The Ministry of Finance, Economic Stabilization, and National Policies has issued a statement addressing misconceptions about Sri Lanka’s economic stabilization efforts, particularly regarding its external debt service payments.
In the statement released on September 12, 2024, the Ministry emphasized that the country’s current economic stability is not solely due to the suspension of external debt payments.
Contrary to popular belief, Sri Lanka has continued to service its multilateral debt even after the temporary moratorium on selected external debt was announced in April 2022. The moratorium applied only to external commercial and bilateral debt, while multilateral debt servicing remained unaffected.
The Ministry highlighted that Sri Lanka made debt service payments of USD 2,483 million in 2022 and USD 2,589 million in 2023—approximately half of the usual annual debt payments prior to the moratorium.
The Ministry aims to correct the narrative that economic stability will collapse once debt servicing resumes, underscoring that ongoing macroeconomic reforms, not just the suspension of debt payments, are the true drivers of stabilization.
The Ministry also noted that Sri Lanka has concluded debt restructuring agreements with official sectors and is in advanced negotiations with external commercial creditors. These agreements are expected to provide significant debt relief and allow the country to resume debt payments without destabilizing the economy.
However, the Ministry warned that Sri Lanka must use this period to rebuild its fiscal and external buffers, cautioning that failure to do so could lead to a return of instability.
