By Ajith Nivard Cabraal, Former Governor, Central Bank of Sri Lanka
Even after 11 weeks from the end of the year 2018, the Government has still not disclosed the amount of the Public Debt as at 31st December 2018. It is primarily because of that deliberate concealment of economic data from the public by the Government, that all economic analysts have to rely upon their own “estimates” and calculations as to the extent of indebtedness of the country as at 31st December 2018.
In that context, from the existing official and publicly available data, the following estimate of the Public Debt could be prepared.
Table: Estimated Public Debt as at 31st December 2018 (Rs. billion)
| Item | Public Debt at end 30/09/18
as per CBSL |
Understated Public Debt as at 31/12/17
as per the Auditor General |
Revised Public Debt as at 30/09/18 | Estimated Increase in Public Debt due to Rupee Depreciation after 30/09/18 | Estimated Loans raised after 30/09/18
up to 31/12/18 |
Estimated Public Debt as at 31/12/18 |
| Foreign Debt | 5,469 | 5,469 | 447 | 50 | 5,966 | |
| Local Debt | 5,802 | 389 | 6,191 | – | 50 | 6,241 |
| Total Debt | 11,271 | 389 | 11,660 | 447 | 100 | 12,207 |
Sources: CBSL Weekly Indicators and MOF Auditor General’s Report for 2017
Central Bank official data indicates that the depreciation of the Rupee from 1st October 2018 to 31st December 2018 was Rs.13.84 (i.e.,184.70-170.86). Further, the Foreign Debt as at 30th September 2018 was officially reported at Rs.5,469 billion by the Central Bank, which amounted to approximately USD 32.3 billion. On that basis, the amount that would be added to the Rupee value of the Foreign Debt stock by 31st December 2018 due to the Rupee depreciation would amount to a further Rs.447 billion: (i.e., USD 32.3 billion x Rs.13.84). Accordingly, the Public Debt as at 31st December 2018 could be estimated at Rs.12,207 billion, after adding a further modest amount of Rs.100 billion as estimated new net borrowings during the 3 months to 31st December 2018.
At the same time, the Public Debt could also be to estimated through another method, by referring to the official Summary of the Budget (as per page 54 of the Budget Speech 2019 document) presented by the Finance Minister. In that Summary, the “Revenue plus Grants” is reflected at an amount Rs.2,025 billion, which amount is officially stated by the Ministry of Finance as being 14.1% of the Provisional GDP. On that basis, the Provisional GDP for 2018 could be worked out as Rs.14,361 billion. Further, the Government Debt is officially reported as 84% of the Provisional GDP at page 56 of the same official Budget Speech, which means the Public Debt as per the Government’s own calculations would amount to Rs.12,063 billion.
If therefore (to be generous to the Yahapalanaya Government), the lower of the above two estimates is taken for purposes of the exercise to estimate the Public Debt, the Public Debt as at 31st December 2018 could be reasonably estimated as Rs.12,063 billion, until the final numbers are released by the Central Bank.
The Public Debt as at 31st December 2014 was Rs.7,391 billion (as officially reported in successive CBSL Reports from 2014 to 2017). Since Public Debt as at 31st December 2018 can now be professionally estimated at Rs.12,063 billion, the estimated increase in the Public Debt over the 4 years ending 31st December 2018, under the Yahapalanaya Government amounts to Rs.4,672 billion (Rs. 12,063 billion – Rs. 7,391 billion). A simple calculation shows that such increase represents an increase of 63.2% over that of the Public Debt as at 31st December 2014.
