No debt cliff in 2028 as SL outpaces IMF projections

BASED think tank Arutha Research Director - Debt Research Umesh Moramudali yesterday dispelled 'overstated' fears that Sri Lanka faces a looming debt servicing cliff when it resumes capital repayments of restructured foreign loans in 2028.

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In 2028, Sri Lanka begins capital repayments on bilateral debt to Japan, EXIM Bank China, and EXIM Bank India, while bullet payments and maturities for macro-linked bonds (MLBS) are also scheduled to begin that year. However, Moramudali says it amounts to an additional $1 billion compared to the $2 billion debt servicing requirements in 2026 and 2027 comprising interest payments and multilateral (ADB, World Bank) loan repayments.

Speaking at the 'Debt and Tax Dialogue'forum organised by Arutha Research, he said the country is on track to reduce its debt burden faster than International Monetary Fund (IMF) baseline projections, though questions remain over whether the new Public Debt Management Office has the capacity to manage complex borrowing once it takes over from the Central Bank and External Resources Department.

"The target given by the IMF in terms of the debt stock stability assessment is that Sri Lanka's debt-toGDP ratio has to come down below 95%," Moramudali said. Current estimates place the ratio at 104.6% of GDP in 2024, with the IMF framework projecting a decline to 96.8% by 2030. Moramudali added that Sri Lanka could reach 85-87% of GDP by 2032, substantially better than the Fund's forecast.