The Hon. (Dr.) Anil Jayantha

¶ 01 I am answering the Question raised by the Hon. Sajith Premadasa, not yours, Hon. Ravi Karunanayake. I will come to that later.

¶ 02 Continuing, new borrowing since Government assumed office from September 2024 to August 2025: - Net issuance of Treasury bills and bonds (domestic): Rs. 1,393 billion. - External lenders’ disbursements: Rs. 526 billion.

¶ 03 By instrument/category up to August: - Bilateral: Rs. 3.3 trillion. - Multilateral: Rs. 4.2 trillion. - International sovereign bonds: Rs. 3.1 trillion. - Short-term facilities: Rs. 0.7 trillion.

¶ 04 3. Debt service in the current year: - External debt service (principal + interest): Rs. 521 billion (principal Rs. 310 bn; interest Rs. 211 bn). - Domestic debt service: Rs. 6,731 billion (principal Rs. 5,391 bn; interest Rs. 1,340 bn).

¶ 05 We have also set out total domestic and external debt falling due over the next five years, and the Government’s baseline growth projections over the next five years, assuming continuity of structural reforms, state sector focus, export growth, robust worker remittances and services exports. We expect to maintain a minimum growth of 4.5% in the near term. As the President said in the Budget Speech, we target 7% medium-term growth. With stronger fiscal management and more efficient public spending, we can create the fiscal space to place debt on a sustainable path.

¶ 06 On funding external debt service: Government services external obligations through multilateral/bilateral inflows, FX market operations, domestic sources, CBSL’s net FX purchases, and the overall FX liquidity shaped by export proceeds, tourism, services, remittances, FDI/portfolio and other inflows. If annual FX inflows for debt service (principal + interest) are insufficient, the balance is met from official reserves. Notably, official reserves have increased from USD 4.4 billion at end-2023 to USD 6.2 billion by end-September 2025.

¶ 07 On FDI: Oct–Dec 2024 FDI was USD 267 million; Jan–Sep 2025 was USD 827 million, per BOI data.

¶ 08 7. On SVAT: This also arose in Hon. Ravi Karunanayake’s question. Briefly, the Simplified VAT system introduced in 2011 was a short-term measure pending a robust refund mechanism. The internationally accepted VAT model requires input VAT to be paid on purchases and netted against output VAT, with balances refunded. From 1 October 2025, we operationalized a risk-based refund system; SVAT was abolished. Deemed exporters will now collect VAT from exporters, improving their liquidity relative to the credit voucher era. The IRD is implementing risk-based refunds, digitized administration and international-standard VAT processes.

¶ 09 I table the annexed table of reserve money (monthly).