Feb 15, 2019 (LBO) – World Bank Vice President, South Asia Region, Hartwig Schafer says that he finds the island facing a challenging macroeconomic landscape and that the nations Gross Domestic Product could be managed in a more effective manner.
“Although the people’s income levels are very high and you are about to reach upper middle income levels there are many pressure points,” he said launching latest edition of the World Bank’s Sri Lanka Development Update (SLDU) in Colombo, Thursday.
“The growth rate are at present are 3.5 percent with medium term growth projected at 4 percent. For an economy that has done so much in terms of economic reforms and performed so well – it should be growing at 6-8 percent.”
He says public debt which remains high at 83 percent of GDP also needs to be better managed while also planning to care for its elderly as it has a rapidly aging population.
The World Bank report reveals that as the country approached upper middle-income status, it has been borrowing on more commercial terms with increased cost and risk.
“The majority of foreign currency denominated debt is now largely made up of market borrowings including International Sovereign Bonds (ISBs) and Sri Lanka Development Bonds (SLDBs), which in 2017 accounted for 53 percent, up from just 3 percent of total foreign currency denominated debt in 2000.”
In total, maturities of bullet repayments on Eurobonds from 2019 to 2023 and from 2025 to 2028 alone amount to USD 12.15 billion.
The SLDU notes that this is new territory for the country and could expose the island nation to refinancing risks.