Focus on domestic borrowings in 2018

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By 2017-11-14

By Mario Andree

The Sri Lankan Government's total financing requirement for 2018 has been estimated to be Rs 675 Billion, of which the Government will borrow Rs 300 Billion from foreign sources and Rs 375 Billion from domestic sources.
According to the 'Budget 2018' technical notes, State revenue and grants are expected to increase 16.5 per cent to Rs 2.3 Trillion, while expenditure is expected to increase 12 per cent to Rs 3 Trillion, leaving a deficit of Rs 675 Billion.
The Government, to address the shortcoming, plans to obtain foreign financing worth Rs 300 Billion, down 9 per cent from Rs 330 Billion this year, while domestic financing is expected to reach Rs 375 Billion, up 7 per cent from Rs 350 Billion.

Accordingly, the Government's gross foreign borrowing for 2018 would be Rs 580 Billion, up 5.5 per cent compared to Rs 550 Billion expected to be borrowed this year. Foreign loans for 'Projects and Programmes' are expected to increase 4.3 per cent to Rs 240 Billion in 2018 from Rs 230 Billion this year, while foreign commercial loans were expected to increase 6.25 per cent to Rs 340 Billion next year, from Rs 320 Billion in 2017.

Rs 280 Billion is expected to be utilized for debt repayment. On the domestic front, the Government is expected to borrow Rs 195 Billion through non-banking sources, up 77 per cent from Rs 110 Billion in 2017.

Rs 60 Billion is expected to be raised through Treasury Bills and Bonds, down 14 per cent from Rs 70 Billion, while Rs 120 Billion is to come from domestic banks, down 30 per cent from Rs 170 Billion this year. Total borrowings of the Government are expected to reach 1.9 Trillion in 2018, of which Rs 1.15 Trillion would be for total debt repayments.

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