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Govt. mulls increasing debt ceiling to raise funds to maintain critical road infrastructure
- Treasury likely to seek approval from parliament to raise debt ceiling to raise required funds via sale of government securities
By Nishel Frenando
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Bandula Gunawardana
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The government is likely to raise the domestic debt ceiling for this year in the coming months in order to raise the required funds via selling government securities to rehabilitate and maintain the country’s critical road infrastructure that is in need of urgent attention.
“We have requested funds from the Treasury to restore the critical road infrastructure some time back.The Treasury will have to make a decision now. We are expecting the Treasury to release these funds soon,” Cabinet Spokesperson and Minister of Transport and Highways and Minister of Mass Media Bandula Gunawardana told reporters in Colombo yesterday.
Accordingly, the Minister shared that the Treasury is likely to seek approval from parliament to raise the debt ceiling to raise required funds via selling government securities as foreign financing sources remain constrained until a debt restructuring deal is reached.
However, he didn’t reveal whether the funding requirement would be bridged through domestic debt.
Meanwhile, he revealed that the Asian Development Bank (ADB) agreed to provide US$ 53 million to minimise the disruptions to the public due to the stalled road development projects after the country defaulted on its external debt.
While acknowledging the dismal nature public finances, he emphasised that sufficient attention must be given to the maintenance of road infrastructure with necessary funds considering public safety and disruption to their livelihoods.
Gunawardana noted that foreign funding, particularly multilateral funding for capital projects, would return to the country upon the conclusion of the debt restructuring negotiations which is targeted towards September this year.
For the year 2023, the parliament has approved Rs.4.979 trillion gross borrowing limit, which consists of Rs.3.526 trillion from domestic sources and Rs.1.45 trillion from foreign sources.
Without increasing the overall debt ceiling, the government recently increased the Treasury bill ceiling to Rs.6 trillion, from earlier Rs.5 trillion maximum limit with a view to raise more funds via Treasury bills as Treasury bond yields remain elevated due to the uncertainty prevailing over domestic debt restructuring.
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