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Saturday, June 14, 2014 - 06.44 GMT
Central Bank responds to charges of under-representing government's external debt

 

Central Bank yesterday responded to the recent reports appeared in media that accused the monetary authority of under-representing the government's external debts.

In a statement released today, the Bank said the press reports have attempted to point out a higher level of government external debt, on the basis of the outstanding external debt position of the country as presented in the Annual Report 2013.

Clarifying the figures, the Central Bank said the outstanding external debt position as reported in the Bank's Annual Report for 2013 is the total of the outstanding position of the SDRs, intercompany lending and Direct Investment Enterprises (DIEs), in addition to the external debt of the Government.

Opposition United National Party (UNP) parliamentarian and economist Harsha de Silva has reportedly said that the Central Bank is trying to create a false sense of security regarding the government debt with flawed calculations only on the basis of foreign debt owned by the Treasury.

The Central Bank said the government's classification on external debt is based on the International Monetary Fund (IMF) Balance of Payments Manual 6 (BPM6) presentation format, and is also followed by many advanced economies.

According to the Bank's Annual Report 2013 the government external debt is shown as only 56 percent of the total external debt, while the balance is shown as being owned by deposit taking financial institutions, private sector and state-owned enterprises, Central Bank and direct investment enterprises.

The Bank last month in a press release said the country has continued to improve its external debt sustainability indicators and placed in the "less indebted" category in the United Nations Economic Commission for Asia and the Pacific (UNESCAP) classification.

In 2013, Sri Lanka has been categorized as 'less indebted' in five out of six external debt indicators in accordance with the parameters defined in the manual on Effective Debt Management of the UNESCAP, to assess the external debt vulnerability of a country, the Bank said in the release.

The present external debt was 39.8% of gross national income against a threshold of 48%, the Central Bank noted.

The Central Bank said the external debt of the government expressed as a per cent of GDP shows a decline to 34.1 percent in 2013 from 36.5 per cent in 2012.

The Bank defended the statistics saying that Sri Lanka undergoes periodic surveillance by international agencies, including rating agencies, which pay careful attention often on the country's external debt level.

A recent mission of the IMF Post-Programme Monitoring mission during September 17-25, 2013 had not voiced any concerns, as claimed in the recent commentaries, the Bank said.

 

 
 
   
   
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Last modified: June 14, 2014.

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