Sri Lanka’s Total External Debt Exceeds $50 Billion – Adaderana Biz
External debt and debt Maintenance
Sri Lanka’s total external debt position has increased in 2021, mainly with the increase in external debt of the Central Bank and depository corporations. The country’s total external debt rose to US$50.7 billion at the end of 2021 from US$49.0 billion at the end of 2020. Although the government’s total foreign loan stock recorded a increase during the year, mainly with the receipt of two term loans in foreign currencies financing facilities obtained from the CDB, the outstanding external debt of the State, valued at market price, increased from 28 .2 billion US dollars at the end of 2020 to 27.3 billion US dollars at the end of 2021.
This is due to the combined effect of lower market prices of outstanding Sri Lankan ISBs and the redemption of an ISB that matured in July 2021. One of the main reasons for the reduced l Outstanding government external debt in 2021 was the lack of new borrowing from international markets, while the repayment of some government external debt obligations had to be financed using Central Bank reserves. At the same time, the Central Bank’s external debt stock increased significantly at end-2021 compared to end-2020 due to new bilateral currency swap agreements with Bangladesh Bank and PBOC, although the international swap facility with the RBI obtained in 2020 was repaid during the year.
The stock of foreign debt of depository corporations also increased due to the significant increase in currency and deposits, although the position of short-term loans declined markedly. At the same time, the stock of external debt of private sector companies and SOBEs decreased in 2021 with the reduction in the stock of trade credits received by the private sector and with the repayment of external borrowings by SOBEs, despite the increase external loans obtained by private sector companies. In addition, intercompany borrowing by DIEs saw an increase in 2021, with a number of DIEs receiving intercompany loans and shareholder advances during the year.
The country’s total stock of external debt as a percentage of GDP fell slightly over the year. The total stock of external debt as a percentage of GDP stood at 60.0% at the end of 2021, compared to 60.5% at the end of 2020, reflecting the increase in nominal GDP in 2021 compared to 2020 The government’s external debt stock of the total external debt position, fell to 53.9% at the end of 2021 from 57.5% at the end of 2020. As debt matures, long-term debt decreased slightly to 50.0% of GDP at the end of 2021 from 50.4% of GDP by the end of 2020.