Sri Lanka debt burden reaches sustainable level

The overall debt burden of Sri Lanka is gradually decreasing to a sustainable level, and a decision cannot be made that debt increased by looking only at trillion or billion amounts.

Member of Parliament Lakmali Hemachandra addressed parliament and stated that the true burden created on the economy by debt is decided only based on the debt-to-GDP ratio. According to her, the debt sustainability index of Sri Lanka, which stood at 95.5 per cent in the year 2024, dropped to 91.6 per cent by the year 2025, whilst the external debt percentage to be paid in dollars also significantly decreased from 155.4 per cent to 150.4 per cent.

She alleged that during the Yahapalana government period from 2015 to 2019, the debt-to-GDP percentage was raised colossally from 73 per cent to 82 per cent, and commercial loans were taken at high interest rates through international sovereign bonds to cover the budget deficit.

However, she pointed out that during the past one and a half years, the current government successfully controlled the interest cost for debt servicing, and according to Central Bank reports, the maintenance of cash reserves and management of interest rates by the Treasury became the main reason for this.

The Member of Parliament further emphasised that Sri Lanka already managed to achieve the 95 per cent debt target expected for the year 2032.