By The Pulseline News Desk
Sri Lanka’s total gross public debt has climbed to nearly Rs. 33 trillion by the end of June 2026, underscoring the scale of the country’s debt burden even as the stock of debt had declined when measured in US dollar terms.
According to the Statistical Debt Bulletin for the second quarter of 2026, issued by the Public Debt Management Office (PDMO) on August 28, total public debt stood at Rs. 32.977 trillion as at June 30, up from Rs. 32.233 trillion at the end of March.
The increase of around Rs. 744 billion in just three months reflects the continuing impact of exchange-rate movements and changes in the government’s domestic and external debt stock.
However, the picture looks different when debt is converted into US dollars.
Total public debt has fallen from US$ 102.27 billion at the end of March to US$ 97.95 billion at the end of June, with the PDMO using a quarter-end exchange rate of Rs. 336.6623 per US dollar for the June figures.
The divergence between the rupee and dollar values highlights the importance of exchange-rate movements when assessing Sri Lanka’s debt position. A larger rupee-denominated debt stock does not necessarily translate into an equivalent increase in the country’s foreign-currency debt burden.
Government debt dominates
The Central Government remains overwhelmingly responsible for Sri Lanka’s public debt, with its debt stock rising to Rs. 31.999 trillion by the end of June, compared with Rs. 31.193 trillion three months earlier.
Of this, domestic government debt has amounted to Rs. 19.203 trillion, while external government debt has stood at Rs. 12.796 trillion.
External government debt has also recorded a moderate increase in nominal dollar terms, rising from US$ 37.47 billion in March to US$ 38.01 billion in June — an increase of approximately US$ 540 million.
The composition of external government debt remains significant for assessing Sri Lanka’s future repayment pressures.
Multilateral creditors have accounted for 38% of external government debt, followed by commercial creditors at 34% and bilateral creditors at 28%.
The figures indicate that, despite the restructuring of Sri Lanka’s sovereign debt and the progress made since the 2022 economic crisis, the country continues to carry a substantial external debt obligation across a wide range of creditor groups.
China remains largest bilateral creditor
Among Sri Lanka’s bilateral creditors, China remains the largest, with approximately US$ 5.01 billion outstanding at the end of June.
Japan was the second-largest bilateral creditor, with US$ 2.27 billion, while India accounted for approximately US$ 853.9 million.
The distribution is important because Sri Lanka’s post-crisis debt management strategy depends not only on reducing the overall debt stock but also on managing repayment schedules, creditor relationships and the cost of servicing the remaining obligations.
The government’s ability to maintain adequate foreign-exchange liquidity will therefore remain critical as it moves through the debt restructuring and recovery period.
Wider public-sector liabilities
The debt burden extends beyond the Central Government.
Government-guaranteed debt of state-owned enterprises (SOEs) stood at approximately Rs. 971 billion at the end of June, while debt attributed to provincial councils and local government authorities have amounted to around Rs. 7 billion.
These liabilities add another layer to the country’s public-sector financial exposure, particularly given the long-standing fiscal challenges faced by several state-owned enterprises.
The latest figures also highlight the distinction between Sri Lanka’s headline debt stock and the government’s broader fiscal challenge.
While debt restructuring, improved reserves and stronger revenue performance can help stabilise the debt trajectory, the government must still manage a very large stock of liabilities while meeting substantial interest and principal repayment obligations.
Rupee value remains a key concern
For households, businesses and the domestic economy, the rise in the rupee value of public debt remains particularly significant.
A debt stock approaching Rs. 33 trillion means that even modest changes in interest costs, exchange rates or government borrowing requirements can have substantial implications for the national budget.
The contrast between the rupee and dollar figures also serves as a reminder of Sri Lanka’s continuing exposure to currency movements. While external debt may appear lower in rupee terms when the currency strengthens, depreciation can rapidly increase the local-currency value of foreign-currency liabilities.
Sri Lanka’s debt challenge, therefore, is no longer simply a question of how large the debt stock is.
The more pressing test is whether the Government can sustain the fiscal reforms and economic growth needed to ensure that the debt burden continues to decline relative to the economy, while simultaneously rebuilding foreign-exchange buffers and meeting future external repayment obligations.
With total gross public debt now close to Rs. 33 trillion, the second-quarter figures show that Sri Lanka’s debt problem remains substantial — even as the country moves deeper into the post-crisis phase of economic stabilisation.
Leave a comment