Sri Lanka says stability not solely due to suspension of debt payments

The Ministry of Finance, Economic Stabilization, and National Policies has clarified Sri Lanka’s external debt service payments, addressing misconceptions about the country’s economic stability.

On September 12, 2024, the Ministry stated that Sri Lanka’s current economic stability is not just due to the suspension of external debt payments. Despite the temporary halt on some debt payments announced in April 2022, Sri Lanka has continued to pay its multilateral debt. The suspension only affected external commercial and official bilateral debts.

In 2022 and 2023, Sri Lanka made debt payments totaling USD 2,483 million and USD 2,589 million, respectively. These amounts are about half of the typical annual payments made before the suspension.

The Ministry’s statement corrects the belief that economic stability will end when debt payments resume. It emphasizes that ongoing economic reforms, not just the temporary suspension, are crucial for stability.

Sri Lanka has completed debt restructuring agreements with official sectors and is close to finalizing deals with commercial creditors. These agreements should provide substantial debt relief and help maintain economic stability in the future.

The Ministry stressed the need for Sri Lanka to use this period to strengthen its financial position. Without this, there is a risk of returning to economic instability.