Deputy Minister of Finance and Planning Anil Jayantha Fernando yesterday rejected claims that Sri Lanka’s Government debt had risen by more than Rs. 190 billion, stressing that such reports were based on misinterpretations rather than verified official data.

Responding to recent media coverage that cited Central Bank figures, Fernando said the reports had failed to explain the basis for the alleged increase and had quoted figures inaccurately. 

He emphasised that the country’s debt position must be assessed using the quarterly Debt Bulletin, which provides a detailed breakdown of domestic and foreign borrowings, including loans from bilateral and multilateral partners, individual countries, and commercial sources.

Fernando underscored the importance of consulting official records before making claims about debt trends, noting that debt statistics can vary depending on whether they are presented in rupees or in dollar terms. 

He pointed out that in dollar terms, Sri Lanka’s debt stock has shown a clear decline in recent quarters, reflecting improved fiscal management.

Highlighting the broader context, the Deputy Minister said borrowing in itself should not be viewed negatively if debt sustainability is maintained and funds are channelled into productive development. 

He noted that Sri Lanka’s debt‑to‑GDP ratio had fallen to 95% by the end of 2025, a milestone initially projected for 2032, and further declined to 88.8% by mid‑2026.

“This reduction demonstrates stronger management of public finances and reinforces confidence in the Government’s ability to meet its repayment obligations,” he said, adding that there was no uncertainty regarding the servicing of loans.

Fernando reiterated that misleading claims risk undermining public confidence and urged media outlets to rely on verified official data when reporting on debt. (Newswire)

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The Australian High Commission in Sri Lanka has confirmed that both the mission and Sri Lanka’s Ministry of Finance are aware of irregularities in payments owed to the Australian Government.

Sri Lankan authorities have launched an investigation into the matter and are coordinating closely with Australian officials, who are assisting the inquiry, the Australian High Commission said in a statement on ‘X’. 

The High Commission further said that Australia remains committed to supporting Sri Lanka’s path toward debt sustainability.

The statement comes after Deputy Minister of Finance Dr Anil Jayantha announced that complaints have been filed with law enforcement agencies following a cyber theft incident involving unauthorised access to the computer system of the Department of External Resources under the Ministry of Finance.

He said the incident occurred during communication and fund settlement activities between the Australian Export Finance Agency and the Treasury, where both parties exchanged information via email. 

Hackers allegedly exploited this communication channel to manipulate the information exchange,he said, adding that the fraud came to light after a similar attempt was made to obtain additional funds linked to a payment due to India. 

He further said that suspicion arose when changes were detected in account numbers. Following this, the Treasury immediately alerted the Sri Lanka Police Computer Crimes Investigation Division and the Sri Lanka Computer Emergency Response Team (CERT), after which a lengthy investigation was then carried out tracing communications back to the start of discussions on debt restructuring and repayments.

This established that money intended for the Australian Export Finance Agency had been diverted into accounts controlled by the hackers. A complaint has since been filed with the Criminal Investigation Department (CID), and investigations are ongoing, Deputy Minister of Finance Dr Anil Jayantha added. (Newswire)

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Sri Lanka saw its largest debt repayment in 2025, according to Rural Development, Social Security and Community Empowerment Minister Upali Pannilage.

Speaking at an awareness program for community development council representatives in Kurunegala, the Minister said that while many had claimed the biggest repayment would fall in 2028, the government in 2025 settled a debt installment of USD 3,900 million. 

By contrast, he noted, the repayment due in 2028 amounts to only USD 3.2 million.

He further explained that despite spending between USD 2,100 and 2,200 million on vehicle imports in 2025, the government was able to record a surplus of USD 1,700 million. 

This surplus was achieved because out of the USD 29,300 million earned that year, only about USD 27,600 million was spent. (Newswire)

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The Official Creditor Committee (OCC) has formally granted a “no objection” clearance, allowing Sri Lanka to move forward with its proposed settlement arrangements for foreign borrowings guaranteed by the government for SriLankan Airlines.

Announcing the development, Secretary to the Ministry of Finance Harshana Suriyapperuma said Sri Lanka has kept markets informed through the Singapore Exchange as part of compliance requirements. 

“We have indicated certain arrangements in principle. Agreements and arrangements in terms of sharing information, etc. We are very grateful and happy to inform that OCC has conveyed their position of no objection, supporting Sri Lanka during this difficult time,” he stated.

The clearance, which follows advice from legal experts, marks a significant milestone in the restructuring process. 

Sri Lanka has already restructured over 90% of its debt obligations, with officials noting that the remaining steps are expected to be procedural. 

“With the support of all parties involved, we should be able to complete them within a short period,” Suriyapperuma added. (Newswire)

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A recent investigation into the Ministry of Health has revealed that 705 government medical officers who vacated their posts owe the State a total of Rs. 1,156 million, while another 116 officers owe Rs. 119 million, bringing the total outstanding amount to over Rs. 1.27 billion.

The figures were revealed in a special audit report into the medical officers who had vacated posts and attachments of foreign-trained specialist medical officers.

Foreign-trained specialist doctors have failed to fulfill their service obligations under government bonds, with recovery of dues progressing slowly, the report said. Some officers have not returned to serve after overseas training, despite signing agreements with the Health Ministry.

