Per Capita Debt Continues To Skyrocket

The government’s continued borrowing at commercial rates has increased the per capita debt to Rs 245,980 by the end of 2011 while the per capita interest component on these loans has increased by Rs 23,153 between 2010 and 2011.
The Auditor General in the 2011 Report which was released recently has noted that internal and external borrowings of the government from 2007 to 2011 have been utilized mostly to cover instalments and interest payments of loans taken.
“According to the Financial Statements of the Republic, loans amounting to Rs 982 billion comprising foreign loans amounting to Rs 287 billion and domestic non-banking loans amounting to Rs 695 billion had been obtained during the year under review,” the Auditor General’s report states under Public Debt Management.
The report also states that even though the government had paid greater attention to domestic borrowing in the past five years, the highest foreign borrowing since the year 2009 had been recorded in the year 2011.
The total loans taken by the government in 2011 was Rs 80 billion more than the loans, obtained in the previous year.
Out of the loans taken, the government utilized less than 50% for development purposes, the report has added.
Out of the domestic borrowings amounting to Rs 695 billion in the year 2011, sums of Rs 470 billion and Rs 312 billion had been utilized for the repayment of loans and the payment of interest on loans respectively.
According to the 2011 report, the amount paid as repayment on foreign loans in that year amount to Rs 72 billion, while interest paid amounted to Rs 40 billion.
The report has also noted that under the economic classification, the loan repayable on 31 December 2010 was Rs 4,591 billion, but by 31 December 2011 that figure had increased to Rs 5,133 billion.
Opposition UNP Parliamentarian Ravi Karunanayake, observed that it was difficult to fathom the government’s strategy of continuing to burden the people and the next few generations as well by obtaining loans to fund grandiose projects that served little or no purpose other than of an ornamental nature.
He observed that the government was utilizing most of the borrowed monies on projects that did not serve the economic interests of the country.
He explained that for instance the annual debt amortization for the Hambatanota Port is Rs 6.5 billion while the amortization for the Mattala Airport stands at Rs 2.9 billion.
“There have been just 24 ships that called at the Hambantota Port in the past 24 months and there are elephants running across the tarmac at the Mattala Airport,” Karunanayake said referring to the two most costly projects built on borrowed funds.
He added that the government was wasting funds that could otherwise be allocated to the country’s health and education sectors and even help reduce the burdens placed on the people who are struggling to survive.
- Mandana Ismail Abeywickrema