Debt Restructuring Nears Completion Amid Interim Budget Debate
Labour Minister and Economic Affairs Deputy Minister Prof. Anil Jayantha Fernando announced in Parliament that the debt restructuring process is nearing its final stage, with efforts underway to conclude it by December 31.
The Minister made this statement while opening the debate on the motion related to the interim Vote on Account (VoA)yesterday (5). The VoA seeks Parliament’s approval for the Government to spend Rs. 1,403 billion during the first four months of 2025.
Prof. Fernando emphasized the urgent need for debt restructuring, noting that delays could result in an additional US$ 1.7 billion in interest arrears. He highlighted the current economic challenge, describing it as an “unsustainable debt trap,” and criticized previous borrowing practices for failing to contribute effectively to the country’s production processes.
Outlining the expenditure breakdown for the VoA, he stated:
- Rs. 1,000 billion for recurrent expenses,
- Rs. 425 billion for capital expenditure, and
- Rs. 1,175 billion for foreign debt restructuring and servicing.
This amounts to an estimated total of Rs. 2,600 billion, while government revenue for the period is projected at Rs. 1,600 billion, necessitating a basic borrowing limit of Rs. 1,000 billion.
The Minister’s remarks underscore the critical importance of finalizing the debt restructuring process to ensure fiscal stability and economic recovery.