The Health Ministry has been urged to recover the outstanding amounts promptly and to enforce disciplinary and legal measures against defaulters to ensure accountability within the public health service. (Newswire)

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At a meeting of the Committee on Public Finance chaired by MP Harsha de Silva, officials from the State Debt Management Office revealed that Sri Lanka’s outstanding foreign debt stands at USD 37 billion, while domestic debt amounts to Rs. 19.6 trillion.

The officials had been summoned before the committee to present an update on the current status of government borrowings. However, when questioned by the chairman about the exact loan installments due for repayment this year, they were unable to provide the precise figures.

MP de Silva expressed dissatisfaction over the lack of preparedness and underscored the need to strengthen the State Debt Management Office with qualified personnel capable of managing the country’s borrowing operations efficiently. He pointed out that all loan acquisition processes are currently handled by the office, making the need for expertise even more critical. (Newswire)

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Deputy Minister of Lands and Irrigation Susil Ranasinghe says President Anura Kumara Dissanayake restructured Sri Lanka’s debt, which even former President Ranil Wickremesinghe could not. 

Speaking to the media, the Deputy Minister said that not only is restructuring of the debt being undertaken, but the economy is also being transformed into one that would commence repayment of debts by 2028.

“So, please stop causing unnecessary turmoil amongst the village people. Within these 09 months, the President has played a good match. Some from the SLPP are having some fun holding on to the rocket incident. Watch out, you might fall off at that same speed,” he warned. (Newswire)

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Minister Sunil Handunneththi drew an analogy between debt collection and personal relationships, stating that banks often forget the past contributions of borrowers when financial difficulties arise.

The Industries Minister was addressing an event organized by the Regional Development Bank.

“Debt can be like certain girls,” quipped Minister Handunnetti, drawing a comparison between bad debt and what he described as the behaviour of certain women. He claimed that banks often forget the good deeds of their customers, much like how, in his analogy, past kindnesses are overlooked.

“Bank officials must not take offence,” he said. “Not all banks behave this way, but when a customer faces difficulty, banks often bring up historical data, letters, and past commitments, disregarding earlier repayments, deposits, and sacrifices.”

The Minister said the situation was comparable to certain personal relationships, where previous goodwill is overlooked, and threats or ultimatums follow. “March 31 is a day like that,” he added, referencing fears among borrowers of asset seizures.

Handunneththi stressed the need for strong relationships between banks and borrowers, likening it to a long-term commitment: “If the connection is there, it can be permanent.”

Highlighting the ongoing debt challenges, particularly for small and medium enterprises (SMEs) following the COVID-19 pandemic and economic crisis, the Minister said the government has recognized these issues and initiated discussions with banks to explore solutions.

He urged struggling enterprises to begin talks with banks immediately. “If we fail to reach agreements even after December, the banks will also be compelled to make decisions,” he said. (Newswire)

“Debt can be like certain girls,” quipped Minister Sunil Handunnetti, drawing a comparison between bad debt and what he described as the behaviour of certain women. He claimed that banks often forget the good deeds of their customers, much like how, in his analogy, past… pic.twitter.com/a8lrhtPecj

— NewsWire (@NewsWireLK) March 28, 2025

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The Government of Sri Lanka borrowed over Rs. 700 billion from the domestic market, such as treasury bills, to sustain itself in January 2025 alone, said Talal Rafi, a regular columnist for the International Monetary Fund (IMF).

Explaining Sri Lanka’s debt situation during a televised interview, Talal Rafi said Rs. 700 billion equals eight expressways from Colombo to Katunayake. 

“This is the amount we are borrowing on a monthly level for the government to sustain. This is not the fault of the present government or the previous government. This is the way Sri Lanka has been functioning,” the Director at Ernst & Young said. 

Touching on Gross Financing Needs, he explained that this was the amount of financing Sri Lanka needs in a year to sustain itself and that this includes interest, maturity, and the Fiscal Deficit. 

He elaborated that at the peak of the 2022 economic crisis, Gross Financing Needs were 32% and per the latest IMF report have now dropped to 25%, a drop of 24.9%.

“This indicates that one-quarter of Sri Lanka’s economy has to be paid/ financed each year for Sri Lanka to sustain,” Talal Rafi said. 

Stating that he was also of the opinion that the government should not borrow, he added that, however, the current and previous governments did not have a choice but to borrow.

“If you stop borrowing, then 25% of the GDP has to be paid per year. That is not sustainable. Even if you double VAT to 36%, Income Tax to 72%, or Corporate Tax to 60%, we still cannot finance it without borrowing. The truth is that is the way forward, as our rollover debt is too high as a quarter,” he said. 

Talal Rafi pointed out that Sri Lanka can only solve this by addressing its Fiscal Deficit, adding that the country cannot continue with its expenditure being more than its revenue.

“The solution is something that will be extremely unpopular, to bring the deficit down or to zero. But this will lead to either an increase in revenue, such as people paying taxes, which is unfair to them. Or reducing expenditure which is not going to be popular with people who are receiving it,” he said. 

