External debt rises in 4Q to $ 37.7 b by end-2025

Sri Lanka’s outstanding Government external debt rose to $ 37,663 million as at 31 December 2025, up by $ 425 million from $ 37,238 million recorded at end-September.

This is according to the Quarterly Debt Bulletin – December 2025 released by the Treasury recently,

Total outstanding public debt (gross), which includes central Government debt, Government-guaranteed SOE debt and Provincial Council and Local Government debt, amounted to $ 103. 6 billion at end-2025, compared to $ 106.8 billion in the September quarter. 

Of the total public debt stock, debt of the Government stood at $ 100.3 billion,  down from $ 102.2 billion the previous quarter, while guaranteed debt of State-Owned Enterprises amounted to $ 3.48 billion down from $ 4.4 billion and Provincial Councils and Local Government debt stood at $ 21 million, unchanged from the previous  quarter.

External debt composition

Multilateral creditors accounted for 38% of total government external debt, followed by commercial borrowings at 34% and bilateral lenders at 28%.

In value terms, multilateral debt stood at $ 14,314 million, bilateral debt at $ 10,678 million and commercial borrowings at $ 12,671 million.

Within commercial borrowings, International Sovereign Bonds (ISBs) amounted to $ 10,255 million, with the remainder comprising term loan facilities including borrowings from the China Development Bank.

Approximately 75% of the Government’s external debt portfolio is at fixed interest rates, with 23% at floating rates.

Total debt profile

Domestic debt of the Government stood at $ 62.7 billion at end-2025, while external debt accounted for $ 37.7 billion ion of the Government’s total $ 102 billion debt stock.

In rupee terms, total public debt (gross) stood at Rs. 32.2 trillion as at 31 December 2025.

Treasury Bills outstanding amounted to Rs. 3.1 trillion, while Treasury Bonds totalled Rs. 15.6 trillion at end-2025.

Debt restructuring progress

Sri Lanka has achieved substantial progress in restructuring its external debt following the suspension of public debt service in April 2022.

In June 2024, Sri Lanka finalised a debt treatment agreement with members of the Official Creditor Committee (OCC). The restructuring process with China Exim Bank was completed through the signing of an amendment agreement in December 2024, while agreements with China Development Bank marked the conclusion of that restructuring process.

On the commercial side, the Government reached agreement in principle with International Sovereign Bond holders in September 2024. The subsequent bond exchange was completed in December 2024 with approximately 98% participation, facilitating the conversion of almost all defaulted ISBs into new instruments. During 2025, Sri Lanka concluded bilateral amendment agreements with Paris Club members including France, Japan and the United Kingdom, as well as with EXIM Bank of Hungary and Saudi Fund for Development. Agreements were also signed with India and other bilateral partners.

With the signing of bilateral agreements with Austria in October 2025 and Denmark in November 2025, Sri Lanka has completed approximately 95% of its debt restructuring agreement-signing process under the external debt restructuring program.

As a result, Sri Lanka has resumed regular debt servicing to the respective creditor partners.

While external debt edged up quarter-on-quarter, the restructuring program has largely stabilised the debt profile, formalising repayment schedules and reshaping the composition of the country’s external liabilities.

Source: Daily FT