Former Minister Bandula Gunawardena has warned that Sri Lanka currently lacks both the rupee liquidity required to run the Government and the foreign currency needed to meet its external payment obligations.
He said the country’s economic and fiscal position is so fragile that Sri Lanka does not have the capacity to withstand internal shocks such as landslides and floods, or external shocks including foreign conflicts and global economic disruptions.
Explaining the severity of the situation, Gunawardena noted that the Government expects total revenue of Rs. 5.3 trillion in 2026, while recurring expenditure alone—including public sector salaries, pensions, welfare programmes such as Samurdhi and Aswesuma, and interest payments on existing loans—is projected to reach around Rs. 5.6 trillion.
This leaves the Government with a deficit of approximately Rs. 300–400 billion even to meet its routine operational expenses, he said.
Gunawardena stressed that the State can no longer rely on past practices such as excessive borrowing or money printing. Under the new Central Bank of Sri Lanka Act, the Government is no longer able to print money freely, nor can the Central Bank extend direct credit to the Treasury.
He further pointed out that Sri Lanka is scheduled to resume external debt repayments only from 2028, which severely limits the country’s ability to secure foreign loans in the present context.
According to him, between 185% and 190% of the Government’s borrowing needs up to 2030 will have to be met through domestic sources, with only a relatively small portion—around 110%—available from external financing.
The former Minister also said the Government lacks sufficient funds to provide relief to disaster-affected communities or to rebuild infrastructure such as roads, houses, and schools damaged by natural disasters.
As a result, he said the State has been compelled to depend on assistance from international organisations, religious institutions, and private donors to support relief and recovery efforts for affected populations.
