Economic Governance and Management
527.
528.
Chapter 4
Data published by the BoM indicate a gradual reduction in the
relative value of public debt. Its ratio to GDP at current market
prices decreased from 58.5 per cent in 2005 to 48.6 per cent in 2008, a
reduction of over 7 per cent. This drop is a result of the domestic debt
trend, where the ratio to GDP declined from 57.6 per cent in 2003 to
44.7 per cent in 2008. In 2008, this ratio dropped from 46.6 per cent to
44.7 per cent. It is important to note that efforts to consolidate shortterm debt into medium- and long-term debt facilitated the reduction
of short-term government securities by 21.3 per cent in 2007 and
16.2 per cent in 2008. The percentage of short-term securities, in the
context of domestic public debt, therefore decreased from 40.2 per
cent in 2007 to 33.3 per cent in 2008. On the other hand, mediumand long-term government securities increased to Rs73,275 million
compared with Rs16,669.4 million in 2003. Their percentage, in terms
of domestic debt, increased from 59.8 per cent to 66.7 per cent in 2008.
The ratio of foreign debt to GDP dropped from 6.1 per cent in 2003
to 4.9 per cent in 2008. In 2008, the ratio showed a slight growth,
increasing from 4.7 per cent to 4.9 per cent. However, in face value,
outstanding debt decreased from Rs13,453 million to Rs12,451 million
from one year to the next. More specifically, parastatal debt decreased
by Rs2,373 million, dropping from Rs11,149 million in 2007 to Rs8,776
million in 2008.
Figure 4.3: Percentages of public debt at the end of 2007
Chapter 4
Economic Governance and Management
Table 4.7: Public debt (in Rs millions)
Outstanding debt
at the end of June
2003
2004
2005
2006
2007
2008
1. Short-term bonds 74,138.3 68,332.5 58,731.8
55,474.9
43,632.6
36,561.4
a. Treasury bills
74,137.9 68,332.5 58,730.8
55,473.9
43,632.6
36,561.4
2. Medium- and
long-term bonds
12,274.3 16,669.4 37,852.9
49,354.7
65,035.4
73,274.6
a. Government debt
11,408.0 13,803.1 15,765.0
17,705.8
19,231.3
20,772.7
b. Five-year
government bonds
866.3
2,866.3
4,866.3
7,866.3
10,866.3
13,107.8
c. Treasury bills
-
-
17,221.6
23,782.7
34,937.8
39,393.7
3. Domestic public
debt (1+2)
86,412.6 85,002.3 96,584.1
104,829.0 108,668.4 109,836.0
4. External debt
9,074.0
8,444.9
9,232.1
8,535.0
13,451.8
12,451.0
a. Drawings on
foreign loans
8,549.7
8,320.4
8,882.0
8,528.1
10,373.4
11,236.1
b. External
investments in
government bonds
524.3
124.5
350.1
6.9
3,078.4
1,214.9
5. Public debt (3+4)
95,486.6 93,447.3 105,816.2 113,364.0 122,120.2 122,287.0
6. Public debt to
GDP at market
prices
63.7
56.3
58.5
57.9
55.7
48.6
7. Amortisation
1,987
2,109
2,597
3,383
3,352
2,584
a. Domestic
1,151
1,227
1,667
2,063
2,382
1,664
b. External
836
882
930
1,320
970
920
8. Interest
6,473
6,690
7,297
7,543
9,191
10,675
a. Domestic
6,273
6,472
7,069
7,262
8,616
10,355
b. External
200
218
228
281
267
321
9. Total debt service
(7+8)
8,460
8,799
9,894
10,926
12,235
13,259
Annual debt service
Source: BoM. Annual Reports for 2007 and 2008.
35.7%
53.3%
11.0%
Short-term debt
Medium- and long-term debt
Total external debt
Source: BoM. Annual Reports for 2007 and 2008.
206
529.
Controlling the management of public resources is vital for ensuring
efficiency and transparency in public financial management. The
CRM noted that the government had launched stringent measures in
the 2006 budget to improve the administrative, legal and institutional
framework for controlling public spending. However, many
weaknesses persist.
207