The Hon. Ravi Karunanayake

¶ 01 Hon. Speaker, under Standing Order 27(2), I seek clarifications from the Hon. Prime Minister regarding the April 2022 declaration of default. Sri Lanka, for the first time in 74 years of independence, suspended external debt service, described by the Ministry of Finance and the Central Bank Governor as a “pre-emptive default,” via a media release on 12 April 2022, placing all external debt payments on hold, citing depleted reserves and inability to fund essential imports.

¶ 02 This was done without prior Parliamentary approval and not regularized thereafter under the Fiscal Management (Responsibility) Act, No. 3 of 2003 or otherwise. Under Article 148 of the Constitution, Parliament has full control over public finance. Therefore, a unilateral Executive action suspending external debt raises serious constitutional and legal concerns.

¶ 03 Parliament was not given an opportunity to debate or approve this. The result has gravely harmed fiscal credibility, investor confidence and access to international markets. We remain in default with major rating agencies, with constrained concessional access and eroded confidence. The President’s 7 November 2025 Budget Speech highlighted the need to strengthen fiscal accountability and Parliamentary control.

¶ 04 Accordingly, I ask:

¶ 05 1. Governance and Authority: Who was CBSL Governor in April 2022, and what was his official role in advising/authorizing/announcing the suspension? 2. Communication and Legal Mandate: Did the Governor formally communicate inability to pay to Parliament or the Minister? Who were the Monetary Board members and did they approve? Under what authority was the declaration made without prior Parliamentary sanction? 3. Form and Approval: Confirm the exact date, form and legal basis of the standstill. Was it approved by Cabinet or endorsed by Parliament under Article 148? Was any gazette, instrument or resolution issued? Was the Attorney-General’s advice obtained? 4. Documentary Evidence: Was there any Cabinet Paper or written recommendation/communication from CBSL to MoF seeking approval before 12 April 2022? If so, will you table them? 5. Extraordinary Instructions: Were any special instructions or temporary powers given to CBSL substituting Parliamentary powers? 6. Executive Authorization and Legal Basis: If Parliament did not approve, who authorized the suspension within the Executive/MoF/CBSL? On what legal basis, and was it consistent with the Constitution and the Fiscal Management (Responsibility) Act? 7. Constitutional Compliance and Legislative Reform: Does Government acknowledge a possible violation of Article 148 and related provisions? What measures have been taken to regularize, restore ratings and ensure future suspensions require Parliamentary approval? Will you introduce a Sovereign Debt Management and Accountability Act? 8. IMF Agreement and Citizen-centric Reforms: Following the 28 April 2023 IMF EFF Agreement debated here and accepted by the present Government, can it be made more citizen-friendly? What recalibrations or amendments ensure equitable burden-sharing, social protection and transparency? 9. Conditions for Credit Restoration: What specific conditions/benchmarks/policy reforms have lenders and rating agencies imposed for restoring normal access to concessional and commercial borrowing? 10. Quantification of Costs: What are the total economic, fiscal, human and reputational costs of the April 2022 standstill, including investor confidence, downgrades, elevated borrowing costs, bankruptcies and prolonged market exclusion? For example, Central Expressway costs rose from Rs. 158 bn to Rs. 350 bn (+Rs. 192 bn) and BIA expansion from Rs. 158 bn to Rs. 260 bn (+Rs. 102 bn), a combined Rs. 294 bn impact.

¶ 06 I seek an answer through the Hon. Prime Minister on how we overcome this situation.

¶ 07 Thank you.