Ways out

Ways out of debt: options, not advice

Imagine Sri Lanka is a family business that also keeps a household running, and it owes a large loan. Here are eight ways to deal with it, how each has worked elsewhere, and what each costs.

Debt / Debt journey

These pages describe options and what happened when countries tried them. Budgets LK does not recommend any option, and nothing here is a forecast or financial advice.

The house version

Debt next to income

96.8% of GDP

GDP is everything the country earns in a year. If Sri Lanka were a family earning Rs 100,000 a month, this would be a loan of about Rs 1,162,000, nearly a full year of the family's income.

IMF, general government gross debt, 2025. The economy

Loan payments next to spending

about Rs 50 in every Rs 100

In the 2026 Act, debt servicing is Rs 4.47 trillion of Rs 8.98 trillion of total spending. In house terms, about Rs 50 of every Rs 100 the family spends goes to the bank before anything else is paid.

Debt servicing

Eight options

Open any option to see how it works, how long it takes, what makes it hard, how people and the wider world may react, and the pros and cons.

Collect more tax

Bring in more money each year, by raising rates, widening who pays, or collecting what is already owed.

In the house: Take a second job, or make sure every customer who owes you actually pays.

Speed: Medium

Spend less

Reduce what the government spends on everything except the loans, and use the saving to repay.

In the house: Cut the monthly household budget: fewer takeaways, a cheaper phone plan, postpone the new sofa.

Speed: Medium

Grow the economy

Make the whole economy bigger, so the same debt is smaller next to what the country earns.

In the house: Train for a better job, or expand the family shop, so income rises while the loan stays the same.

Speed: Slow

Ask lenders for easier terms

Agree with the people owed money to repay less, later, or at a lower interest rate.

In the house: Visit the bank and ask for lower payments, a longer loan term, or a smaller total.

Speed: Medium

Sell or lease what the state owns

Raise cash by selling or leasing land, ports, companies or shares, and use it to repay.

In the house: Sell the second car, or rent out the spare room, and put the money against the loan.

Speed: Medium

Print more money

Have the central bank create money to pay government bills instead of borrowing or taxing.

In the house: Photocopy banknotes. The bills get paid today, but every note in everyone's wallet buys less tomorrow.

Speed: Fast

Combine several options

Use a mix: more revenue, careful spending, new loan terms and reforms, all at once and with outside support.

In the house: Take a second job, trim the monthly budget, and talk to the bank, all together, with a financial adviser checking your progress.

Speed: Slow

Change nothing

Keep the current path: no new measures, and see where debt goes. Used here as a point of comparison.

In the house: Keep spending as usual and make only the minimum payment, and see what the loan looks like in ten years.

Speed: Slow

Side by side

Option	Speed	Who has to agree	Who feels it first
Collect more tax	Medium	Parliament. Lenders and the IMF often ask for it in a programme.	Households and businesses that pay the new or higher taxes.
Spend less	Medium	Parliament and the Treasury. Lenders often ask for it in a programme.	People who use the services or are paid from the spending that is reduced.
Grow the economy	Slow	Mostly private businesses and investors, plus stable government policy.	Workers and firms in growing sectors. Others may feel change as industries shift.
Ask lenders for easier terms	Medium	Every group of lenders. The IMF usually has to confirm the debt will be sustainable.	Lenders, who lose some value. Domestic holders such as banks and pension funds can be affected if domestic debt is included.
Sell or lease what the state owns	Medium	Buyers or investors, and public acceptance.	Workers and customers of the asset sold, and the public who may value it as national property.
Print more money	Fast	The central bank, and the laws that limit or allow it.	Everyone who holds rupees, especially savers and people on fixed incomes.
Combine several options	Slow	Government, parliament, lenders and the IMF.	Several groups at once, as each lever lands on different people.
Change nothing	Slow	Nobody has to agree, which is part of why it can happen by default.	At first nobody. Later, whoever bears the cost when lenders stop lending.

Try the numbers

Move the sliders, or pick an example. The line shows debt as a share of GDP. The dotted line is the 95% goal the IMF programme sets for 2032. Want to set tax, spending, loans and more yourself? Try your strategy.

Growth, inflation and the primary surplus follow the IMF figures shown on this site for 2030.

Real growth of the economy % a year Inflation % a year Average interest rate on the debt % Primary surplus (income minus spending, before interest) % of GDP

Each year, debt as a share of GDP = last year's share × (1 + interest rate) ÷ (1 + growth of GDP in rupees) − primary surplus. Growth in rupees combines real growth and inflation. Debt starts at 96.8% of GDP in 2025 (IMF, general government gross debt). The interest rate is the Central Bank's actual interest paid in 2025 divided by central government debt at the end of 2025. This is a simple illustration with the settings you choose, not a forecast, and it cannot show shocks such as exchange rate moves or new borrowing for other reasons.