The Hon. (Prof.) Anil Jayantha - Minister of Labour and Deputy Minister of Economic Development

¶ 01 Mr. Speaker, this is the reply to the question raised on 2025.02.21 by Hon. Ravi Karunanayake under Standing Order 27(2).

¶ 02 There are two parts: (a) on building foreign reserves and their sources, and (b) on debt servicing.

¶ 03 (a)(1) During this period, the main contributors to the increase in official reserves were the Central Bank’s FX purchases from the domestic market, IMF Extended Fund Facility tranches 1–3, and project/programme loans from multilaterals like the World Bank and ADB and bilateral sources. These inflows built the reserves.

¶ 04 The composition: end-December 2023 US$ 4,392 million; end-December 2024 US$ 6,122 million. I table the document with the details.

¶ 05 At end-2024, total external debt is US$ 100,294 million (a little over US$ 100 billion), over Rs. 29 trillion.

¶ 06 Next, on debt service: from 2025–2028, external principal due is US$ 1,369m, 1,191m, 1,196m, and 2,133m respectively; interest for those years is US$ 1,085m, 931m, 893m, and 974m.

¶ 07 Government bears primary responsibility for debt service. If FX is insufficient, the Central Bank, as banker to Government, releases reserves as needed upon Government request.

¶ 08 Combining both parts, the question asks about maintaining gross reserves up to 2028 and related plans.

¶ 09 According to the IMF Staff Report (June 2024) projections, the official reserve path differs from what was referenced: 2025 US$ 7,174m; 2026 US$ 9,262m; 2027 US$ 13,466m; 2028 US$ 15,105m. These figures are drawn from the IMF Staff Report placed in the Library.

¶ 10 These projections are based on macroeconomic assumptions and are not deterministic targets for reserves under the EFF; values are recalculated each review as variables change. The quantitative performance criterion under the EFF relates to Net International Reserves (NIR), i.e., net of reserve-related liabilities. We have so far consistently met these NIR targets across the first three reviews through CBSL purchases from the FX market.

¶ 11 (b)(1),(2),(4) summary: Under Section 37 of the State Debt Management Act, No. 33 of 2024, interim provisions provide that from its commencement (25 Nov 2024) all responsibilities, functions, and forecasting on debt are with the State Debt Management Department. Technically, the bidding system remains under CBSL; over about 18 months we will transition jointly with CBSL.

¶ 12 The State Debt Management Office currently has 23 officers (12 All-Island Services and 11 Combined Services).