The governor of Sri Lanka's Central Bank this warned that island's signficant debt was the achilles heel of the economy.
"The underlying problem was that Sri Lanka allowed exports to come down as a share of gross domestic product and allow foreign commercial borrowing to go up," the governor, Indrajit Coomaraswamy was quoted by Economy Next as saying.
“That was a suicidal set of policies - to allow exports to collapse and go on a foreign commercial borrowing binge.”
"It created a 'big hole' in the economy which the new government is trying to fix, by improving export growth to get out of the debt servicing problem and havng fiscal consolidation by reducing the budget deficit," he reportedly added.
Mr coomaraswamy said the Central Bank was accumulating a 'war chest' during times of no deby repayments in order to help see the country through the next two years when domestic and foreign borrowings are expected to fall.
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