Finance Ministry says it’s incorrect to claim foreign debt is not being repaid

The Central Bank repaid $522 million in 2023

By Sanath Nanayakkare

It is incorrect to claim that Sri Lanka is not repaying its foreign debt, the Ministry of Finance states on its official website in a document dated Sep 16, 2024.

Sri Lanka’s government and private borrowers serviced $2.58 billion in debt in 2023, following $2.48 billion in 2022 – the year the country defaulted on external debt – according to the report.

The report highlights that the Central Bank repaid $522 million in 2023, including $172 million to the IMF and $350 million in swaps.

Further clarifying the concerns in some quarters that foreign debt is not being repaid, the Ministry points out that, by 2023, the government made $1.043 billion in principal repayments and $405 million in interest payments.

“In 2022, central government principal repayments dropped to $1.236 billion from $2.377 billion in 2021 after the default, with interest payments falling from $1.187 billion to $465 million,” it states.

“Meanwhile, in the private sector, banks and corporations repaid $769 million in principal in 2022, down from $1.410 billion in 2021, while interest payments dropped from $394 million to $273 million.”

“In 2023, private entities paid $405 million in interest. The data excludes foreign reserve collections by both the central bank and private banks, which resemble debt repayments. Reduced imports of building materials and machinery were linked to domestic savings being used to repay debt instead of being invested locally,” the report states.