News & market updates

The Ceylon Federation of MSMEs says Sri Lankan banks recorded about Rs.762 billion PBT in 2023/24 and the Government collected Rs.295 billion in taxes while borrowers faced AWPLR-driven rates near 30%, triggering widespread MSME defaults. The federation demands interest refunds (May 2022–Nov 2024), tax credits to banks, suspension of parate actions/NPL listings and binding legislation.

Hemas Holdings reported nine-month earnings up 7.5% to Rs. 5.9 billion on revenue growth of 9.4% to Rs. 95.8 billion, led by double-digit growth in Healthcare and Mobility; Cyclone Ditwah caused temporary supply-chain and demand disruption but recovery trends are evident.

Commercial Bank of Ceylon signed an MoU with GAIA Greenenergy to expand its Green Loans and Green Leases, offering preferential rates from 10.00% p.a. and up to seven-year repayment to finance solar installations (promotion until 2 Dec 2026). GAIA will provide supply, installation, warranties and one year free service.

The SEC and Colombo Stock Exchange held an investor forum in Riyadh and met Saudi PIF to promote Sri Lanka's capital market after exiting sovereign default and restoring macro stability. Speakers highlighted ASPI >23,800 (≈120% since Oct 2024), projected reserves of USD 8bn, and a move to market-driven interest rates and a flexible exchange rate.

Asian shares wobbled as U.S. and European selloffs driven by AI-related pressure on software hit markets, while oil rose after the U.S. shot down an Iranian drone and gold rebounded from a recent rout.

CBSL left liquidity in surplus through 2025 (ending Rs.175.2bn) and refrained from OMOs even as AWCMR rose above the OPR from mid‑July (AWCMR 8.04% vs OPR 7.75%); the central bank said the deviation was tolerable and rates realigned by January 2026.

The CBSL was a net buyer of $1.99 billion of foreign exchange in 2025, injecting about Rs. 788.9 billion into the rupee money market and raising gross official reserves to $6.8 billion. Liquidity remained in surplus all year, short-term rates moved above the policy rate mid-2025 before realigning by Jan 2026, and the CBSL did not conduct OMOs.

PMF Finance PLC reported profit before tax of Rs.456.7 million for the nine months to 31 Dec 2025, up 139% year‑on‑year. Gross income rose 24% to Rs.3.84 billion and net interest income climbed 46.5% to Rs.2.17 billion, with loans up 13.4% and total assets at Rs.23.08 billion.

Foreign holdings of rupee government securities rose by Rs. 6.63 billion to Rs. 146.56 billion in the week ending 29 Jan; interbank liquidity surged to Rs. 233.13 billion, driving money-market rates and bond yields lower and the rupee to about Rs. 309.25. January CCPI inflation was 2.3% and recent T-bill/bond auctions were well-subscribed.

CFA Society Sri Lanka will hold a half-day programme on "Understanding the Fundamentals of Credit Research" with Acuity Analytics on 16 February 2026 in Colombo, targeted at credit analysts, credit risk managers and fixed-income professionals.

John Keells Stock Brokers (JKSB) forecasts the ASPI will reach 28,000 in CY2026 (ASPI at 23,812), citing recurring earnings growth and scope for foreign inflows. JKSB also expects 4–5% GDP growth, muted inflation, potential primary fiscal surplus and increased IPO activity.

The Central Bank of Sri Lanka cancelled Pan Asia Bank's Primary Dealer Licence (suspended from 15 Aug 2017; cancellation notified 27 Jan 2026 with effect from 23 Oct 2025). Pan Asia Bank said this will not affect its regular banking activities or secondary market trading.

Headline CCPI inflation accelerated to 2.3% YoY in January 2026 (up from 2.1%), with month-on-month CCPI rising 0.59%. Food inflation rose to 3.3% YoY while core inflation eased to 2.3%; the Central Bank projects inflation to gradually reach 5% by H2 2026 with supportive policies.

DFCC Bank PLC received CSE approval to issue up to Rs.10 billion of Basel III-compliant Tier 2 listed unsecured subordinated bonds in 5-, 7- and 10-year tranches with coupons of 11.50%, 11.75% and 12%; subscription opens 6 February.

