Central government debt as a percentage of GDP declined to 103.9 per cent by end 2023 from 114.2 per cent in 2022, primarily due to the notable growth in nominal GDP driven by high inflation and the impact of currency appreciation on foreign debt.

Accordingly, domestic debt and foreign debt as a percentage of GDP declined from 62.5 per cent and 51.8 per cent, respectively, in 2022 to 61.7 per cent and 42.1 per cent, respectively in 2023.

However, nominal value of the total debt increased by 4.4 per cent driven solely by a rise in domestic debt, while outstanding foreign debt, valued in domestic currency, decreased from the levels observed in 2022.

The nominal increase in total domestic debt reflects the substantial financing needs fulfilled from the domestic market amidst limited foreign financing options.

Source: Annual Economic Review 2023 | Central Bank of Sri Lanka