Item in DailyFT, 8 February 2026 …. sent to TPS by Asoka Kuruppu in Brisbane
[The Governor of the Central Bank, SL informed the world …]
- Says no basis for fears of another sovereign default or debt restructuring; a sentiment economists share
- Govt. paid $ 2.5 b in external debt service in 2025
- Reserve build-up targeted at $ 8-10 b over next two years against annual debt service of about $ 3.5 b
- Finance Ministry to brief Bondholders on debt position and fiscal outlook on 11 February
CBSL Governor Dr. Nandalal Weerasinghe
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Sri Lanka will not face another sovereign debt crisis and will commence repayment of its restructured external debt as scheduled, Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe said, dismissing what he described as unfounded fears of a renewed default around 2028.
Speaking at an event organised by The Ceylon Chamber of Commerce, the Governor rejected claims that the Government and the CBSL would be unable to meet upcoming debt service obligations, warning that such narratives risk undermining investor confidence at a sensitive juncture in Sri Lanka’s post-crisis recovery.
“I don’t see any reason even talking about any restructuring or another default. That is a completely misguided misperception. That creates unnecessary doubt among investors and countries that are willing to lend to Sri Lanka,” he said.
The CBSL Governor noted that Sri Lanka had maintained a strong record of meeting its sovereign debt obligations until 2022, when severely depleted foreign reserves forced the suspension of external debt payments. He said that position has since changed materially.
In 2025, external debt service obligations amounted to about $ 2.5 billion.
Looking ahead, he said annual debt servicing is expected to average around $ 3.5 billion, while the CBSL aims to build gross official reserves to between $ 8 billion and $ 10 billion over the next two years, eliminating the need for any further restructuring.
Asia Securities Head of Research Sanjeewa Fernando recently told an investor forum that external debt settlement obligations for 2026 and 2027 do not exceed $ 2.5 billion per year. “This represents a significant reduction from pre-restructuring levels and materially improves debt sustainability,” he said.
Colombo-based think tank Arutha Research Director – Debt Research Umesh Moramudali last September argued that that fears about post-2028 debt repayments were overstated.
In 2028, Sri Lanka begins capital repayments on bilateral debt to Japan, EXIM Bank China, and EXIM Bank India, while bullet payments and maturities for Macro-Linked Bonds (MLBs) are also scheduled to begin that year.
However, Moramudali said it amounts to an additional $ 1 billion compared to the $ 2 billion debt servicing requirements in 2026 and 2027 comprising interest payments and multilateral (Asian Development Bank, World Bank) loan repayments.
He said the country is on track to reduce its debt burden faster than International Monetary Fund (IMF) baseline projections, though questions remain over whether the new Public Debt Management Office (PDMO) has the capacity to manage complex borrowing once it takes over from the CBSL and External Resources Department.
Separately, the Finance Ministry announced that Sri Lanka has scheduled an investor call for holders of several series of International Sovereign Bonds (ISBs), in line with the terms of the instruments.
According to the Ministry, the call will present the Government’s Debt Report published on 31 December 2025, alongside updates on fiscal developments and other relevant economic indicators. The investor briefing will be held on 11 February at 8:30 a.m. Eastern Standard Time, 1:30 p.m. Greenwich Mean Time, and 7 p.m. Indian Standard Time.
Bondholders have been invited to register their participation through the official WebEx platform circulated by the Government.
According to the PDMO’s latest Quarterly Debt Bulletin, Sri Lanka’s external debt stock stood at $ 37.24 billion at end-September 2025, up $ 100 million from the previous quarter.
Despite remaining shut out of international capital markets, the country continues to access and service funding from multilateral lenders, primarily the World Bank and Asian Development Bank. External debt servicing totalled $ 1.36 billion in the first half of 2025, covering 55% of the $ 2.45 billion due for the full year.
Dr. Weerasinghe has said annual external debt service is expected to average around $ 2.75 billion through 2027, rising to between $ 3.2 billion and $ 3.5 billion from 2028, with peaks of close to $ 4 billion in certain years.
The Bulletin notes that multilateral lenders account for 37% of the external portfolio, followed by commercial debt at 34% and bilateral debt at 29%, with ISBs comprising about 81% of commercial liabilities. It also records substantial progress in restructuring since the April 2022 default, with agreements covering about 94% of creditor commitments concluded by end-2025, allowing the Government to resume regular external debt servicing.
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This is the problem of working in a cold lofty tower. You get your brains frozen.