Fact Check
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 (see Exhibit 1). 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%. (See Exhibit 2). 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 3 by Publicfinance.lk, a platform by Verité Research, mapping the Interest to Revenue Ratio among countries with large debt levels).
**FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.
Additional Note
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 3 by Publicfinance.lk, a platform by Verité Research, mapping the Interest to Revenue Ratio among countries with large debt levels).
Sources
World Bank, Databank – World Development Indicators, available at: https://databank.worldbank.org/source/world-development-indicators [last accessed 25 August 2021]
World Bank, Lebanon Economic Monitor – Lebanon Sinking (To the Top 3) – Spring 2021, available at: https://documents1.worldbank.org/curated/en/394741622469174252/pdf/Lebanon-Economic-Monitor-Lebanon-Sinking-to-the-Top-3.pdf [last accessed 30 August 2021]
Central Bank of Sri Lanka, Annual Report 2020, available at https://www.cbsl.gov.lk/en/publications/economic-and-financial-reports/annual-reports/annual-report-2020 [last accessed 25 August 2021]