Debt Assurances Clash With Rising Repayment Risks

Sri Lanka will not face another sovereign debt crisis, according to Central Bank Governor Dr. Nandalal Weerasinghe, who has dismissed concerns about renewed default risks from 2028 onward. However, official data indicates that annual external debt servicing is set to rise from around $2.75 billion through 2027 to as much as $3.5 billion thereafter, with peaks nearing $4 billion in certain years.

As of September 2025, the country’s external debt stock stood at $37.24 billion, with nearly one-third owed to bilateral lenders and over 80% of commercial debt in International Sovereign Bonds. Although restructuring agreements now cover about 94% of creditor commitments, Sri Lanka remains locked out of global capital markets and dependent on multilateral funding.

Analysts warn that external shocks, weak reserves, and institutional capacity constraints could undermine the Government’s optimistic outlook unless fiscal discipline and growth momentum are sustained.

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