Talal Rafi noted that Sri Lanka, including the current or any future government, is caught in this situation, but the solution would be to increase revenue and downsize wasteful expenditure of the government, including getting rid of some unproductive sectors. (Newswire)

Sri Lanka's debt situation explained in 3 minutes. Every Sri Lankan needs to know how deep in debt Sri Lanka is. Can Sri Lanka afford to stop borrowing? I explained this at Ada Derana Hyde Park TV show last month (February 2025)#srilanka #economics #economy pic.twitter.com/bqo06IXY9f

— Talal Rafi (@talalrafi7) March 16, 2025

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Deputy Minister of Finance and Planning, Harshana Suriyapperuma says national carrier, SriLankan Airlines is facing a large debt due to political interference of the past regimes, resulting in an ongoing case in international courts.

Addressing the Parliament, Deputy Minister Suriyapperuma said SriLankan Airlines has been found not only to be involved in corruption at the state level but also at the international level. 

“Currently, there is an ongoing case in the international court over claims that commissions were sought during the purchase of planes. Planes have been obtained on lease at exorbitant rates beyond the existing market rates,” he revealed. 

The Deputy Minister further said that the actions and decisions over the past few decades by former regimes related to SriLankan Airlines must be taken into consideration when looking into its debt.

Outlining the measures taken by the government to address the debt, the Deputy Minister of Finance said that they have planned to introduce a 05-year programme from 2025 to 2030.

He further explained that despite the government allocating Rs. 20 billion in its 2025 budget for SriLankan Airlines, the funds will not be utilised for the airlines’ management of operating expenses and that its management is tasked with making it a self-sustaining entity.

Deputy Minister Suriyapperuma also revealed that discussions have commenced with relevant stakeholders to restructure the debt, under which loans have been obtained in US Dollars. 

He assured that measures will be taken to address SriLankan Airlines’ debt without burdening the public. (Newswire)

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Sri Lanka is set to acquire a new software to manage its debt, following a proposal tabled by President Anura Kumara Dissanayake as the Minister of Finance.

Accordingly Cabinet approval has been granted to procure the Commonwealth Meridian software to guarantee the timely, accurate, and comprehensive recording of public debt data through an efficient system.

The Commonwealth Meridian is a web-based tool used by several member countries to proactively manage their debt.

Currently, Sri Lanka uses the Commonwealth Secretariat Debt Recording and Management System (CS-DRMS) to manage foreign debt, a system maintained by Sri Lanka’s Department Of External Resources.

However, the Commonwealth Secretariat has recently suspended updates and annual license extensions for CS-DRMS, the government said.

After discussions with technical missions from the International Monetary Fund (IMF) and the World Bank, two software options were identified as suitable replacements for the current system: the Commonwealth Meridian software, provided by the Commonwealth Secretariat, and the Debt Management and Financial Analysis System (DMFAS) from the United Nations Conference on Trade and Development (UNCTAD)

The Cabinet of Ministers has approved the President’s proposal to move forward with securing recommendations from a procurement committee appointed by the Cabinet to finalize the acquisition process, the government said. (Newswire)

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Sri Lanka will wrap up talks with international bondholders on restructuring $12.5 billion in debt within a few weeks, Foreign Minister Ali Sabry said in an interview at the Reuters NEXT conference in Singapore on Tuesday.

According to Reuters, Minister Sabry said that Sri Lanka will also seek to balance its ties with key creditors India and China to ensure that there is no difference in dealing with the two.

“Hopefully within a couple of weeks,” Sabry said when asked when the nation’s bond restructuring efforts with creditors will be finished.

“Towards the end of this month, officially, we are done and dusted with the restructuring process, then of course, in line with that, we need to start payment,” he said.

Sri Lanka secured a provisional agreement with some of its bondholders to move forward on restructuring its international bonds last week but now needs the other private creditors and the International Monetary Fund (IMF) to also agree.

The country, which has $37 billion in external debt in total, clinched an agreement with its official creditors including Japan, China and India in late June to restructure $10 billion in debt.

In total, the debt rework is estimated to save Sri Lanka $8 billion in write-offs and delay capital repayments by at least four years.

Sri Lanka will use this opportunity to restart about a dozen stalled, foreign-funded development projects and promote economic growth, Minister Sabry said. (Newswire)

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Pakistan’s total debt has surged to a new peak, hitting PKR 67.816 trillion as of May 2024, according to a report by ARY News citing the State Bank of Pakistan (SBP).

The central bank data reveals a significant 15 per cent increase in the federal government’s total debt over the past year, marking an addition of PKR 8,852 billion. In May 2023, the total debt stood at PKR 58,964 billion, escalating to PKR 66,086 billion by April 2024.

Pakistan’s domestic debt has also soared to a record high of PKR 46,208 billion, reflecting ongoing fiscal challenges. Meanwhile, the ‘Naya Pakistan Certificates’ witnessed a notable 37.51 per cent decrease in annual debt, amounting to PKR 87 billion. Additionally, the federal government’s external debt experienced a slight decline of 1.4 per cent, dropping from PKR 21,908 billion to PKR 21,608 billion, as reported by ARY News.

Earlier reports from the finance ministry highlighted Pakistan’s mounting fiscal pressures, revealing that the country disbursed PKR 5.517 trillion for debt servicing in the first nine months of FY2023-24. This included PKR 4,807 billion for domestic debt servicing and PKR 710 billion for international debt obligations.

The fiscal operation report for the July-March period unveiled that the federal government’s gross revenue receipts reached PKR 9.1 trillion. Out of this, PKR 3.8 trillion was allocated to provinces under the National Finance Commission (NFC) Award, leaving net revenue receipts at PKR 5.3 trillion.

