Public debt declines in 2010
Ravi LADDUWAHETTY
The Government debt as a percentage of GDP has declined to 81.9
percent in 2010 from 86.2 percent in the previous year due to
improvements in fiscal operations, says the Central Bank of Sri Lanka.
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Dharma
Dheerasinghe |
Central Bank Deputy Governor Dharma Dheerasinghe told Daily News
Business yesterday that higher revenue collection which reduced the
borrowing requirement, the reduction in the discount factor (which is
the net difference in the book value and the face value of issues and
maturities of Treasury bills and Treasury bonds) as a result of
declining yield rates in government securities and the appreciation of
the rupee vis-a-vis major foreign currencies, as well as higher economic
growth contributed to the reduction in the debt to GDP ratio.
In nominal terms, the total outstanding government debt increased by
10.3 percent to Rs. 4,590 billion as at end 2010. As a percentage of GDP
domestic debt declined significantly to 45.8 percent of GDP in 2010 from
49.8 percent of GDP in 2009, while foreign debt declined to 36.1 percent
of GDP in 2010 from 36.5 percent of GDP in the previous year, he said.
The share of domestic debt in total government debt declined further
in 2010 to 56 percent from 58 percent in 2009. Repayment of high cost
domestic borrowings with the proceeds of the international sovereign
bond and the increase in availability of foreign funds reduced the share
of domestic debt in the total debt stock.
The share of medium to long term debt to total domestic debt stock
declined marginally to 76 percent in 2010 from 77 percent in the
previous year, while 84 percent of medium to long term domestic debt
comprised Treasury bonds.
The share of Treasury bills in short term debt increased to 83
percent in 2010 from 79 percent in the previous year.
The outstanding stock of Rupee loans continued to decline to Rs. 88
billion in 2010 from Rs. 112 billion in 2009 due to the repayment and
non issuance of Rupee loans during the year, as the debt management
strategy has been to move towards more market oriented debt instruments.
Reflecting the increasing reliance on non bank borrowings, the
outstanding debt held by the non bank sector increased by 10.5 percent
to Rs 1,873.8 billion in 2010.
Accordingly, the outstanding stock of Treasury bills and Treasury
bonds held by the non bank sector increased by 19.5 percent and 12
percent, respectively, in 2010.
The EPF and NSB continued to be the major investors in government
securities, accounting for 46 percent and 15 percent, respectively of
the outstanding debt stock held by the non bank sector, the Deputy
Governor said.
The outstanding debt obligations of the government to the domestic
banking system declined by 2 percent to Rs 691.7 billion in 2010. The
outstanding debt held by the Central Bank declined by Rs. 31.2 billion
to Rs. 78.4 billion, while outstanding government debt held by
commercial banks increased by Rs. 17.2 billion to Rs. 613.3 billion in
2010. Consequently, the share of banking sector debt in the total
domestic debt stock declined to 27 percent in 2010 from 29 percent in
2009.
Retirement of the Central Bank’s holdings of Treasury bills reduced
the government debt outstanding to the Central Bank. While, Treasury
bill holdings of commercial banks increased by Rs 60 billion to Rs 220
billion, Treasury bond holdings of commercial banks declined by Rs 26
billion to Rs 162 billion, reflecting the appetite of investors for
short term instruments.
Further, other outstanding government debt held by commercial banks
declined to Rs 230.8 billion in 2010 from Rs 247.5 billion in 2009.
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