Sri Lanka Thursday said it was stuck in a "gigantic debt trap" and that paying off foreign loans would hit a record $2.41 billion this year, up from $1.82 billion last year.
The Finance Ministry said the cash-strapped country's debt servicing cost this year was estimated at about half of its foreign currency reserves, while repayments were expected to worsen to $4.0 billion in two years.
The main reason was loans taken by the previous administration for white elephant projects such as an airport and a deep sea port, Finance Minister Ravi Karunanayake said in a statement, with both continuing to incur heavy losses.
"Sri Lanka is embroiled in a gigantic debt trap," he said. "The infrastructure development (of the former government) has not brought any returns on its investments."
Earlier this month the government announced it would raise $1.5 billion through a domestic bond sale to rebuild its foreign exchange reserves.
The move to borrow locally came weeks after the International Monetary Fund warned the country's foreign reserves were "below comfortable levels".
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