Sri Lanka’s Treasury Halts Borrowing from State Banks

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In a significant development for Sri Lanka’s economy, Sri Lanka’s Treasury has halted borrowing from the Bank of Ceylon and the People’s Bank to cover government expenditures.

This achievement comes as a result of increased government revenue and better management of government expenses, according to Finance State Minister Dr. Ranjith Siyambalapitiya.

Minister Siyambalapitiya highlighted that this milestone was reached in 2023, despite challenging circumstances. He noted that it represents a unique achievement in Sri Lanka’s economic history.

Decades ago, the Treasury’s overdraft with the Bank of Ceylon and the People’s Bank was in negative status due to insufficient government income to cover expenses, including salaries and pensions of public employees.

This shortfall led to the government borrowing from the two state banks.

The State Minister emphasized that the Treasury has successfully paid off the overdraft, which had exceeded Rs. 900 billion in 2021.

With the government no longer relying on loans from these banks, the Bank of Ceylon and the People’s Bank now have a substantial amount of available funds.

This increase in funds opens up opportunities for the two state banks to enhance their existing businesses, start new industries, and improve services for their customers.

Minister Siyambalapitiya expressed optimism about the positive impact this will have on the banks and the broader economy.