Taxpayers Foot Bill as SriLankan Airlines Debt Mounts

Sri Lanka is once again poised to inject massive public funds into its loss-making national airline, with taxpayers expected to cover nearly Rs. 100 billion over five years. In 2025 alone, Rs. 25 billion will be allocated to recapitalize SriLankan Airlines, mainly to repay sovereign-guaranteed bank loans, officials confirmed.

The airline faces USD 210 million in foreign loans and around Rs. 30 billion in domestic rupee loans. Interest rate restructuring will reduce rupee loans from 16% to SLFR+1% and dollar loans from 10% to approximately 6%, with a “day-one” loss of Rs. 13 billion covering interest reductions. Despite repeated capital injections, including USD 150 million in 2020, SriLankan remains financially unstable, operating without a chief executive for eight months.

Economists warn that continuous bailouts strain public finances, inflate sovereign debt, and raise questions over the government’s ability to maintain the airline sustainably without harming the broader economy. Currency depreciation has further bloated dollar liabilities, while bond arrears exceeding USD 200 million remain unresolved.

 

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