Sri Lanka’s central government recorded a notable reduction in its total debt stock during the first quarter of 2026, according to the latest figures released by the Public Debt Management Office.

The total debt of the central government fell from USD 100,356 million at the end of December 2025 to USD 98,965 million as of March 31, 2026. This represents a nominal decline of approximately USD 1,391 million over the three-month period.

The reduction was driven by decreases in both domestic and external obligations:

• Domestic Debt: The stock of domestic debt, which comprises the largest portion of government liabilities, fell from USD 62,693 million to USD 61,497 million. This includes LKR-denominated debt and a smaller portion of foreign currency-denominated domestic debt.
• External Debt: Total government external debt saw a nominal decrease of USD 195 million, moving from USD 37,663 million at the end of 2025 to USD 37,468 million by the end of March 2026.

Despite the decrease in US Dollar terms, the Rupee-denominated value of the government's debt saw a slight increase, rising from LKR 31,109 billion to LKR 31,193 billion. This discrepancy is due to the shift in the indicative exchange rate used for valuation, which moved from LKR 309.99 per USD in December 2025 to LKR 315.19 per USD at the end of March 2026.

This downward movement in the debt stock occurs as the government continues to normalize its financial operations. During the first quarter of 2026, Sri Lanka settled a total of USD 8,094 million in debt service payments, with USD 530 million directed toward external creditors and USD 7,565 million toward domestic obligations.

The report also highlights continued progress in finalizing external debt treatments. Following the successful exchange of International Sovereign Bonds (ISBs) in late 2024, which achieved a 98 percent participation rate, the government signed additional bilateral amendatory agreements with Belgium and Germany during the first quarter of 2026.

As a result of these finalized agreements, Sri Lanka has officially resumed regular debt servicing to its respective creditor partners. The data released in this bulletin is intended to support evidence-based policymaking and reinforce the government's commitment to fiscal transparency.