News & market updates

IMF warns Cyclone Ditwah could destroy 2.5–5% of GDP, widen the balance-of-payments gap by about $700m and push average inflation to 5.4% in 2026, above the CBSL 5% limit. Agriculture and tourism are hardest hit while reconstruction may support construction but raises external and debt risks.

Treasury told parliament excess domestic borrowings of about Rs1.2 trillion cost roughly 2% to maintain as a cash buffer. The excess is held in state banks (c. Rs1tn by year-end), raising interbank liquidity risks and crowding out private credit; Rs500bn earmarked for hurricane relief.

The weekly Treasury Bill auction offers Rs.150.00 billion (Rs.35bn 91-day, Rs.70bn 182-day, Rs.45bn 364-day), the largest in 28 weeks and well above estimated maturities of ~Rs.95bn. NCPI fell to 2.4% in November; secondary bond yields were ~9.55–10.30%; liquidity surplus rose to Rs.88.40bn and USD/LKR closed near 309.6.

Sri Lanka's rupee closed at 309.50/65 to the US dollar, largely unchanged from Friday, while short-term government bond yields adjusted slightly. The rupee has fallen from about 292 in Dec 2024 amid central bank interventions; yields ranged roughly 8.30%–10.70%.

Dr. Nishan de Mel urged Sri Lanka to reject the IMF's proposed $206 million RFI, warning the effective cost could exceed 6% in USD terms and 11% in rupee terms, and urged cheaper domestic borrowing, grants or ESG/ISB alternatives for cyclone recovery.

Sri Lanka's tea export earnings rose 13% YoY to about $1.40 billion in January–November 2025. Cumulative volumes increased to 239.57 Mnkg, while average FOB fell modestly in rupee terms and averaged $5.85/kg in dollar terms.

Sri Lanka's secondary bond market saw a midweek rally led by short-term maturities but finished broadly unchanged week-on-week; 91/182/364-day T-Bill rates held at 7.51%, 7.91% and 8.03%. Sentiment was supported by confirmed $120m World Bank emergency financing and a $200m ADB loan, while USD/LKR closed near 309.5.

Donor agencies have committed $350 million to Sri Lanka for cyclone recovery. The IMF approved $206 million via its Rapid Financing Instrument and the World Bank activated $120 million, and officials say about $500 million more is expected for 2026.

Sri Lanka's rupee opened slightly weaker at 309.55/65 per USD vs 309.50/60 on Friday, while local government bond yields were broadly steady — e.g. the 15.10.2029 at ~9.49–9.55% and other maturities quoted around 9.55–10.40%.

Sri Lanka’s Treasury said it can manage debt service into early 2026 using $270m already from the ADB, $100m expected and a Rapid Finance Instrument, but if the IMF's $350m tranche is delayed it will buy dollars from the central bank. Analysts warned such central bank dollar sales and recent rate cuts have reduced banking liquidity and contributed to rupee depreciation.

Sri Lanka will pay about 3.275% plus possible surcharges on a $206m IMF Rapid Financing Instrument loan, which has a 3.25‑year grace period and is repayable within five years. The IMF said surcharges are level-based and the funds will go to the Treasury to support response efforts and catalyze further donor financing.

IMF Executive Board approved SDR150.5m (about $206m) in emergency RFI financing for Sri Lanka to address cyclone-related balance-of-payments and fiscal pressures; the EFF fifth review is deferred and discussions will resume in early 2026.

IMF Executive Board approved SDR150.5m (about US$206m) in emergency RFI financing for Sri Lanka to address urgent balance-of-payments and fiscal pressures from Cyclone Ditwah. The Fifth Review under the IMF's EFF has been deferred and discussions will resume in early 2026.

IMF approved US$206 million in emergency RFI financing for Sri Lanka to address urgent balance-of-payments and fiscal needs from Cyclone Ditwah and preserve macroeconomic stability. The Fifth Review under the EFF is deferred and an IMF mission will visit in early 2026 to resume discussions.

Sri Lanka will use a Rs1,202 billion Treasury cash buffer for cyclone relief and recovery and seek parliamentary approval for an additional Rs500 billion in 2026. Allocations include Rs250bn for infrastructure, Rs150bn for business recovery and Rs100bn for relief/housing, and the government expects an extra $500m from IMF/WB/ADB to limit exchange-rate and inflation impact.

