The government is to introduce a new Act titled Liability Management Act to strengthen the government policy framework to attract foreign direct investment, instead of resorting to commercial loans for government projects, Senior Advisor, Ministry of Finance Mano Thittawella said.
” The aim of the Act is to manage government liabilities in a more efficient and effective manner using modern technology, Thittawella said at the launch yesterday at the Taj Samudra of the World Bank report titled, ‘Sri Lanka Development update with special focus on Managing Risks and Creating Opportunities for Sustainable Growth,”
He said that Sri Lanka should now focus on protecting the SME sector and also introduce state enterprise reforms to achieve sustainable economic growth in a medium to long-term perspective.
‘ Therefore, it is the need of the hour to introduce the new Act , which would bring significant benefit to the public, he said.
Minister of National Policies and Economic Affairs Dr Harsha de Silva said that the Liability Management Act would control and help to resolve the debt situation in the country, which is a heavy burden.
‘Sri Lanka has graduated from concessionary International Development Association window loans in July, World Bank Senior Country Economist for Sri Lanka and the Maldives Ralph van Doorn said.
‘Sri Lanka has relied more on commercial borrowings in recent years, pushing up interest costs, requiring more careful debt management, van Doorn said.
‘Sri Lanka has been tapping capital markets, ahead of losing concessionary financing from agencies such as the World Bank and Asian Development Bank as well as bilateral donors, he said.
‘The World Bank has two main credit windows. IDA and the International Bank for Reconstruction and Development, which are London Interbank Offered Rate plus rates. IDA loans go up to 30 to 40 years while IBRD loans range from 8 to 20 years, he added.
Research Director, Verite Research Dr Subhashini Abeysinghe said that the government should focus more on fiscal risk in order to increase government revenue.
She said that adhoc and inconsistent laws to increase government revenue will not serve the purpose.
Taken from – Theisland.lk