Former Deputy Leader of the United National Party and Member of Parliament Ravi Karunanayake has cautioned the government against the unsustainable practice of borrowing money solely to repay existing debts, warning that such actions could have serious consequences for the economy.
Speaking at a media briefing, Karunanayake emphasized that the key challenge facing the government today is to control public expenditure while increasing national revenue.
He noted that both the method of borrowing and the applicable interest rates play a critical role in economic stability. Referring to the current rise in the price of treasury securities, the MP explained that this indicates a higher demand for money than its supply.
“If we can earn more income than the amount we borrow, that reflects economic growth,” he said. However, he warned that borrowing simply to settle past debts is a dangerous path that will not support long-term development.
Karunanayake stressed that loans should be obtained in a manner that contributes to revenue generation and productive investment, rather than merely sustaining debt obligations.
