Topics
Explore
Featured Insight
Interest Costs Have Been Eating Up Revenue
In 2023, for the first time in history, the government spent 9% of its GDP on interest payments, which took up 80% of the government revenue. A high interest-to-revenue ratio can be severely detrimental to a country's debt sustainability. This high ratio creates a need to borrow more, undermining debt sustainability and leaving limited revenue for essential government spending and investments. The interest-to-revenue ratio has increased in recent years for two reasons. Revenue Fell Due to Tax Reductions in 2019 Government revenue as a share of GDP dropped from 12% in 2019 to 9% in 2020. This is mainly due to the newly elected government lowering several tax rates in 2019. Thus, the interest share of revenue increased to 71% in 2020 from 47% in 2019, even though the interest payments as a share of GDP remained at 6%. Interest Costs Surged Due to High Interest Rates and More Government Debt Interest expenditure as a share of GDP increased to 9% in 2023 from 6% in pre-2021. This is due to (1) the domestic interest rates skyrocketing to above 25% post-2021 from less than 10% in the prior years - mainly owing to tight monetary conditions and lack of access to foreign financing. (2) Central government debt also increased significantly from 81.9% in 2019 to 114.2% in 2022, leading to higher interest expenditure as the government had to pay more interest on the excessive debt obtained. It is also important to note that this interest figure would have been much higher if the accrued interest expenditure on defaulted foreign debt had been included.
Featured Insight
Interest Costs Have Been Eating Up Revenue
In 2023, for the first time in history, the government spent 9% of its GDP on interest payments, which took up 80% of the government revenue. A high interest-to-revenue ratio can be severely detrimental to a country's debt sustainability. This high ratio creates a need to borrow more, undermining debt sustainability and leaving limited revenue for essential government spending and investments. The interest-to-revenue ratio has increased in recent years for two reasons. Revenue Fell Due to Tax Reductions in 2019 Government revenue as a share of GDP dropped from 12% in 2019 to 9% in 2020. This is mainly due to the newly elected government lowering several tax rates in 2019. Thus, the interest share of revenue increased to 71% in 2020 from 47% in 2019, even though the interest payments as a share of GDP remained at 6%. Interest Costs Surged Due to High Interest Rates and More Government Debt Interest expenditure as a share of GDP increased to 9% in 2023 from 6% in pre-2021. This is due to (1) the domestic interest rates skyrocketing to above 25% post-2021 from less than 10% in the prior years - mainly owing to tight monetary conditions and lack of access to foreign financing. (2) Central government debt also increased significantly from 81.9% in 2019 to 114.2% in 2022, leading to higher interest expenditure as the government had to pay more interest on the excessive debt obtained. It is also important to note that this interest figure would have been much higher if the accrued interest expenditure on defaulted foreign debt had been included.
Featured Insight
Interest Costs Have Been Eating Up Revenue
In 2023, for the first time in history, the government spent 9% of its GDP on interest payments, which took up 80% of the government revenue. A high interest-to-revenue ratio can be severely detrimental to a country's debt sustainability. This high ratio creates a need to borrow more, undermining debt sustainability and leaving limited revenue for essential government spending and investments. The interest-to-revenue ratio has increased in recent years for two reasons. Revenue Fell Due to Tax Reductions in 2019 Government revenue as a share of GDP dropped from 12% in 2019 to 9% in 2020. This is mainly due to the newly elected government lowering several tax rates in 2019. Thus, the interest share of revenue increased to 71% in 2020 from 47% in 2019, even though the interest payments as a share of GDP remained at 6%. Interest Costs Surged Due to High Interest Rates and More Government Debt Interest expenditure as a share of GDP increased to 9% in 2023 from 6% in pre-2021. This is due to (1) the domestic interest rates skyrocketing to above 25% post-2021 from less than 10% in the prior years - mainly owing to tight monetary conditions and lack of access to foreign financing. (2) Central government debt also increased significantly from 81.9% in 2019 to 114.2% in 2022, leading to higher interest expenditure as the government had to pay more interest on the excessive debt obtained. It is also important to note that this interest figure would have been much higher if the accrued interest expenditure on defaulted foreign debt had been included.
