By Sanath Nanayakkare
The internationally accepted practice was to classify domestic debt and external debt based on the resident or non-resident status of the holder of such debt, Dr. Chandranath Amarasekara, the Director Economic Research at the Central Bank told
The Island yesterday.
Dr. Amarasekera said so when he was asked to explain why the Central Bank had decided to reclassify US$ 2.2 billion worth of international sovereign bonds held by local entities as domestic debt.
“We did not have accurate information on ISB holdings by the resident/non-resident status of the holder, and accordingly a new survey was commenced in 2020 to collect this information, and this survey is continued on a monthly basis. According to the survey, ISB holdings of resident banks was around USD 1.1 billion at end 2019, which increased to over USD 2.2 billion by end 2020. With this new information, adjustments were made to external debt for 2019 and 2020. This does not mean that they are not shown in total government debt. The total gets the same treatment, while this was only a reclassification within the given total, where the entire ISB liability at face value of USD 15.05 billion at end 2019 and USD 14.05 billion at end 2020 are included in the outstanding government debt. Nevertheless, the international norm of reporting ISB liabilities at market value has been continued in relation to external statistics, as practiced in the past.” he explained.