MP Wickramaratne generates interest on Sri Lanka’s record cost of interest

30 September 2021 09:16 am 1 Bookmark

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In his statement, the MP states that (1) 70% of government revenue is spent on interest on loan repayments, and (2) Lebanon is the only country in the world to pay higher interest than Sri Lanka as a percentage of national revenue. To evaluate this claim, FactCheck.lk consulted the Central Bank of Sri Lanka (CBSL) Annual Reports and the World Bank World Development Indicators database.

Claim 1: According to the CBSL Annual Report 2020, Sri Lanka’s interest on loan repayments as a percentage of government revenue has risen to 72% in 2020 from 47.7% in 2019. This increase arises from the increase in interest payments and a reduction in government revenue in 2020. Therefore, the 70% figure cited by the MP reflects the 2020 share of interest payments.

Claim 2: The World Bank World Development Indicators database is currently available for 117 countries (including Sri Lanka) up to 2019. In that, Sri Lanka had the second highest interest payments as a percentage of national revenue ratio at 47% in 2019; with Lebanon having the highest at 51%. This confirms the MPs claim.

The MPs first claim is correct for 2020 and the second claim is correct for 2019, the latest year for which a full set of cross-country data is available. Therefore, we classify his statement as TRUE.

Note: In 2020 Lebanon defaulted on its debt and therefore incurred only 18% of revenue interest payments. Therefore, in 2020, with 72% interest to revenue ratio Sri Lanka has become the country with the highest share of interest to government revenue. (See Exhibit 1)

Exhibit 1: Interest to Revenue Ratio among countries with large debt levels

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For comments, suggestions and feedback, please visit www.factcheck.lk.

<img src="https://bmkltsly13vb.compat.objectstorage.ap-mumbai-1.oraclecloud.com/cdn.dailymirror.lk/assets/uploads/image_14a00b2bf6.jpg" />   <img src="https://bmkltsly13vb.compat.objectstorage.ap-mumbai-1.oraclecloud.com/cdn.dailymirror.lk/assets/uploads/image_5dd8308a0f.jpg" style="margin: 10px; float: left;" />In his statement, the MP states that (1) 70% of government revenue is spent on interest on loan repayments, and (2) Lebanon is the only country in the world to pay higher interest than Sri Lanka as a percentage of national revenue. To evaluate this claim, FactCheck.lk consulted the Central Bank of Sri Lanka (CBSL) Annual Reports and the World Bank World Development Indicators database. <center><a href="https://www.hi.lk/himag" target="_blank"><img src="https://bmkltsly13vb.compat.objectstorage.ap-singapore-1.oraclecloud.com/cdn.sg.dailymirror.lk/assets/uploads/advr_7fec3b236e.jpg" /></a></center> Claim 1: According to the CBSL Annual Report 2020, Sri Lanka’s interest on loan repayments as a percentage of government revenue has risen to 72% in 2020 from 47.7% in 2019. This increase arises from the increase in interest payments and a reduction in government revenue in 2020. Therefore, the 70% figure cited by the MP reflects the 2020 share of interest payments. Claim 2: The World Bank World Development Indicators database is currently available for 117 countries (including Sri Lanka) up to 2019. In that, Sri Lanka had the second highest interest payments as a percentage of national revenue ratio at 47% in 2019; with Lebanon having the highest at 51%. This confirms the MPs claim. The MPs first claim is correct for 2020 and the second claim is correct for 2019, the latest year for which a full set of cross-country data is available. Therefore, we classify his statement as TRUE.  Note: In 2020 Lebanon defaulted on its debt and therefore incurred only 18% of revenue interest payments. Therefore, in 2020, with 72% interest to revenue ratio Sri Lanka has become the country with the highest share of interest to government revenue. (See Exhibit 1)   Exhibit 1: Interest to Revenue Ratio among countries with large debt levels <img src="https://bmkltsly13vb.compat.objectstorage.ap-mumbai-1.oraclecloud.com/cdn.dailymirror.lk/assets/uploads/image_b0049d1480.jpg" />   FactCheck is a platform run by Verité Research.  For comments, suggestions and feedback, please visit www.factcheck.lk.