Reserves set to hit post-crisis high in December: CBSL Governor

Central Bank Governor Dr. Nandalal Weerasinghe – Pic by Pradeep Pathirana

•  Says Govt. will receive over $ 700 m of inflows collectively from IMF and ADB
• In addition, expects stronger forex inflows via exports, workers’ remittances and tourism receipts
• Notes Nov. reserves will appear lower than Oct. due to currency fluctuations, timing effects
• Reiterates exchange rate determined by market forces, with CBSL interventions only to offset excessive volatility
• Expects 5% currency depreciation; inflation expected to rise gradually than previously forecasted, to reach 5% target by 2H 2026

By Charumini de Silva

Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe yesterday said Sri Lanka’s gross official reserves are expected to climb to the highest level recorded since the height of the economic crisis by the end of December, whilst expressing confidence that the country will comfortably meet its reserves target under the International Monetary Fund (IMF) program.

Addressing the media following the latest Monetary Policy Review meeting, Dr. Weerasinghe said the final month of the year traditionally brings stronger foreign exchange inflows through export conversions, workers’ remittances, and tourism receipts. 

“These seasonal gains will be boosted further by the anticipated disbursement of the fifth tranche of the IMF Extended Fund Facility (EFF) amounting to $ 340 million, alongside $ 370 million in Budgetary support from the Asian Development Bank (ADB). Collectively, the Government will see fresh inflows of over $ 700 million, pushing reserves to their highest point since the crisis,” he explained.

He noted that while November’s reserves will appear lower than October’s due to currency fluctuations and timing effects, a sharp rebound is expected in December. “We will easily achieve the reserves estimate for the year,” he said, attributing the clarification to persistent speculation surrounding the exchange rate.

The Governor reiterated that the exchange rate will continue to be determined by market forces, with the CBSL intervening only to offset excessive volatility. 

He pointed out that the recent fluctuations, including a roughly 5% depreciation this year, reflect underlying shifts in demand and supply. Dr. Weerasinghe said strong inflows from tourism, exports, and remittances continue to strengthen supply, while demand has increased notably with the resumption of vehicle imports and rising private sector activities.

“There is a balance building between demand and supply. We have seen depreciation in recent weeks turn around into appreciation and now the currency is stable. Gradual, two-way movement is healthy and expected under the current regime,” he said.

Dr. Weerasinghe also said Sri Lanka is on track to record a current account surplus of around 1% of GDP equivalent to $ 1 billion for 2025, driven by resilient external inflows. 

He stressed that the recovery in imports is largely a reflection of improved economic activity, noting that the economy is projected to grow by 4.5% this year following a 5% expansion last year.

Going into 2026, he highlighted the importance of building monetary, fiscal, and reserve buffers to withstand any potential global headwinds. 

In addition, he said inflation is expected to rise more gradually than previously forecasted, but should reach the CBSL’s 5% target by the second half of 2026.