Deputy Finance Minister Rejects Claims Sri Lanka Faces Future Foreign Debt Crisis

Deputy Minister of Finance and Planning Dr. Anil Jayantha has rejected claims that Sri Lanka faces a risk of being unable to meet its future foreign debt obligations, saying the country’s economic recovery remains on track and that some concerns circulating publicly are based on misleading interpretations of economic data.

Speaking on Sri Lanka’s foreign reserve position, Dr. Jayantha said reserves should be considered a safety buffer rather than viewed as an isolated measure of economic performance.

He explained that countries can increase reserves by restricting imports, reducing economic activity or postponing debt repayments. However, he said the Government has chosen instead to maintain economic activity, attract investment and build reserves while supporting economic growth.

Sri Lanka’s Foreign Reserves Around USD 6.5 Billion

Dr. Jayantha said Sri Lanka has maintained foreign reserves of approximately USD 6.5 billion despite several challenges, including the impact of Cyclone Ditwah and increased import costs caused by higher global fuel prices amid developments in the Middle East.

According to the Deputy Minister, the reserve position has remained resilient despite these additional pressures.

He said the Government expects foreign reserves to increase to approximately USD 8 billion within the next six months, which he described as sufficient to support debt repayments and future import requirements.

Highest Annual Debt Repayment Expected in 2028

Addressing concerns over Sri Lanka’s future debt servicing obligations, Dr. Jayantha said the country’s highest annual repayment requirement over the coming years is expected to be around USD 3.8 billion in 2028.

Debt repayments in 2027 are projected to exceed USD 2 billion, while obligations in 2029 and 2030 are expected to remain at broadly similar levels.

He argued that the projected reserve growth, combined with expected foreign currency inflows, would provide sufficient capacity to meet these obligations.

Government Expects More Than USD 1 Billion in Additional Inflows

Dr. Jayantha highlighted several expected foreign currency inflows that he said would strengthen Sri Lanka’s external position.

The current account is expected to generate nearly USD 900 million in inflows over the coming months, according to the Deputy Minister.

Sri Lanka’s development partners have also agreed to provide policy-based budget financing, including approximately USD 350 million expected from the International Monetary Fund in December.

In addition, foreign direct investment through the Board of Investment and Colombo Port City is projected to contribute around another USD 1 billion over the next six months.

Dr. Jayantha said these inflows would support the Government’s target of building foreign reserves to around USD 8 billion by the end of 2026.

Banking Sector’s Foreign Asset Position Improves

The Deputy Minister also pointed to improvements in Sri Lanka’s banking sector.

He said the banking system had recorded negative net foreign assets when the current administration assumed office, meaning foreign liabilities exceeded foreign assets.

However, by June this year, net foreign assets in the banking sector had increased to approximately Rs. 1,265 billion, equivalent to around USD 3.8 billion.

Dr. Jayantha described the improvement as an additional buffer supporting the country’s economic stability.

Government Rejects Public Concerns Over Debt Sustainability

The Deputy Minister said there is no reason for public panic, arguing that the Government’s economic policies have strengthened investor confidence and improved several key economic indicators.

He also referred to international assessments of Sri Lanka’s progress in debt transparency and information-sharing with creditors.

According to Dr. Jayantha, the International Institute of Finance recorded a 6.3-point improvement in Sri Lanka’s performance, placing the country fourth among 57 countries for the highest level of improvement.

Minister Accuses Critics of Creating Economic Fear

Dr. Jayantha accused sections of the Opposition and other critics of presenting economic statistics out of context in an attempt to create fear among the public.

He argued that critics could not credibly claim that economic growth is deteriorating, inflation is uncontrolled or public finances are being mismanaged because official indicators show progress in these areas.

Instead, he said, complicated economic figures are being selectively presented to create uncertainty among the public.

The Deputy Minister maintained that Sri Lanka is on a stable economic recovery path, with the Government focused on increasing foreign reserves, attracting investment, maintaining economic activity and ensuring that future foreign debt obligations can be met.

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