Abstract:
In the sense of the developing world, foreign debts are earned in
order to meet the expenses of the government. Consequently, the
research aims to assess the effect of foreign debt on economic growth
in Sri Lanka using a review of data obtained from the Central Bank
of Sri Lanka's annual report for the period 1995 – 2018.The analysis
considered international debt as the independent variable, and the
dependent variable was the gross domestic product. Labor power,
income, and exports were also seen as variables of influence. Based
on the results of the pooled standard least squares process, it was
found that the foreign debt and economic growth have a substantial
negative effect. This explains that the increase in foreign debt of the
country would cause in a reduction in economic growth. In respect
to control variables, it was found that savings and exports shows a
significant impact and labour force does not show any significant
impact on economic growth.
