The Sri Lankan government plans to reduce the country’s public debt to 70 percent of the Gross Domestic Product (GDP) by the end of year 2020.
The government plans to achieve this target by increasing the revenues and decelerating debt accumulation.
On a request made by the Cabinet Committee on Economic Management (CCEM), the Governor of the Central Bank on November 1, 2017 has presented the options available to bring down debt to GDP ratio to the CCEM. Various Investment Houses have also presented proposals to manage public debt more favorably.
The debt to GDP ratio can mainly be brought down by decelerating debt accumulation and the key for this is to reduce the government budget deficit, informed the Central Bank.
The cabinet paper on the Central Bank was submitted to Cabinet by Prime Minister Ranil Wickremesinghe. The following options according to the cabinet paper have been recommended;
- Gradually increase public income as a percentage of GDP to achieve the revenue targets set out in the medium-term fiscal projections (15% of GDP in 2017; 15.5% in 2018, 16% in 2019 and 16.5% in 2020)
- Make public investment on programs that give swift benefits
- Reduce obtaining loans for public investments by attracting domestic private sector or foreign investors for public investments
- Reduce the impact on government expenditure by improving the financial and operational performance of large state owned enterprises
- Issue local loans prudently
- When loans can be obtained with a low interest, pay loans obtained at a high interest using such low interest loans.
Cabinet of Ministers has considered those proposals and challenges faced in implementing them, presented to the cabinet by Hon. Prime Minister Ranil Wickremesinghe as the Minister of National Policies and Economic Affairs.