Under the NFC Award, Punjab received PKR 1,865 billion during July-March FY2023-24, while Sindh obtained PKR 946 billion. Khyber Pakhtunkhwa (KP) and Balochistan received PKR 623 billion and PKR 379 billion, respectively, from the divisible pool, ARY News reported.

The latest figures underscore Pakistan’s growing debt burden amid efforts to manage fiscal stability and meet financial obligations both domestically and internationally. (ANI)

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• A grace period until 2028 for principal loan repayment
• Substantial reduction in interest rates
• Extension of the loan repayment period by 8 years
• Substantial fiscal capacity includes efforts to restore the economy, bolster reserves, establish fiscal buffers, and enhance debt repayment capabilities
• As the government pursues sound policies for the nation, critics continue to fabricate new narratives solely for political gain
• Isn’t it Good News that the days of queuing for fuel, gas and kerosene are now behind us?
• Sri Lanka is leading among middle-income countries that have successfully completed the debt restructuring process
• We must continue on this path—regardless of changes in leadership, there is no turning back
• Some awaited the collapse of our efforts like waiting for a fall from the vine bridge—let’s diligently build our nation without anticipating failure.
• I make decisions not for political gain but for the betterment of our country
• All patriots are encouraged to join in the challenging endeavour of rebuilding the country, irrespective of their background

President Ranil Wickremesinghe highlighted today in Parliament that false propaganda regarding debt restructuring and related matters are being spread by various individuals both inside and outside the parliament. He emphasized that while the government pursues policies beneficial for the country, critics continue to fabricate different narratives solely for political gain.

The President underscored that Sri Lanka has achieved a significant milestone among middle-income countries by successfully navigating the debt restructuring process, which he described as a notable accomplishment and good news for the nation.

President Ranil Wickremesinghe made these remarks during a special statement in Parliament aimed at informing about the on-going debt restructuring efforts.

To ensure the continued success of the government’s initiatives and to carry this Good News into the future the President called upon all parliamentarians to unite in the collective endeavour of advancing the country, transcending political affiliations. He stressed the importance of continuing the government’s program without turning back, irrespective of future changes in leadership.

The President emphasized his non-involvement in politics over the past two years, highlighting his commitment to making decisions solely for the benefit of the country rather than for political gain or popularity

Following is the full statement delivered by President Ranil Wickremesinghe in Parliament:

Honourable Speaker,

Last week, we were able to achieve another significant milestone in the challenging journey of restoring economic stability to a country that defaulted on its debts in 2022.

On June 26, we reached an agreement with our official creditors regarding the repayment of the loan. Representing our country, officials authorized by the Cabinet signed these agreements and contracts. That same night, I addressed the nation through electronic media to share these developments.

From the beginning of this arduous journey to rebuild the economy, I have consistently presented updates to Parliament. Initially, we outlined our plans before Parliament, and subsequently, we reported on the progress we have made.

Therefore, I would like to present the information about the current situation to the Parliament today.

Honourable Speaker,

About two years ago, after accepting the challenge of restructuring the country’s economy, I presented our four-step work plan to this Parliament:

1. Obtain extended credit facilities in consultation with the International Monetary Fund and establish financial discipline in the country.

2. Collaborate with international financial and legal experts Lazard and Clifford Chance to prepare the debt stabilization plan in coordination with the IMF and reach an agreement with the creditors.

3. Establish policies, rules, and programs to secure foreign investment, strengthen the export economy, and create a digital green economy. Prepare and present the necessary reforms to promote the country’s economy.

4. Achieve developed country status through a debt-free economy by 2048 through this program.

Since then, we have embarked on a challenging journey, knowing that success was achievable step by step. We forged ahead step by step. The 2023 and 2024 budgets further strengthened our program.

By March 2023, we secured approval for the IMF Extended Credit Facility and received the first instalment on March 20, 2023. Following a review of our progress, we received the second instalment on December 12, 2023, and the third instalment on June 12, 2024.

From the start of the IMF program, we initiated discussions on debt restructuring, continuing to rely on the expertise of international organizations Lazard and Clifford Chance.

Our foreign debt amounts to USD 37 billion, comprising USD 10.6 billion in bilateral debt, USD 11.7 billion in multilateral debt, and USD14.7 billion in commercial loans, including USD 12.5 billion in sovereign bonds.

There are various opinions expressed inside and outside this council regarding debt write-off, loan grace periods, extension of repayment periods, restructuring, and related matters. Some of these opinions are not true, and some are half-truths. Therefore, I would like to clarify the international practices and facts of debt restructuring at this time.

What constitutes this foreign loan? Where do lending countries get the money?

They lend us the tax money and the savings of their citizens.

Many people in our country suggest that we should seek concessions on foreign loans without making any commitments. However, this is neither practical nor feasible according to international practices. Just as we must be responsible with the tax money and savings of our own citizens, we must also make commitments when borrowing the tax money and savings of other countries. If we fail to make a commitment, the citizens of those countries will not support us.

Not only that, debt restructuring is also a challenging endeavour. International economic experts agree that it is a difficult and painful process for creditors, debtors, citizens of the debtor country, and mediators alike.

