Sri Lanka’s total external debt position increased in 2021, mainly with the increase in the external debt of the Central Bank and deposit taking corporations. The total external debt of the country increased to US dollars 50.7 billion at end 2021 from US dollars 49.0 billion by end 2020. Although the total outstanding foreign loans of the Government recorded an increase during the year, mainly with the receipt of two foreign currency term financing facilities obtained from the CDB, the external debt stock of the Government, valued at the market price, declined from US dollars 28.2 billion at end 2020 to US dollars 27.3 billion at end 2021.

This was a result of the combined effect of the decline in market prices of Sri Lanka’s outstanding  ISBs and the repayment of an ISB that matured in  July 2021. A key reason for the reduction of the outstanding government external debt in 2021 was due to lack of new  borrowings from international markets, while repayment of some external debt obligations of the Government had to be met by utilizing Central Bank’s reserves. Meanwhile, the  outstanding external debt of the Central Bank increased significantly by end 2021 in comparison to that of end 2020 due to the new bilateral currency swap arrangements with the Bangladesh Bank and the PBOC, although the international swap facility with the RBI obtained in 2020 was repaid during the year.