October 18, Colombo (LNW): Senior Professor Wasantha Athukorala from the University of Peradeniya’s Department of Economics and Statistics has disclosed that the current Sri Lankan government is forced to borrow extensively to repay loans incurred by previous administrations. Addressing concerns about large-scale borrowing, Professor Athukorala emphasized that much of the current borrowing is to settle Rs. 4,859 billion in maturing Treasury Bills and Bonds due over the next year.
He revealed that the previous government had borrowed approximately Rs. 800 billion per month from the domestic market without a clear repayment plan. As a result, the current administration must continue borrowing to service these debts, particularly the Treasury Bills and Bonds maturing in the coming months.
Professor Athukorala highlighted that between 2015 and 2019, nearly US$ 12 billion out of the US$ 17 billion borrowed through International Sovereign Bonds came from that period, accounting for 70% of foreign debt. With Sri Lanka’s credit rating downgraded, the country can no longer borrow from international markets, further complicating the repayment process.
Despite restructuring efforts, the country remains burdened by substantial loans from both foreign and domestic markets. Domestically, the government raises funds weekly through Treasury Bills and Bonds to cover financial obligations. Looking ahead, Sri Lanka will need to repay Rs. 3,774 billion in Treasury Bills from November this year to November next year, and Rs. 13,237 billion in Treasury Bonds by 2045, with Rs. 1,125 billion maturing next year.
Professor Athukorala stressed the importance of establishing a sustainable debt management plan. He suggested that the government gradually reduce monthly borrowings to Rs. 200 to 250 billion over the next five years to avoid future crises. He also noted that while previous governments misused borrowed funds, there are signs of reduced wasteful spending under the current administration, which is a positive development.