Official bilateral creditors never reduce the principal amount of a loan. What we can obtain are concessions such as extended loan repayment periods, grace periods, and reduced interest rates.

However, not understanding this reality, some blame the Sri Lankan government for not requesting a basic debt write-off. Others claim that if they come to power, they will negotiate with creditor countries to cut 50% of the initial loan amount. We must recognize that such actions require mutual agreement. Creditors will not simply comply with our demands. These statements reveal a lack of understanding of international economic systems.

Neither the creditor nor the borrower has the authority to make the final decision on the extent of debt restructuring. The International Monetary Fund (IMF) makes that decision. They determine what kind of restructuring plan is necessary to make a country’s debt sustainable, based on an independent assessment of the economic strength of each country.

The IMF warned us long before our 2022 crisis that our country’s debt was unsustainable.

Furthermore, the methodology the IMF follows varies by country. There is one approach for low-income countries and another for middle-income countries.

Let me provide an example. Sri Lanka, being a middle-income country, was among the first to implement debt restructuring using the new debt sustainability analysis framework tailored for middle-income countries. According to the plan set for Sri Lanka, public debt must be reduced to below 95% of the Gross Domestic Product (GDP) by 2032. In contrast, the plan presented for Ghana, a low-income country, required them to reduce the present value of their public debt to below 55% of GDP by 2028.

Low-income countries follow a common action framework, which allows them to convene all their creditors on one platform to make decisions. However, this does not apply to us since we are a middle-income country. Therefore, debt restructuring in Sri Lanka is a more complex process.

Within this background, we had to negotiate separately with the Paris Club and India as members of the official creditor committee, as well as with China’s Exim Bank. However, we do not have the authority to offer special terms to any of these parties. Our greatest challenge has been to establish a set of common conditions that are treated equally by both parties involved.

Navigating this complex landscape amidst current geopolitical trends has not been easy, hindering our progress toward our goals.

Despite these formidable difficulties, we successfully reached an agreement with our foreign bilateral official creditors within just 15 months of initiating the IMF program. We are among the middle-income countries that have efficiently completed the debt restructuring process within a short timeframe, marking a significant achievement. This is indeed promising news.

Honourable Speaker,

I would like to update this House on the agreements reached with the Official Creditor Committee co-chaired by India, Japan, and France, as well as the Exim Bank of China, regarding debt restructuring:

• We have secured a grace period until 2028 for repaying the principal loan.

• Significant reductions have been made to the interest rates, with the new rate set at 2.1% or lower.

• The repayment period for clearing the entire loan has been extended by 8 years, meaning our debt should now be fully settled by 2043.

• There is flexibility to gradually increase principal loan repayments, allowing us to defer loan servicing costs. This has resulted in Sri Lanka retaining a debt service of USD 5 billion.

• Through economic restructuring, rebuilding reserves, creating fiscal buffers, and enhancing debt repayment capacity, we aim to position the economy strongly for future debt repayments. This approach is creating considerable financial flexibility.

Honourable Speaker,

In 2023, we successfully finalized Domestic Debt Restructuring (DDR) operations. Throughout this process, we took great care to ensure the stability of our country’s financial institutions, prevent any institutional challenges, and safeguard our depositors from risks.

Subsequently, we have successfully completed the restructuring of foreign bilateral debts amounting to USD 10 billion.

According to international conventions on debt restructuring, multilateral debts are not included in this arrangement.

Next, we are in the process of finalizing the restructuring plan for commercial debts totalling USD 14.7 billion. Discussions on this matter are currently progressing successfully.

We anticipate completing all these tasks within a short timeframe. Following this, I will submit all agreements and documents related to debt restructuring to the Committee on Public Finance of Parliament. I urge the Public Finance Committee to give careful and thorough consideration to these matters.

Honourable Speaker,

We were able to achieve such progress in a short period due to the strategic path we have followed. I would also like to highlight the benefits to our country resulting from these successful outcomes.

Since announcing our inability to repay debts in April 2022, no foreign country has provided us with loan assistance, as they are legally unable to do so under these circumstances.

However, during this time, India and Bangladesh, as friendly nations, offered us short-term loan assistance. International organizations like the World Bank and the Asian Development Bank also provided concessional loans through various channels. Apart from these efforts, no other country had the capability or authorization to offer us long-term loans.

Certain political groups have been spreading misinformation about our foreign debt on social media. A post shared by a supporter of our MP Anura Kumara Dissanayake claimed the following:

“Good News. When “Pina” took the country, the total foreign debt was USD 71 billion. Now it is UISD 100 billion.

We have debated with MP Anura Kumara Dissanayake, and there have been disagreements. But he has not insulted me directly in such a manner. However, some of your supporters are also actively working against you.

Let me clarify the relevant points through this post.

The total foreign debt of our country is USD 37 billion, not 71 billion as claimed by this individual, which is a false statement. Moreover, they suggest that we have borrowed up to USD 100 billion in the last two years, but it’s widely known that no country has provided us with loans since we declared default. Legally, no country has the authority to lend to us under these circumstances.

What is the purpose of spreading such misinformation? Are these actions intended to bolster support for your party in the future? It’s worth reflecting on these questions.

Honourable Speaker,

Following this MoU, the possibility of bilateral foreign loans has reopened for us. We now have the opportunity to receive loan assistance again from our official creditors such as the Paris Club and the Exim Bank of China.

