Lanka Business Online

Aid scare

Economists are warning that key fiscal targets could be missed as donors pledge a record amount of aid.
Most of the US$ 4.5bn pledged at the Tokyo Donor Conference is debt on concessionary terms that eventually have to be repaid.rn

rnAnalysts say this would automatically raise the countrys debt stock and the Debt to GDP Ratio.rn

rnUnder a recently passed Act the Government has legislated to reduce its debt stock to 85% of GDP by 2006.rn

rnWhile the aid disbursement schedule is still uncertain, economists say that to reduce the debt to GDP ratio to planned levels could be difficult, considering that the countrys debt currently stands at over a 100% of GDP.rn

rnThe Fiscal Responsibility Act also requires the Government to reduce the key debt to Gross National Product ratio to 60% by 2013.rn

rnWhile the Act requires the Government to ensure that targets are met, it does not have any provisions on what is to be done if targets are not met.rn

rnEconomists however say that the aid disbursement sc

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