By: Staff Writer
November 30, Colombo (LNW): Sri Lanka’s external debt story is entering a new and more complex phase, even as the country continues to benefit from a temporary moratorium offered by several bilateral lenders.
Despite this breathing space, the nation’s overall external payment obligations remain steep and in some areas are actually rising underscoring deep structural vulnerabilities in the country’s foreign financing landscape.
According to fresh disclosures by Central Bank Governor Dr. Nandalal Weerasinghe, Sri Lanka’s external interest payments alone amount to approximately US$2.75 billion in 2024, a figure that includes foreign currency liabilities the Government absorbed from the People’s Bank and Bank of Ceylon during the height of the economic collapse. These payments, he stressed, reflect only interest and related obligations—not full debt amortisation.
The Governor confirmed that the country will need to meet about US$2.75 billion annually in external servicing commitments through 2027, even under the concessionary arrangements already agreed upon. However, beginning in 2028, the burden will climb again, with annual repayments projected to fall between US$3.2 billion and US$3.5 billion, and in certain years of the next decade, touching nearly US$4 billion.
The revelation is significant because it highlights the difference between the debt moratoriums granted largely by bilateral creditors and the extensive obligations Sri Lanka still carries with multilateral lenders, international financial institutions, and commercial transactions, all of which must be serviced without interruption.
The country may not be repaying bilateral lenders temporarily, but institutions such as the IMF, ADB, World Bank, and other development partners continue to require timely payments.
In 2024, Sri Lanka paid US$1.674 billion in external debt servicing, according to figures cited from the 2025 Budget Speech.
That requirement rises sharply to US$2.435 billion in 2025, of which US$1.948 billion had already been settled by September. A further US$487 million is due by 31 December much of which is believed to have already been cleared. This marks a year-on-year increase of roughly US$750 million, despite the ongoing debt relief efforts.
These rising obligations raise critical questions about the long-term sustainability of Sri Lanka’s economic recovery. While the debt moratorium has temporarily softened bilateral repayments, the spike in multilateral and commercial servicing commitments has limited the country’s ability to redirect resources toward development, social services, and economic recovery programmes.
The Central Bank insists that adherence to fiscal discipline, strengthening foreign reserve buffers, and maintaining tight monetary controls are essential to preventing another balance-of-payments crisis. Analysts warn, however, that unless export performance, foreign investment flows, and tourism earnings expand significantly, the country risks slipping back into dependency on emergency financing.
As Sri Lanka prepares for a decade of elevated payments despite temporary relief—the core issue becomes clear: a moratorium can delay repayment, but it cannot erase structural weaknesses. Without a renewed growth model and a diversified foreign-exchange strategy, the country’s external debt challenge may simply be deferred, not resolved.
