Treasury plays down debt repayment fears

 Two locals have their eyes fixed on the screen at a small tea shop in Colombo as President Anura Kumara Dissanayake delivers Budget 2026 in Parliament 

PIC BY KUSHAN PATHIRAJAH

• Says journey ‘on track and under control’
• Assures island nation’s repayment plan remains intact through 2028 as it is backed by “financial discipline and transparent fiscal management”
• Says country’s repayment progress, alongside strong performance of capital markets, reflects growing trust in system
• Describes Budget 2026 as a bridge connecting recovery to expansion

By Shabiya Ali Ahlam

As chatter grows over Sri Lanka’s ability to stay on course with its external debt repayments, the Treasury struck a note of confidence. 

It insisted that the journey is largely “on track and under control”, with the reserves steady, repayments ongoing and investor confidence rebounding.

Treasury Secretary Dr. Harshana Suriyapperuma yesterday used a fully packed post-budget forum as a platform to reassure markets and sceptics that the island nation’s repayment plan remains intact through 2028. It is backed by what he called “financial discipline and transparent fiscal management”.

“We are very confident the journey continues and very successfully we will be stepping into 2028 because the repayments have already started,” Dr. Suriyapperuma assured, addressing the post-budget forum hosted by our sister paper Daily FT.

“Certain multilateral engagements, ODIs are already being served. So, the journey has already begun. The repayment and reserve position that we have achieved as a nation is despite the fact that we have opened up importation of vehicles that was suspended for five years. So, that shows the level of resilience in the market and the confidence that the businesses are demonstrating.”

His sentiments come against a backdrop of mixed commentary from political circles and sections of the analyst community, some of whom have questioned the government’s repayment capacity and the realism of its fiscal targets under Budget 2026.

The Treasury, however, appears unfazed as Dr. Suriyapperuma pointed out that the country’s repayment progress, alongside the strong performance of capital markets, reflected the growing trust in the system.

“The difference today is confidence. The same share people paid one-third of the price two or three years back, they are now paying three times that. It’s the outcome of teamwork, discipline and consistency,” he said, referring to the Colombo Stock Exchange’s recent highs. Budget 2026, tabled by President Anura Kumara Dissanayake last Friday, projects total revenue at Rs.5,300 billion, a 4 percent increase from 2025, with a Rs.4,910 billion tax revenue, including Rs.1,210 billion from income tax, Rs.3,056 billion from goods and services and Rs.644 billion from external trade.

While asserting that fiscal consolidation and consistency in policy direction remain non-negotiable, Dr. Suriyapperuma said the government was not chasing expansion at the cost of stability.

He described Budget 2026 as a bridge, one connecting recovery to expansion. 

“It’s about taking the economy from stability to growth. There is a vision, there’s a path and there’s a plan to get there,” he said.

Dr. Suriyapperuma also reaffirmed that Sri Lanka’s broader reform agenda is structured around six key pillars: inclusive growth, export diversification, debt sustainability, productivity enhancement, digital transformation and rural economic development.