President says US $58bn foreign debt under previous govt. unaccounted for

REUTERS:  Sri Lanka’s President said on Friday that more than US $58 billion, or 90 percent, of foreign loans borrowed by the previous government was unaccounted for in Finance Ministry records.

However, ministry officials of the last government said President Maithripala Sirisena’s numbers were false.

The Central Bank’s latest records show Sri Lanka’s total outstanding debt was Rs.10.3 trillion as of the end of September last year.

Sirisena, who is struggling to deliver his 2015 election promise of eliminating corruption, also said a large sum of funds under the previous government that should have been deposited with the treasury have gone to private companies. This was done in a systematic manner to avoid disclosure, he said.

His administration is facing a debt crisis and struggling to face an expensive loan repayment cycle started this year. It must repay an estimated Rs.1.97 trillion (US $12.85 billion) in 2018—a record high— including US $2.9 billion of foreign loans, and a total of US $5.36 billion in interest.

“President Maithripala Sirisena said of the Rs.10 trillion loans taken by the previous government from abroad, only about Rs.1 trillion could be accounted for in the assets and huge sum of money could not be accounted for in the documents in the finance ministry,” his office said in a statement.

Sirisena’s office did not respond when asked if the numbers were correct. However, it confirmed that the president stated the numbers. He made the comments to a group of local editors.

The president also criticized his own coalition government, saying some of the sales of state properties during the last three years were done without informing the cabinet.

Two officials at the Finance Ministry who spoke to Reuters on condition of anonymity said Sirisena’s statement on the foreign loan was wrong.

Under the previous government from 2004-2015 led by Mahinda Rajapaksa, Sri Lanka borrowed RS.5.17 trillion of total loans including Rs.2.16 trillion (US $14.06 billion) of foreign loans.

Ajith Nivard Cabraal, the Central Bank Governor between 2006 and 2015 and a close ally of former leader Rajapaksa, said the president may have made “this irresponsible statement to sling mud at the previous regime”.

“Sri Lanka has diligently and faithfully recorded all foreign borrowings in accordance with our laws and regulations as well the terms of issue, during the time of the previous government,” Cabraal said.