countries such as Malaysia, Japan, and Indonesia have used a similar development strategy and made their economies stronger.
“Unless we move towards such methods, our economy will be unable to bear the debt which fresh loans would incur, he added.
He said if there is a freeze on foreign loans for at least three years, the country will be able to scrape through and survive economically.
A Ministry official said that the country’s external trade balance was highly unfavourable to the country with imports more than double of exports. He added that the strategy is to find new sources of export.
He added that this is the highest debt repayment in the history of the country accumulated over the years.
“We are unable to raise taxes as it is an unpopular move. We are also unable to cut allocations to various ministries so we have to move towards a new strategy,” he added.