Submit a resolution to increase borrowing limit, former finance minister says

COLOMBO (News1st): Former finance minister Mangala Samaraweera has called on the government to submit a resolution in Parliament to increase its borrowing limit, days after it signed a loan agreement with the World Bank. Sri Lanka, last Friday, inked an agreement with the World Bank for a 128.6 million dollar loan to combat COVID - 19, which has left several industries reeling. However, the former finance minister in a statement said legal complications may arise while obtaining the loan as it could breach the government's Rs 721 billion borrowing limit approved in Parliament in October last year. This year, the "government has borrowed Rs. 650.15 billion through Sri Lanka Development Bonds, a dollar-loan from the China Development Bank and primary auctions of Treasury bills and Treasury bonds", the statement read. “Once the borrowing limit is reached, there will be no legal authority under which public debt can be issued,” Samaraweera said in the statement. “As a result, the government may face insurmountable challenges in raising the funds necessary for managing this crisis.” Samaraweera also said due to these legal complications, there may also be delays in drawing down the USD 128 million (Rs. 24.4 billion) soft-loan granted by the World Bank for fighting COVID-19. Accordingly, he urged the government to immediately move a resolution in Parliament to raise the borrowing limit. The parliament was dissolved on March 2 to head into the general election, before the date of the poll was revised owing to the spread of COVID-19 in the country.