By:Staff WriterColombo (LNW): The government’s economic reform program is expected to trigger additional financing assistance with budget support from the World Bank and the Asian Development Bank of US dollars 3.75 billion, of which US dollars 900 million is expected in 2023.
It is also expected that with the recovery in the economy and buildup of buffers,Sri Lanka would be able to access international markets to raise funds in terms of sovereign bond issues in 2027. These resources, together with external public debt service relief, will close the external financing gap and allow Sri Lanka to rebuild its gross international reserves.
With the emphasis given in the programme on the fiscal front and the relevant structural benchmarks, it is expected that the Government will persist with its fiscal consolidation efforts to meet the fiscal targets through revenue enhancement measures and rationalization of expenditure further.
With constrained access to monetization of deficits going forward, the Government is expected to make required adjustments during the available transitory period to ensure that such requirements could not arise.
In the meantime, unwarranted leakages from the fiscal revenue are addressed through the envisaged broad-based programme for SOEs transitory period to ensure that such requirements would not arise. In the meantime, unwarranted leakages from the fiscal revenue are addressed through the envisaged broad-based programme for SOEs.
The Government was compelled to adopt a debt standstill policy in 2022 to stabilize the economy, which further closed the access to the market in the short run, the Government was able to secure foreign financing commitments in the form of Official Development Assistance (ODA), mainly from India and Asian Development Bank (ADB) for importing essential goods.
Government obtained total ODA commitment amounting to USD 1,915.2 million by entering into 15 agreements with foreign development partners and lending agencies from 1st January to 31st December in 2022, of which, USD 1,805.5 million in the form of loans together with USD 109.7 million grants.
During this period, India leads by its commitments amounting to USD 1,555 million, followed by the ADB (USD 203 million), the United States of America (USD 73 million), Kuwait (USD 32.9 million), Germany (USD17.6 million), European Union (EU) (USD 13.9million), Korea (USD 12 million) and Japan (USD7.8 million), respectively.
The highest amount of commitment was made for the trade sector which amounted to USD 1,000 million or 52 percent of the total commitments, followed mainly by the power and energy sector (USD 500 million or 26 percent) and the humanitarian assistance sector (USD 203 million or 10 percent).