Marikkar’s ‘many loans’ claim: Much probleming about nothing

Fact Check

In parliament, MP S.M. Marikkar cited total debt figures as of 31 March 2025 and used these figures to make a broader argument that the government’s borrowing relative to expenditure and debt servicing costs, is ‘inexplicably high’ (“the problem we have is why this government…is obtaining so many loans”).

FactCheck.lk, therefore, evaluates two aspects of this broad claim: (1) whether the debt data cited is accurate, and (2) whether government borrowing is ‘inexplicably high’ relative to the requirements of expenditure and debt servicing in Q1 2025.

To check these claims, FactCheck.lk reviewed data from the Quarterly Debt Bulletins, and the Report on Financial Performance of the Government up to the quarter ending 31 March 2025, with Q1 selected as the first full quarter under the new administration.

Claim 1: On data accuracy, the Q1 2025 Quarterly Debt Bulletin records total public debt at end-December 2024 as USD 106,166 million. The MP appears to have used this December aggregate as if it were the March 2025 total. However, the breakdown he provided for government debt of USD 102,671 million and SOE debt of USD 4,831 million (adding up to USD 107,519 million) does match the composition and total reported for end March 2025 (See Exhibit 1).

Claim 2: To test the broader contention that borrowing is inexplicably high, FactCheck.lk compared the government’s actual borrowing (AB) in Q1 2025 with its gross financing need (GFN) for Q1 2025. If AB is greater than GFN, the government has borrowed more than what was immediately required for expenditure and debt servicing.

In Q1 2025, AB amounts to LKR 900 billion, comprising of LKR 690 billion in domestic debt, and LKR 210 billion in external debt (See Additional Note 1 for calculations). Over the same period, GFN amounts to LKR 498 billion (See Exhibit 2 for calculations).

On this basis, AB exceeded GFN by LKR 402 billion during Q1 2025. Therefore, the government’s borrowing was much higher than what was immediately required for expenditure and debt servicing in Q1 2025.

However, the excess borrowing is not inexplicable. Section 3 of the Active Liability Management Act, No. 8 of 2018 authorises the government to borrow in advance and maintain buffers for the purpose of refinancing or pre-financing public debts of the government. Section 3 of the Act permits the government to build buffers up to 10% of the total outstanding debt at the end of the preceding financial year. Measured against the end-December 2024 central government debt stock, the excess Q1 borrowing amounts to only 1.4%, which is well within the allowed buffers. Thus, although borrowing exceeded immediate financing needs, it is not inexplicable, as the excess falls well within the allowed prefinancing buffers.

In sum, on claim 1 the MP appears to have combined a December-dated total for total public debt with a March-dated breakdown for government and SOE debt. On claim 2, although actual borrowing in Q1 2025 exceeded immediate gross financing needs, it is not inexplicable, given the buffer borrowings encouraged by the Active Liability Management Act.

Therefore, we classify the MP’s claim as PARTLY TRUE.

*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.

Exhibit 1: Breakdown of debt

Source: Quarterly debt bulletin Q1 2025

Exhibit 2: Calculation for Gross Financing Need for Q1 2025

Source: Financial Performance of the Government Up to 01st Quarter Ending 31st March 2025

 

 

Additional Note 1

Actual borrowing for Q1 2025 is calculated using the following formula,

Actual borrowing = Closing Debt Stock for Q1 2025 – FX-change-adjusted-Opening Debt Stock for Q1 2025 + Principal Debt Payments in Q1 2025

• Domestic Debt Stock includes T-bills and T-Bonds
• Exchange rate of 1 USD =LKR 292.5833 as of 31st Dec 2025.
• Exchange rate of 1 USD = LKR 296.3472 as of 28th March 2025.
• Debt repayment for central government debt.
• Actual borrowing in Q1 2025 for External debt amounts to USD 710 million. This was converted into LKR billion using the exchange rate of 1 USD = LKR 296.3472 as of 28th March 2025.