Sri Lanka may need to raise approximately US$1.5 billion to bridge a foreign exchange gap in the coming years, according to Professor Priyanga Dunusinghe of the University of Colombo.
The economist said the country could enter international financial markets in 2027 and issue sovereign bonds to secure the required funds. He noted that Sri Lanka faces significant economic risks despite recent progress in stabilizing the economy. These risks could affect investor confidence and increase the cost of borrowing from global markets.
High Borrowing Costs Could Challenge Economic Recovery.
Professor Dunusinghe pointed to information contained in the fifth and sixth review reports of the International Monetary Fund (IMF) programme. He said the reports highlight several economic vulnerabilities that continue to affect Sri Lanka’s financial outlook.
According to his assessment, Sri Lanka may have to offer interest rates between 11% and 13% when it seeks funding through international bond issuances. Such rates would place a substantial burden on public finances and increase future debt-servicing obligations.
IMF Support May Remain a Key Option.
Professor Dunusinghe also warned that Sri Lanka could face difficulties if it fails to raise the required funds from international financial markets. In that situation, the country may need to enter another IMF-supported programme, at least on a short-term basis, during 2027.
He stressed that policymakers should carefully manage economic risks, strengthen investor confidence, and maintain fiscal discipline to ensure continued economic stability. These measures could help Sri Lanka secure financing on more favorable terms and reduce pressure on the country’s foreign exchange reserves.
