Sri Lanka foreign reserves marginally up in July to US$6.1bn
- CNL Reporter
- August 9, 2025
- Banking and Financial, Sports
- Sri Lanka
- 0 Comments
Sri Lanka’s gross foreign reserves edged up by 64 million US dollars in July 2025 to 6,144 million US dollars, official data showed, amid concerns over the impact of recent rate cuts on the ability to collect reserves and repay debt.
Sri Lanka’s central bank has not been able to grow its gross reserves for nine months, and the July Number is below the 6,472 million dollars reached in October 2025.
In the last quarter of 2024, money printed to target a mid-corridor or ‘single’ policy rate which tends to cripple the workings of the interbank money market and eventually trigger forex shortages.
At the current interest rates, the central bank is still able to collect some amount of dollars from the banking system as it has stopped inflationary open market operations.
The central bank has a de facto obligation to give dollars to the Finance Ministry to repay debt and interest, and also repay its own debt to India (about 75 million dollars a month) and loans to the International Monetary Fund taken during past crises.
Analysts have warned that the central bank has no freedom of action to actually conduct ‘independent’ monetary policy in the light of these constraints and any attempts to target inflation by rate cuts is likely to take the country closer to sovereign default.