Colombo CCPI rose to 2.3% year-on-year in January 2026 (from 2.1% in December 2025); food inflation increased to 3.3% while non-food inflation remained at 1.8%.

Asia Securities chairman Dumith Fernando said Sri Lanka's equity market in 2026 is likely to be driven primarily by domestic investors, supported by interest-rate stability (expected 50–100bps range) and rising participation (about 98,000 active investors; 57,000 CDS accounts), with foreign inflows seen as incremental rather than necessary.

The Public Debt Management Office raised Rs.179.06 billion (87.35% of Rs.205bn) at a three‑maturity bond auction, with WAYRs of 9.72% (01.03.30), 10.92% (15.06.34) and 11.08% (01.07.37). Secondary yields fell, trading was robust (Rs.60.69bn) and USD/LKR closed near Rs.309.4.

Bank of Ceylon listed its inaugural Basel III–compliant Tier II sustainability bond — the largest sustainability bond in Sri Lanka — which was oversubscribed and closed on 22 Dec 2025. Proceeds will fund eligible green and social projects (renewables, energy efficiency, water, healthcare, MSMEs); rated 'AA-'.

Brand Finance's Global Soft Power Index 2026 ranks Sri Lanka 100th with a score of 33.8/100; the country improved to 79th for 'ease of doing business' and rose in visit appeal, friendliness and food rankings while overall governance and media influence declined.

The SEC and Colombo Stock Exchange held an 'Invest Sri Lanka' forum in Riyadh on 24 January to showcase Sri Lanka's capital market and attract Saudi investors; a high-level delegation including the Central Bank Governor, SEC Chairman and CSE CEO took part.

CBSL Governor Nandalal Weerasinghe said IMF staff are assessing Cyclone Ditwah's economic impact and the postponed fifth review of the IMF Extended Fund Facility may be revised. He noted Sri Lanka received $206m under the IMF RFI, expects ratings upgrades to boost foreign investment, and sees only a short-term growth hit with recovery in 2026.

IMF reaffirmed solidarity with Sri Lanka and said it will field a mission to resume the next EFF review and support recovery from Cyclone Ditwah. Discussions focused on the fiscal response, implications for monetary policy, financial-sector stability, and financing needs for reconstruction.

Central Bank of Sri Lanka kept the Overnight Policy Rate at 7.75%. Inflation was 2.1% in Dec 2025 and is projected to move toward 5% by H2 2026 amid rising food and core inflation, strong credit growth and post-cyclone rebuilding; gross official reserves were $6.8bn at end-2025.

Central Bank kept the Overnight Policy Rate at 7.75% and the weekly Rs.125 billion T-bill auction was fully subscribed with yields falling (91d 7.84%, 182d 8.26%, 364d 8.36%). Net money-market liquidity surged to Rs.211.53 billion and short-end bond yields dropped ahead of a Rs.205 billion Treasury bond auction on 29 Jan.

Spot gold hit a record high near $5,600/oz (about $5,542 by 0149 GMT) as investors sought safety amid geopolitical and economic uncertainty; spot silver approached $120/oz.

IMF says Sri Lanka’s EFF program is not on hold; only the fifth review has been postponed to reassess economic conditions after the recent cyclone, and the IMF mission is expected to return in the coming weeks to discuss any target adjustments.

Sri Lanka signed a bilateral debt-restructuring agreement with CREDENDO (Belgium) to reschedule about €9.6 million of external debt. The agreement is intended to advance the external debt restructuring process and help restore debt sustainability.

President Anura Kumara Dissanayake and an IMF delegation agreed to continue the Extended Fund Facility (EFF) programme without changes; discussions on the release of the sixth tranche will resume in March. The government also presented a Rs. 500 billion supplementary estimate for rural relief and infrastructure restoration.

An IMF team led by Evan Papageorgiou concluded a visit to Sri Lanka to assess Cyclone Ditwah damage and held talks with government and CBSL on fiscal response, monetary and financial sector stability and support under the Extended Fund Facility; a follow-up IMF mission is planned for the next EFF review.

Gold broke above $5,200 per ounce for the first time as the dollar plunged to a near four-year low ahead of the U.S. Federal Reserve decision. Spot gold was around $5,220/oz, up more than 20% year-to-date, while U.S. futures also rose.