Sri Lanka's Public Debt Sustainability and Restructuring Update
Sri Lanka's Public Debt has grown rapidly and now reaches unsustainable levels
In the absence of an upfront comprehensive debt treatment, Sri Lanka's public debt is set to remain at unsustainable levels in the
coming years
Sri Lanka's public debt indicators in the absence of an upfront comprehensive debt treatment¹
In % of GDP²
Barbados GFN
target, 15.0%
Ukraine GFN
target, 10.0%
Actuals
89.0%
21.7%
Ecuador GFN
target, 6.0%
Argentina GFN
target, 5.0%
2019A
2020A
Estimates
136.6%
37.9%
2021E
2022P
2023P
Central Government Gross Financing Needs
Projections
2024P
Public Sector Debt Stock
2025P
2026P
2027P
Projections presented above assume that the macro-fiscal framework and underlying policy package agreed with the IMF are implemented, and that Sri
Lanka benefits from financial support from development partners as contemplated under the IMF program
It is therefore a << theoretical » exercise designed to illustrate the relief to be delivered by the expected comprehensive upfront debt treatment and should be
seen as optimistic. Absent such debt treatment, none of the above assumptions should materialize, leading to a far worse macro-fiscal framework and
therefore further deteriorated debt trajectory
Sources: Ministry of Finance, Economic Stabilization and National Policies, Central Bank of Sri Lanka, IMF
Notes: (1) The above DSA trajectory reflects a "pre-restructuring scenario" (i.e., a DSA scenario assuming the IMF program's adjustment path and foreseen
multilateral financing and in which the remaining financing gap is financed with an illustrative 10% interest rate debt instrument), (2) CG Debt/GDP and CG
GFN/GDP indicators are not presented on the same scale
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