Additionally, several projects that were initiated with foreign loan assistance and halted projects can now be resumed. Being categorized as a country unable to meet its debt obligations led to the suspension of many development projects funded by various countries, particularly in the construction sector. Now, we can restart these projects anew.

This marks a significant advancement for our construction industry, contributing greatly to our economic strength and expanding job opportunities.

Another consequence of halting foreign projects was a decline in our economic growth rate. Despite this setback, we have made some progress. Once these projects are resumed with international assistance, we will be able to accelerate our development even further.

Honourable Speaker,

I would like to address some of the myths circulating in society regarding foreign loans.

A developing country like Sri Lanka cannot rely solely on its own resources, as we do not yet generate sufficient income to be self-sustaining. Therefore, we must seek loans and grants.

However, it is crucial that we invest these funds wisely, rather than using them for daily expenses or salary increases. This has been one of the primary mistakes our country has made since gaining independence.

Loans were used to increase wages, create government jobs, provide free food, reduce the costs of food, fuel as well as electricity, and also to cover the losses of public enterprises.

Some political groups promise to continue this approach, pledging wage increases, tax reductions, and various concessions without addressing how they will fund these initiatives. They make numerous promises but fail to explain how they will generate the necessary revenue.

Since assuming my responsibilities, I have put an end to this unsustainable practice, which has been perpetuated by many previous governments.

Honourable Speaker,

I will now highlight the financial benefits expected from restructuring our foreign debt.

By 2022, our expenditure on debt payments denominated in foreign currency amounted to 9.2% of GDP. It is projected to be reduced to 4.5% between 2027 and 2032. Additionally, 34.6% of GDP was allocated for gross financial needs by 2022. It is expected to be maintained at less than 13% between 2027 and 2032. This strategic adjustment will enable greater funding allocation to government services, alongside potential reductions in domestic interest rates.

Honourable Speaker,

I have consistently urged members of this House to unite in rebuilding our country’s economy, setting aside political differences.

Even longstanding political adversaries have openly supported these efforts, considering the national interest, while others have quietly offered their backing. However, there remains a group that continues to criticize and disrupt.

During this economic crisis, I advocated for immediate IMF assistance. When certain opposition groups boycotted President Gotabaya Rajapaksa’s all-party discussion, I participated alone as a Member of Parliament and firmly voiced my stance. I emphasized that seeking IMF assistance is the only viable path forward for us.

Several months later, in a context where no one else stepped up to the challenge of revitalizing the country’s economy, I took on that daunting task. I embraced this risky challenge for the sake of my country, my homeland, and its future.

I committed publicly to overcoming these challenges, akin to traversing a perilous vine bridge. I extend my appreciation to all those who rallied behind this initiative, and I express my gratitude once more for their unwavering support.

Despite numerous challenges, we pushed forward with negotiations with the IMF.

Critics initially claimed that our negotiations with the IMF would fail.

However, we proved successful in these negotiations.

Subsequently, critics shifted their stance. Some argued that no country had ever fully recovered from IMF interventions, while others declared their intention to disregard IMF agreements upon assuming power.

Despite these challenges, we persevered and continued to achieve success.

Critics then changed their approach once more, referencing survey reports to highlight perceived shortcomings in meeting IMF conditions. They labelled our program a failure and asserted they would refuse the second instalment despite accepting the first.

Yet, we successfully secured the second instalment as well.

At that point, critics altered their stance once more.

A survey agency reported that we had fulfilled less than 18% of the IMF conditions, attempting to unsettle the country by suggesting we might not receive the third instalment.

Despite this, we successfully secured the third instalment.

Critics then shifted their focus, asserting doubts about our ability to effectively restructure our debt even after receiving the third instalment. Additionally, they endeavoured to influence creditor countries against agreeing to our restructuring efforts. Nonetheless, we achieved success in restructuring our debt.

Once again, the critics changed their narrative.

It is now being argued that debt restructuring holds no value since our credit ratings have not improved, leaving us classified as a financially bankrupt nation.

Allow me to elaborate on this matter.

As of 2019, our international credit rating stood at level B. By 2020, Sri Lanka had been downgraded to level C. This downgrade occurred well before any debt default declaration, indicating that credit ratings are influenced by various factors beyond debt solvency alone.

We have achieved several notable successes: successfully completing domestic debt restructuring, restructuring foreign bilateral debt, and progressing swiftly with the remaining commercial debt restructuring.

As a result, our economic indicators are improving. International financial institutions will likely work towards upgrading our credit ratings based on these indicators in due course.

That’s when our critics change their stance once more.

Honourable Speaker,

There exists a distinction between us, the government and these critics. There is a difference between us, the government, and these boastful individuals. There is a distinction between us and these opportunists.

We are steadfastly advancing with policies and actions that serve the best interests of our country.

They fabricate stories day after day to gain power.

In this parliament, there is a group attentively and vigilantly observing these developments. Hailing from various political parties, they maintain independent and impartial oversight. They are patiently assessing

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President Ranil Wickremesinghe delivered a special statement to the nation today, highlighting Sri Lanka’s success in reaching final agreements to restructure debt with its bilateral creditors, including the Official Creditor Committee (OCC) and the Export-Import Bank of China.

