ECONOMYNEXT – Sri Lanka’s debt service in 2025 amounts to 2,435 million US dollars of which 1,948 million dollars has been paid by September, President Anura Kumara Dissanayake said presenting a budget for 2026.
“Another 487 million US dollars is to be paid by December 31 of this year,” President Dissanayake said.
In 2024, Sri Lanka serviced debt of 1,674 million dollars, he said.
There is a narrative that Sri Lanka’s debt repayment will begin in 2028.
Sri Lanka’s Treasury at the moment uses new loans from multilaterals and reserves from the central bank to repay debt.
If the central bank does not run sufficient deflationary policy (mopping up liqudity), it may not be able fully to supply dollars to the Treasury, and any attempts to buy extra dollars above any deflationary policy will lead to depreciation, analysts have warned.
Given the experience in the past especially since the war ended, analysts have said the Treasury should buy its own dollars in monetary policy neutral transactions.
The other strategy should be to get taxes from exporters in US dollars, which will also stop the Treasury being hostage to any unwillingness to by central bank to run deflationary policy. (Colombo/Nov07/2025)