Sri Lanka’s mounting debt over the years under previous regimes have now been dramatised by interested parties.

Secretary to the President and former longstanding Treasury Secretary Dr. P.B. Jayasundera branded Sri Lanka’s debt as the “most dramatised” story, asserting it was unwarranted given the country’s unblemished track record of repayment.

Speaking at the ‘Colombo Development Symposium’ organised by Biznomics, Dr. Jayasundera said that as a responsible Government it had approached debt servicing and management responsibly amidst multiple challenges. “If a country or a company is in debt, the first thing you do is stop borrowing. Companies get people to invest or reinvest.

ost-election we started looking at the debt issue more seriously in the same way as the IMF. As a result the Government has recognised the Treasury Secretary is the best positioned and responsible to manage this task in a politically-sensitive economy and a democratic environment,” Dr. Jayasundera said.

He said that President Gotabaya Rajapaksa via the policy document ‘Vistas of Prosperity’ committed to reducing the budget deficit as a percentage of GDP to 4% in the medium term from 10% at present. This will be done by not reinforcing a higher VAT but assuring to maintain the status quo of the new tax regime introduced.

For the next five years, income tax will remain at gazetted rates, while VAT will be 8%. There will be no other new taxes. Customs taxes will be rationalised whilst a more efficient, transparent and compliance friendly tax regime will be maintained by the Government.

Dr. Jayasundera disclosed that in 2020 total external debt had declined by $ 500 million, which he said was a unique achievement whilst even in rupee terms foreign debt had seen a drop.