Saturday Nov 08, 2025
Saturday Nov 08, 2025
Saturday, 8 November 2025 02:13 - - {{hitsCtrl.values.hits}}
President and Finance Minister Anura Kumara Disanayake yesterday ruled out another debt default by Sri Lanka in 2028 and expressed confidence of staying the course including lower debt to GDP ratio encouraged by achievements in 2025.
In an apparent response to critics of the Government and doomsayers, Disanayake during the presentation of the 2026 Budget in Parliament explained his confidence given the over-performance amidst challenges in 2025.
“Certain groups are spreading an unfounded opinion that an inability to pay foreign debt may arise in 2028. But what is the real situation?” the President queried in Parliament.
He revealed that Sri Lanka’s debt servicing in 2024 was $ 1.67 billion whereas, during January to September 2025, Sri Lanka has paid $ 1.95 billion, leaving only $ 487 million out of $ 2.43 billion total due in the entirety of the year.
“The foreign debt service payments in 2025 are an increase of $ 761 million compared to 2024.
The foreign debt service payment in 2028 is only $ 3,259 million. That is, an increase of only $ 824 million compared to 2025. We have the capacity to pay this. Therefore, we believe that the people of this country will not accept such false propaganda,” the President said whilst also referring to some critics earlier speculating the President and NPP Government will only last for a few months or a year. “We will still be in power in 2028 and we will pay.” Erupting applause from Government MPs in Parliament.
The President also referred to Governance-Linked Bonds (GLB), which have to be repaid in 2034 and 2035 as part of the solution of the external debt restructuring.
“The creditors have agreed to provide relief in the debt restructuring process depending on the progress that Sri Lanka achieves on two indicators during the debt restructuring process.
Accordingly, the Government’s revenue targets for 2026-2027 should be maintained above 15.3% and 15.4% of GDP, respectively, and the fiscal strategy should be announced within the stipulated timeframe. If these targets are met, the creditors have agreed to provide a 0.75% reduction in the annual interest rate payable from 2028 to 2035. Accordingly, the Government will receive a debt servicing benefit of $ 7.9 million per year. The Government is working to achieve these economic targets,” the President explained during the speech presenting the 2026 Budget.
He also said maintaining the gross financial requirement at a level below 13% of GDP in the medium term, and annual central Government foreign currency debt servicing at a level not exceeding 4.5% of GDP is a strategy to ensure debt sustainability.
“Accordingly, as the public financial situation has strengthened, public debt as a percentage of GDP has begun to decline gradually. The public debt target as a percentage of GDP of 95% by 2032 is gradually reaching. Given the remarkable performance achieved in the public finances and our debt management strategy, we believe that there is a high level of potential to maintain public debt as a percentage of GDP below 90% by 2032,” the President added.