Sri Lanka's rupee closed at 309.50/60 to the US dollar on Friday, slightly weaker than 309.40/55 the previous day after a week of depreciation; government bond yields were mostly higher, with the 15.03.2031 issue rising to 9.90/95% from 9.85/90%.

Sri Lanka's central bank bought $90mn in November 2025 (net $74.3mn), contributing to the rupee's fall to about 307.8/USD. The bank has bought $1,625mn in 2025 while returning only $89.3mn YTD, creating liquidity that may pressure the exchange rate unless sterilized.

Sri Lanka's rupee strengthened slightly to 309.30/50 per US$ on Friday from 309.40/55 the previous day, while government bond yields edged up (e.g. the 15.09.2029 bond quoted at 9.47/52%). Colombo Stock Exchange indices rose, with the ASPI up 0.43% at 22,195.

Secondary bond market activity moderated as yields held broadly steady and total transacted Treasury volume was Rs. 30.64 billion on 17 December. Net liquidity surplus narrowed to Rs. 66.08 billion, overnight call/Repo at 7.97%/8.01%, and USD/LKR spot ~309.40/309.55.

Sri Lanka's rupee closed at 309.40/55 to the US dollar on Thursday, slightly stronger than the prior day but still down over the week; government bond yields were broadly steady (e.g. 15.12.2026 at 8.30–8.40%).

Government says it is confident of securing $200 million from the IMF under the Rapid Financing Instrument to meet urgent foreign-exchange needs after Cyclone Ditwah. The RFI request (SDR 150.5m, ~26% of quota) is before the IMF Executive Board and may delay a planned EFF disbursement while a Rs.500bn supplementary estimate is reviewed.

Secondary Treasury bond yields declined, with shorter 2028 tenors rallying around ~8.95% and broader yields easing as the curve steepened. T-Bill rates held steady for a 22nd week (91d 7.51%, 182d 7.91%, 364d 8.03%) and the weekly auction was undersubscribed, raising Rs.40.629bn.

Sri Lanka's rupee weakened, opening at 309.75/80 per US dollar (from 309.65/72); bond yields were broadly steady (e.g. 15.02.2028 quoted at 8.90/97%). The ASPI was up 0.26% at 22,387.

Sri Lanka will breach the 13% of GDP primary spending limit in 2026 by seeking parliamentary approval for an extra Rs500 billion (about 1.4% of GDP) for cyclone relief, while maintaining the IMF debt target of 95% of GDP by 2032 and continuing to service foreign debt.

Sri Lanka's rupee weakened to 309.65/72 per US dollar on Wednesday while local government bond yields fell; the 15.12.2026 bond closed at 8.25/8.38% and the 15.09.2027 at 8.78/8.88%.

Sri Lanka's 9-month real GDP for 2025 is estimated at 9,866 billion rupees, almost matching the 2021 level, while the central bank has maintained very low inflation and pursued deflationary policies to stabilise the rupee.

IMF Executive Board will review Sri Lanka’s request for SDR 150.5m (about USD 200m) under the Rapid Financing Instrument on Dec 19, 2025, to meet immediate balance-of-payments needs after Cyclone Ditwah; approval would provide rapid emergency financing for recovery and rebuilding.

Sri Lanka's rupee traded at 309.55/65 per USD on Wednesday, slightly weaker than 309.50/60 the previous day, while government bond yields opened lower. A 48,000 million-rupee Treasury bill auction was underway and sovereign bonds were quoted around 8.98%–10.66%.

IMF Executive Board will meet on Dec 19 to consider a $200m Rapid Finance Instrument loan to Sri Lanka after Cyclone Ditwah. The RFI is disbursed upfront; an IMF team is due in Jan 2026 to renegotiate program targets after an expected 500 billion rupee increase in 2026 spending and recent reserve pressures.

Secondary bond yields recovered after renewed buying, with 15.02.28 at 8.99%, 01.05.28 at 9.05% and 2029 tenors around 9.40%-9.49%. This came ahead of a Rs.48bn weekly T-Bill auction (Rs.10bn 91-day, Rs.25bn 182-day, Rs.13bn 364-day) and USD/LKR closed at Rs.309.50/309.60.