Featured Insight
Interest Costs Have Been Eating Up Revenue
In 2023, for the first time in history, the government spent 9% of its GDP on interest payments, which took up 80% of the government revenue. A high interest-to-revenue ratio can be severely detrimental to a country's debt sustainability. This high ratio creates a need to borrow more, undermining debt sustainability and leaving limited revenue for essential government spending and investments. The interest-to-revenue ratio has increased in recent years for two reasons. Revenue Fell Due to Tax Reductions in 2019 Government revenue as a share of GDP dropped from 12% in 2019 to 9% in 2020. This is mainly due to the newly elected government lowering several tax rates in 2019. Thus, the interest share of revenue increased to 71% in 2020 from 47% in 2019, even though the interest payments as a share of GDP remained at 6%. Interest Costs Surged Due to High Interest Rates and More Government Debt Interest expenditure as a share of GDP increased to 9% in 2023 from 6% in pre-2021. This is due to (1) the domestic interest rates skyrocketing to above 25% post-2021 from less than 10% in the prior years - mainly owing to tight monetary conditions and lack of access to foreign financing. (2) Central government debt also increased significantly from 81.9% in 2019 to 114.2% in 2022, leading to higher interest expenditure as the government had to pay more interest on the excessive debt obtained. It is also important to note that this interest figure would have been much higher if the accrued interest expenditure on defaulted foreign debt had been included.
Data
Reports
Acts and Gazettes
Insights
Dashboards
Annual Budget Dashboard
Budget Promises
Fiscal Indicators
Fuel Price Tracker
IMF Tracker
Infrastructure Watch
PF Wire
About Us
EN
English
සිංහල
தமிழ்
;
Thank You
Free and Open Access to
Public Finance Data and Analysis
Home
Search Result
Tags
All
Action Plan
Actual
Annual Report
Appropriation Bill
Asset Management
Audit
Bank
Bonds
Budget
Central Bank of Sri Lanka
Compensation
COPF
Corporate
Covid
Customs Duty
Customs
Debt Management
Debt
Deficit Financing
Development
Disaster
Elections
Employee Provident Fund
Employment
EPF
ESC
Estimate
Excise
Expenditure
External Debt
Finance Act
Financing
Fiscal Policy
Gaming Tax
Gazette
Grant
Health
IMF
Income Tax
Loans
Macroeconomics
Ministry of Finance
Motor Vehicles
National Evaluation Policy
NBT
PAL
Parliament
Performance Report
Procurement
Progress Report
Project Progress
Provincial Council Budget
Public Finance
Remuneration
Reserves
Revenue
Scams
SCL
SOEs
Stamp Duty
State-Owned Enterprises
Tax Exemptions
Tax Incentives
Tax Reforms
Tax Revenue
Tax
Telecommunication Levy
Tobacco
VAT
Filter by year
From
2018
2019
2020
2021
>
To
2018
2019
2020
2021
Free and Open Access to
"debt restructuring"
Reports
Verité Research Debt Update Issue 4
View More
The Desirability of Domestic Debt Restructuring
View More
PF Wire
Wall Street targets bad governance in Sri Lanka with Bond deal
View More
Sri Lanka expects talks with bondholders ‘very soon’: Minister
View More
Eyeing Green Bonds, Sri Lanka State FinMin takes part at WB Biodiversity Financing forum
View More
Recovery at stake as deal with bondholders delays: Economists
View More
Sri Lanka offers fresh debt plan to bondholders amid Hamilton case extension hopes
View More
Sri Lanka private creditors said to be frustrated over lack of progress
View More
Bonds held by pension funds likely to be restructured; banks excluded
View More