Sri Lanka seeks $2.08bn foreign loans in 2027

Sri Lanka will seek $2.08 billion in foreign loans in 2027 as it completes a four-year International Monetary Fund bailout programme, President Anura Kumara Dissanayake said Thursday.

Presenting the 2027 budget, Dissanayake said he was still considering whether to enter a new IMF arrangement after the current programme ends in March. He said a committee had been appointed to study the question.

Sri Lanka secured a four-year, $2.9 billion IMF loan in March 2023 after defaulting on its $46 billion foreign debt in April 2022.

Dissanayake said government foreign debt servicing would be $2.98 billion in 2027, down from $3.59 billion this year and $3.70 billion last year. “We have the stability required for this debt servicing,” he told parliament.

Official figures forecast state revenue at 15.8 percent of GDP next year, down from 16.6 percent in 2026 and 16.7 percent last year. The overall budget deficit is forecast to widen to 4.5 percent of GDP in 2027, compared with 3.7 percent this year and 2.3 percent last year.

The government has marginally increased the income tax threshold and widened tax bands, with a slight reduction in rates for middle-income earners. The top income tax rate remains 36 percent.

Dissanayake said the government hoped to maintain 5.0 percent economic growth in 2027. The IMF forecasts Sri Lanka's growth will slow to 3.1 percent in 2026 because of higher global energy costs.