The total value of debt restructuring agreements that Sri Lanka reached today with creditor nations is US$ 10 billion, which will provide up to 92% relief on debt repayments during the International Monetary Fund’s (IMF) EFF programme. 

Addressing the nation, President Ranil Wickremesinghe announced that today marks a significant milestone in the recent history of Sri Lanka, as the country has successfully reached a final agreement with its official bilateral creditors. 

Following are five key points from the President’s special address to the nation;

1. Today, debt restructuring agreements were finalized with Sri Lanka’s official creditors in Paris and with the Chinese Exim Bank in Beijing. This development is a significant milestone, bringing good news to all who cherish the country.
2. Debt restructuring agreements will postpone all bilateral loan payments to foreign countries until 2028. Additionally, Sri Lanka will have until 2043 to repay these loans on concessional terms.
3. Following Sri Lanka’s official declaration of its inability to repay loans, all transactions and foreign-funded development projects were suspended. The successful debt restructuring now paves the way to resume these projects and transactions.
4. After six consecutive quarters of economic contraction, Sri Lanka’s economy began to grow again from the third quarter of 2023. The country’s foreign reserves, which depleted to a critical low by April 2022, have now rebounded to $5.5 billion.
5. In 2022, Sri Lanka allocated 9.2% of its GDP to foreign debt payments. However, with ongoing efforts, this percentage is expected to decrease to less than 4.5% between 2027 and 2032, reflecting significant fiscal improvement. (Newswire)

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Sri Lanka reached a final restructuring agreement for US$ 5.8 billion of debt with its bilateral lenders’ Official Creditor Committee in Paris, France today.

According to the President’s Media Division (PMD), this agreement with bilateral lenders grants significant debt relief.

The PMD added that this agreement also allows Sri Lanka to allocate funds to essential public services and secure concessional financing for its development needs. 

Meanwhile, taking to ‘X’, State Minister of Finance Shehan Semasinghe announced that the final agreement was reached on debt restructuring between Sri Lanka and the Official Creditor Committee (OCC) on the sidelines of the Paris Forum 2024 in France.

The State Minister further said that Sri Lanka is also in the process of signing bilateral debt treatment agreements between Sri Lanka and the Export-Import Bank of China today.

“On behalf of Sri Lanka, I would like to sincerely thank the OCC chairs – France, India, and Japan – as well as the Export-Import Bank of China for their leadership in this process, as well as all OCC members for their unwavering support. 

“I also commend the OCC Secretariat for their dedication to finding a resolution to our debt crisis and achieving this significant milestone, which will enhance confidence in our economy and foster growth,” he said.

State Minister of Finance Shehan Semasinghe further reiterated that the unwavering commitment and leadership of President Ranil Wickremesinghe have been instrumental in steering Sri Lanka towards this milestone achievement. (Newswire)

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The relevant agreements on debt restructuring with the Paris Club and other stakeholders will be signed on Wednesday (June 26), the government said. 

The announcement was made by Cabinet Spokesman Minister Bandula Gunawardena during the weekly Cabinet media briefing held today. 

The Cabinet Spokesman further said that the relevant agreements on debt restructuring with the Paris Club and other stakeholders have received Cabinet approval. 

Stating that a team of Sri Lankan officials have already left the country to sign the agreement, Minister Bandula Gunawardena said that upon the signing of the relevant agreements, the President will brief the Parliament and nation in this regard. 

Sri Lanka which faced a severe economic crisis in 2022 owes close to $14 billion to a wide range of bilateral creditors, of which 66% is owed to non-Paris Club members.

The country also needs to renegotiate around $12 billion with overseas bondholders after defaulting on its international debt in 2022. (Newswire)

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President Ranil Wickremesinghe has expressed hope to reach an agreement with creditor nations in the next few weeks, it was reported. 

According to the President’s Media Division (PMD), the President made the announcement while providing details of forthcoming negotiations with creditor countries. 

President Ranil Wickremesinghe made the remarks while speaking at the International Industry Expo 2024 held today.

At the event, President Ranil Wickremesinghe also revealed plans to boost the industrial sector.

The PMD states these plans feature the creation of a new commercial bank, an economic commission, and an institute called Enterprise Sri Lanka.

The new entities are to be established to promote a competitive, digitalized green economy. (Newswire)

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The Government of Sri Lanka has settled a total of US$ 1909.7 million in foreign debt and interest payments between President Ranil Wickremesinghe’s assumption of office and February 2024.

Director General (Community Affairs) in the President’s Office, Rajith Keerthy Tennakoon revealed that from July 21, 2022, to February 2024, the government has disbursed $1338.8 million in multilateral loans and interest, with no outstanding arrears in loan instalments or interest payments up to February 2024. 

Addressing the media on Friday ( Apr 05), Keerthi Thennakoon said according to the Department of External Resources, payments totalling US$ 760.1 million have been made to the Asian Development Bank and US$ 7.0 million to the Asian Infrastructure Investment Bank. 

Additionally, payments of US$ 22.3 million have been made to the European Investment Bank, US$ 17.9 million to the International Fund for Agricultural Development, and US$ 9.8 million to the EFF 23-26 program of the International Monetary Fund. 

Furthermore, US$ 1.7 million has been disbursed to the Nordic Development Fund, US$ 29.9 million to the OPEC Fund for International Development, and US$ 489.9 million to the World Bank. Consequently, the government’s total payments for loans and interest amount to US$ 1,338.8 million. 

