Sri Lanka government interest burden high in 2009

Sri Lanka's Prime Minister Ranil Wickremesinghe arrives with flowers to receive blessings at the Gangaramaya Buddhist Temple, Colombo, Sri Lanka on Wednesday 4 April 2018. On wednesday (4), Wickremesinghe survived a no-confidence motion in the Sri Lankan parliament with a 46 vote majority after a 12-hour debate with 122 MPs voted in his support while 76 MPs voting to remove the prime minister. (Photo by Tharaka Basnayaka/NurPhoto via Getty Images)

Mar 03, 2010 (LBO) – Heavy borrowings from the domestic market at high rates in recent years had pushed up interest payment costs on Sri Lanka’s government debt last year, a finance ministry report said. The total debts consist of 2,401 billion rupees of domestic debt and 1,760 billion foreign debt which makes up 42.3 percent of the total debt.

The interest cost of foreign debt rose to 31.5 billion in 2009 from 24.2 billion in 2008 largely owing to the depreciation of the rupee against foreign currencies.

The interest cost of domestic debt increased to 276.8 billion owing to the high rate of interest as well as higher domestic borrowings.

“The heavy borrowings on a short-term basis from domestic markets during the latter part of 2008 in the absence of the envisaged foreign capital market borrowings pushed up the interest cost,” the report said.

“Also, revenue shortfalls warranted heavy borrowings from domestic market to finance rupee funds needed for capital and other expenditure.”

But the finance ministry said interest payments on government debt are likely to “moderate” in 2010.

This is because of the retirement of some high-cost debt from funds received through a soverei