Sri Lanka’s outstanding debt rises this year
View(s):Sri Lanka’s total outstanding foreign debt as of April 2021 stood at US$ 35.1 billion while the total debt service payments from January 1 to April 30, 2021 amounted to $981 million.
The debt payments this year are made of up $520.6 million as principal repayments and the balance $460.4 million as interest payment. $1 billion of an international sovereign bond (ISB) was paid by July 27, Finance Ministry data shows.
Of the total outstanding external debt, the market borrowings is 47 percent totalling $16.4 billion which comes from the Asian Development Bank-ADB ($4.4 billion or 13 percent of the debt), China ($3.4 billion-10 percent), Japan ($3.4 billion-10 percent), World Bank ($3.2 billion), and India and other countries ($859 million).
Maturity of 40 percent of these loans are 10 + years; 39 percent in 5-10 years, 2.5 percent in 4-5 years, 7 percent is 3-4 years, 2.5 percent in 2-3 years, 5 percent in 1-2 years and 4 percent in less than a year, according to the data. These concessionary loans were taken during 2012 -2019 period at an interest rate of 1 percent or even lower.
Under bilateral borrowings with development partners, Sri Lanka has received a loan from Japan of $9.50 million and Germany – $ 12.47 million while multilateral loans came from the ADB – $568 million, World Bank – $217.80 million, European Union – $43.60 million and UN agencies -$0.73 million during the period uptodate.
Recent borrowings since 2019 are $150 million from the ADB for COVID-19 Vaccines for Recovery (RECOVER) project; $200 million from the ADB for the Second I-road Programme; $80.51 million from the World Bank as Second Additional Financing for Sri Lanka COVID-19 Emergency Response and Health Preparedness project; and $500 million from South Korea.
The data shows that Sri Lanka has received financing of $1.3 billion by entering into 18 agreements with foreign development partners and lending agencies in 2020
to support the public investment programme.
Total foreign financing disbursements made for development projects and programmes in 2020 amounted to $ 2 billion. Of this, $1.8 billion was disbursed as loans while $36.7 million was disbursed by way of grants. The majority of the disbursements were made from the loan agreements signed with China, (almost 23 percent), followed by the World Bank (22.8 percent), the ADB (22.4 percent), and Japan (12 percent). The Government obtained $500 million from the China Development Bank in 2020.
According to Finance Ministry data up to April 2021, the Gross Official Reserves remain at $4 billion, without considering the standby SWAP agreement of approximately $1.5 billion with the People’s Bank of China. Inflows expected to the Central Bank include the SWAP facility of $250 million from the Bangladesh Bank expected in July 2021, the SAARC Finance SWAP facility from the Reserve Bank of India of $400 million expected in August 2021, and the special SWAP facility of $ 1,000 million being negotiated with the Indian counterpart.
Domestic borrowings will mainly consist of the issuance of Treasury bills, Treasury bonds and Sri Lanka Development Bonds (SLDBs).
In 2021, the total debt service payment is estimated to be $7 billion and $1.5 billion as interest payments, according to a memorandum of financing the Budget 2021 formulated by the Finance Ministry recently.
During 2021, $2 billion is expected to be raised through the issuance of SLDBs. In addition $ 1.2 billion worth of FCBUs raised from the Bank of Ceylon and the People’s Bank will mature this year and the Treasury will raise loans to repay it from the same channel, ministry sources said.