Hon. Lakmali Hemachandra, Attorney-at-Law

¶ 01 Without disrupting operations, we should repatriate foreign currency earnings from exports and convert them into rupees within the country. Doing so will significantly reduce pressure on our foreign exchange.

¶ 02 Hon. Presiding Member, while clarifying those points, I also wish to speak about our country’s debt sustainability. Today a few questions were raised: that debt is not sustainable; that our debt has increased. Several MPs spoke about it. We must discuss whether Sri Lanka’s debt stock has actually increased. We are a country that defaulted because we could not borrow. Therefore, claims that debt has increased generate great public anxiety. However, the fact that a nominal figure moved from USD 96 billion to USD 100 billion does not, by itself, determine whether debt has increased in a meaningful way, or whether the burden on the economy is higher or lower. What we must assess is sustainability: whether the economy has the capacity to service debt while meeting the basic needs of our people. If borrowing expands and grows the economy and improves repayment capacity, then a higher nominal debt stock, in and of itself, is not a problem. We must look at it relatively—hence the debt-to-GDP ratio, which indicates the economy’s capacity to carry debt.

¶ 03 Comparing 2024 and 2025, the debt-to-GDP ratio has declined from 95.5% to 91.6%. This shows the debt burden, relative to the economy, has eased. Likewise, external debt as a share has declined—from 55.7–55.8% in 2024 to 50.4% in 2025.

¶ 04 Let us also consider the period when those who now claim “debt increased” were in government. During the 2015–2019 Yahapalana government, Sri Lanka’s debt saw one of its largest increases. When that government began, the debt-to-GDP ratio was about 73%. By the time it ended, it had increased to around 82%. These concrete indicators inform any discussion on sustainability and repayment capacity. Without such context, mere numbers can mislead.

¶ 05 Hon. Presiding Member, over the past year we have also reduced interest costs on debt service. The Central Bank’s Annual Report notes that by maintaining a Treasury cash buffer and anchoring interest rates, the Government contributed significantly to lower interest payments. On debt overall, over the last year and a half, we have reduced the debt burden, and as a Government we have reduced interest costs. Contrast this with the Yahapalana period, when debt rose to unsustainable levels and interest costs became unbearable. We borrowed via international sovereign bonds at very high rates and used expensive commercial market borrowing to fund our Budget. Therefore, when discussing debt, we must be responsible. Sri Lanka’s debt has not increased in an unsustainable way; in fact, it is moving toward a manageable level. Our 2032 target was 95% debt-to-GDP; we have already neared it. Thank you for the time.