He said it was noteworthy that the Asian Development Bank, the International Monetary Fund, and the World Bank have extended further financial support to the government due to its commendable track record in debt repayment. During this period, negotiations are underway with relevant states and institutions to finalize agreements regarding the repayment of bilateral loans and interest, which currently stand at US$ 571.0 million.

Additionally, preliminary agreements have been reached concerning debt and interest payments, involving members of the Paris Club, with outstanding interest to be settled by the end of February 2024 amounting to $450.7 million.

It is worth noting that several countries, including Japan, have provisionally agreed to resume numerous projects halted during the previous season. Moreover, bilateral loan transactions have been conducted with nearly 25 other financial institutions, such as Canada, China, France, Germany, India, Japan, South Korea, Kuwait, Pakistan, Russia, Spain, the United States, China Development Bank, Sino-Hungarian Bank, Indian Exim Bank, and American Exim Bank.

Keerthi Thennakoon further said that these loans and interest payments have been denominated in US Dollars, Euros, Japanese Yen, and Canadian Dollars. The Central Bank of Sri Lanka has bolstered its dollar reserves in foreign currencies to facilitate local payments to institutions like People’s Bank, Bank of Ceylon, and Hatton National Bank after settling local debt and interest obligations.

Furthermore, following the repayment of multilateral, bilateral, and local dollar loans, the country’s cash reserves have surged to over $4.9 billion ($4950 million). The government is actively engaged in restructuring business loans and interest totalling $4,439.2 million, acquired at high interest rates. It is important to note that payment of these funds will be deferred until negotiations regarding debt restructuring are finalized.

He pointed out that the ongoing discussion regarding the special interest rate offered for fixed deposits of senior citizens warrants attention. Introduced as a budget proposal in 2015, the special interest rate initiative aimed to provide senior citizens with a competitive interest rate of 15% per annum on their fixed deposits. Initially, the Treasury allocated funds to bridge the gap between the prevailing low-interest rates in banks and the proposed higher rate of 15%. This program, implemented through commercial banks, initially covered deposits up to One million rupees, which was later increased to Rs. 1.5 million in the 2018 budget. Consequently, all 1.2 million senior citizen accounts were eligible for this favourable interest rate.

By 2022, the Treasury was allocating Rs. 20 billion per quarter to cover the additional interest payments. This amounted to an annual expenditure of Rs. 80,000 million (Rs. 80 billion). However, due to the country’s economic crisis, this initiative had to be halted from October 1, 2022. With over 50% of senior citizens relying on monthly interest payments, it’s evident that the government cannot sustain an annual expenditure of Rs. 80,000 million given the current financial situation. The outstanding amount owed to 17 banks for the additional interest payments until October 2022 stands at Rs. 108 billion.

Keerthi Thennakoon revealed that to secure the additional funds required annually, amounting to Rs. 80,000 million, a proposal suggests increasing the current value-added tax (VAT) by 1%. It’s imperative that any discussion of reinstating the 15% interest rate for senior citizens addresses how the necessary funds will be raised. The Central Bank’s policy of lowering interest rates and fostering competitive investment opportunities to stimulate economic growth should be upheld. Lessons from past instances where unsustainable interest rates led to financial instability underscore the importance of prudence in financial management to prevent such crises from recurring. (Newswire)

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Sri Lanka is eyeing nearly US$5 billion in foreign funds after debt restructuring, it was reported. 

According to Reuters, Foreign Minister Ali Sabry said on Monday (Feb 5) that Sri Lanka expects to attract foreign funds in the next two years once it is able to finalise the restructuring of its overseas debt.

The nation defaulted on its overseas debt in May 2022 after a severe shortage of foreign exchange reserves triggered the worst financial crisis since independence from Britain in 1948.

Foreign Minister Ali Sabry told Reuters, that Sri Lanka has since made progress on about US$11 billion of bilateral debt restructuring and hopes to have agreements in place with all key creditors, including bondholders, by May at the latest.

It will then focus on kick-starting major infrastructure projects suspended during the crisis, including a highway, an expansion of the main airport near Colombo and a US$2 billion light railway project with Japan.

“We are looking at, within the next 12 to 24 months, somewhere in the region of about US$5 billion worth of foreign currency infusion into the country in terms of projects and also from the sale of some state-owned enterprises,” Sabry said in an interview.

Sri Lanka’s private creditors account for about US$16 billion of debt, including international sovereign bonds, Sabry said.

“If we reach an agreement with them then we can…start lifting the moratorium on the foreign debt payments.”

That would make it easier for investment to flow into Sri Lanka, including US$1.5 billion committed for Colombo’s Chinese-funded Port City, as well as renewable energy and port terminal projects by India’s Adani Group.

“There is a bag of big projects lined up, hopefully, it will…start once we finalise the debt restructuring,” Sabry said.

Sri Lanka secured a US$2.9 billion bailout from the International Monetary Fund (IMF) last March, helping to temper inflation, increase state revenue and rebuild foreign exchange reserves.

Its national carrier and main telecommunications company are on a list of state-owned enterprises to be revamped with private investment under the IMF programme. Jio Platforms, a unit of India’s Reliance Industries, is among the bidders for the latter. (NewsWire)

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