COLOMBO- Sri Lanka plans to raise up to 480 billion rupees ($2.72 billion) in additional debt this year to finance the government's repayment obligations via local and foreign markets, a document showed on Thursday.

The funds are to be used for repaying debt maturing from 2020 to 2029 as the island nation needs $1 billion to $2.15 billion per year to meet its debt obligation, the government document showed.

The government is planning ahead as it struggles to meet this year's repayment obligation of loans worth $5.9 billion following downgrades due to political turmoil in the country in the wake of bomb attacks by Islamic militants that killed 250 people.

"The Monetary Board of the Central Bank of Sri Lanka has recommended to raise an amount not exceeding 480 billion (rupees)...in or outside Sri Lanka for such purpose as specified in the provisions of the Active Liability Management Act (ALMA)," the document said.

ALMA enables the government to raise additional funds over and above the parliament approved annual borrowing limit to ensure the financing needs and payment obligations of the government are met at the lowest possible cost.

An official at the fiance ministry, who confirmed the contents of the document, said the government will raise the funds when the market conditions are favorable.

Moody's in a note on Wednesday said domestic and external obstacles pose challenges to Sri Lanka's refinancing of government debt as recent terror attacks in the country could hurt revenue streams further straining public finances and political issues could resurface.

Investor confidence took a hit when President Maithripala Sirisena abruptly sacked Prime Minister Ranil Wickremesinghe in October and replaced him with pro-China former President Mahinda Rajapaksa and dissolved parliament.

The country's top court ruled the parliament dissolution was illegal and Wickremesinghe was restored to power in December - but the seven-week-long crisis hurt the rupee and drove sovereign bond yields higher, straining government finances.

($1 = 176.6000 Sri Lankan rupees)

(Reporting by Ranga Sirilal Editing by Jacqueline Wong) ((ranga.sirilal@thomsonreuters.com; +94-11-232-5540; Reuters Messaging: ranga.sirilal.thomsonreuters.com@reuters.net ; www.twitter.com/rangaba))