Domestic debt growth slows as FDI underperforms – Economist

Peradeniya University Economics Professor Wasantha Athukorala calls for labour, land and capital factor market reforms to revive underperforming FDIs Commends decreasing growth in Govt. domestic debt, signalling stabilisation in borrowing and improved fiscal discipline Domestic debt growth has eased from over Rs. 100 b a month since 2019, peaking at Rs. 300 b in 2022, to about Rs. 50 b a month in 2025

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THE Government must accelerate reforms in its land, labour, and capital markets, key factor markets that drive investment, while sustaining the slowdown in domestic debt accumulation, University of Peradeniya Economics Professor Wasantha Athukorala said, noting that improved fiscal discipline has begun to stabilise the country's borrowing trajectory.

Commenting through the Department of Government Communication, he said the increase in total debt since January 2025 has been minimal, signalling a stabilisation in borrowing trends.

Sri Lanka's total public debt stood at Rs. 29,634 billion as of June 2025, comprising Rs. 18,806 billion in domestic debt and Rs. 10,800 billion in external debt, according to Prof. Athukorala.

He cautioned that some analyses of debt trends are misleading when external and domestic debt are compared in the same denomination.