Sri Lanka will continue to borrow from international capital markets, although not at the concessionary funding rates the country used to enjoy in the past.
According to Minister of State Revenue and Finance, Ranjith Siyambalapitiya, international donor agencies no longer give loans at low-interest rates and with long grace periods to middle-income countries such as Sri Lanka, which has a per capita income of US$1,600.
The Central Bank announced last week that it planned to raise US$300 million in overseas markets.
Discussing the Appropriation Bill with The Sunday Times, Mr. Siyambalapitiya said government expenditure for 2009 was estimated at Rs. 980.6 billion, and that Rs 849. 9 billion would be raised largely through overseas loans.
The minister said Sri Lanka borrowed between US$400 and US$600 million every year from overseas lending institutions. He said these institutions were impressed by the country’s economic growth and steadily decreasing primary budget deficit. He said the budget deficit had come down to 6.9 percent in 2008 from 7.7 percent in 2007 because of the government’s pragmatic spending patterns.
Sri Lanka would not be affected by the global financial crisis as the country had only minimal links with international banks hard hit by the crisis.