Govt fights to avoid debt trap

Tuesday, January 27, 2026 | 140 Views |

BALANCING ACT: The Finance Ministry is juggling citizens’ aspirations and revenue forecasts

The Finance Ministry says it is redoubling its efforts to avoid a debt trap for the country, as revenues remain low, while the amount of borrowings and arrears owed by government to suppliers increases.

Without meaningful restrictions on spending, government faces an elevated risk of a debt trap over the short to medium term, said technocrats writing in the Budget Strategy Paper released last week.

The officials noted that the country’s fiscal trajectory was skirting close to the debt ceiling limits set by government. The government’s fiscal rules limit debt to 40% of Gross Domestic Product (GDP), being 20% for domestic debt and 20% for external debt.

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