Sri Lanka’s central bank governor said overall debt levels are likely to improve further after data showed the nation managed to hit the debt-to-GDP goal months ahead of the year-end target.

Central Bank Governor Ajith Nivard Cabraal told Reuters on Friday in a phone interview that emerging signs point to debt levels continuing to fall.

“Space seems to be building up for further improvement in the debt indicators towards the end of the year” Cabraal said.

His comments were made after central bank data on Thursday showed the ratio of debt to gross domestic product has fallen to 74.3 percent, which was the year-end target set by the bank. The indicator stood at 78.3 percent at the end of 2013.

The average maturity of domestic debt extended to six years in mid-June from last year’s 4.8 years. Foreign debt maturity increased to 10.4 years from 9.8 years in the same period.

Recently, analysts have pointed to the stepped-up borrowing by state-owned banks on international capital markets, adding that it could place a burden on the government’s ability to finance them down the road.

The concerns were echoed a week ago by the International Monetary Fund, which said medium-term sustainability of growth depended on Sri Lanka’s “judicious use of foreign borrowing.”

These loans are not counted in the overall debt figure.

Howerver, Cabraal said the offshore commercial borrowings by banks is very small as a proportion of the official debt load, suggesting that policy makers are sanguine about the economy’s exposure to such debt.

Since the end of a civil war fought against Tamil separatists in May 2009, Sri Lanka has increasingly sought funding from expensive commercial loans instead of bilateral channels to pay for massive infrastructure projects.

Cabraal said the decision to go for commercial loans was due to conditions attached to bilateral loans and lower availability of concessionary loans as the country progresses to middle-income-nation status.

Analysts said the government has also been borrowing through state banks and those loans, mainly for state spending, are not reflected in the latest numbers.

In the 17 months to September 2013, state banks have borrowed $1.85 billion from international markets at commercial rates. The IMF last week urged caution on such borrowing.

But Cabraal said that state banks have sufficient flexibility to manage fresh debt.

“(State) banks, which account for 40 percent of the entire financial system of our country, have borrowed only $1.8 billion out of the total $55 billion. That means there is still a massive space available for them,” the governor said.

In absolute terms, Sri Lanka’s total debt stood at 7.18 trillion rupees ($55.2 billion) at the end of March this year, compared with 6.79 trillion rupees by the end of 2013.

Foreign debt accounted for 44.1 percent of the total, as of the end of March this year, Reuters reports.