(AFP) President Anura Kumara Dissanayake vowed Friday to overhaul the country’s loss-making national airline after the government failed to find a buyer, in line with commitments under an IMF bailout.

Successive administrations have sought to sell SriLankan Airlines, which has been burdening the state budget, but Dissanayake told parliament there had been “no takers” despite sustained efforts to attract a foreign buyer.

The International Monetary Fund (IMF) granted a $2.9 billion bailout loan to Sri Lanka in 2023 and had insisted that loss-making state enterprises, including the carrier, should be restructured or sold to ease the strain on public finances.

The carrier, with accumulated losses nearing $2 billion by the end of March 2025, still has an outstanding $175 million sovereign-guaranteed bond awaiting rescheduling.

Dissanayake said the process was expected to be completed by year’s end.

“We will also restructure the management of SriLankan Airlines early next year,” Dissanayake told parliament while unveiling the 2026 budget for the country, which is emerging from its worst economic meltdown in 2022.

He said the management has been asked to formulate a credible business plan to salvage the carrier.

“Should the taxpayers carry the huge burden of SriLankan Airlines?” he asked, warning that if the reforms failed “alternative action” would follow, without elaborating.

The country defaulted on its $46 billion foreign debt in April 2022 after running out of foreign exchange.

The government was on track to resume repaying its own commercial external debt from 2028, thanks to better-than-expected export earnings and remittances, Dissanayake said.

He also proposed reducing the government’s borrowing limit by $200 million next year as the country’s debt burden is expected to gradually decline in the short term.

The IMF has said Sri Lanka’s reforms are paying off, but the country should maintain the momentum amid the “heightened downside risks” posed by global trade uncertainties.

Sri Lanka’s 2022 economic crisis led to months of street protests that eventually toppled then-president Gotabaya Rajapaksa.

The World Bank has warned that Sri Lanka’s recovery remains “uneven and incomplete”, with many households yet to regain livelihoods lost during the 2022 crisis.

by Amal Jayasinghe ✍️