Sri Lanka project loans and assets disparity exposed
The disparity in the Sri Lanka project loan disbursement and utilisation has been uncovered in recent government audit findings raising the credibility of state accounting procedures.
Sri Lanka has been borrowing billions of dollars (running up to trillions of rupees) from donor countries and multilateral agencies to finance infrastructure and development projects in the country for the past two decades.
But these assets which have economic value and the potential to generate future benefits have not been properly accounted in state financial statements, Auditor General W. P. C. Wickramaratne revealed.
Sri Lanka has taken project loans amounting to Rs. 8 trillion since 2015 but the country has assets worth Rs. 2 trillion in accordance with financial statements, he said adding that Rs. 6 trillion is missing from those assets.
Mr. Wickremaratne disclosed this serious disparity when he addressed a workshop for parliamentarians recently.
He explained that these assets are normally recorded on the state balance sheet as it contributes to net worth or equity.
The country has obtained Rs. 8 trillion only for infrastructure and development projects and it was recorded in the balance sheet as liability but in the financial statement it was indicated as Rs. 2 trillion worth of assets, he said.
This cannot be acceptable by any accounting standards, Mr. Wickremaratne said adding that loans are recorded as liabilities on the borrower’s balance sheet
The explanation given for this disparity by state officials was that they were in the process of assessing the assets, he revealed adding that even after eight years the country was unable to identify its assets.
The authorities should pay immediate attention on this matter as it is high time for the country to make a full assessment of its assets to prove its net worth to the international community, he opined.
According to provisional data of international agencies Sri Lanka’s total net wealth of the country is US$402 billion.
The issue is that the country with $402 billion of assets has been declared bankrupt just because of $51 billion total external debt position with various maturity profiles, several economic experts and high ranking finance ministry officials told the Business Times.
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