Sri Lanka sells Rs45.84bn Treasury bills; yields mostly flat

Saturday December 6, 2025 5:13 pm

ECONOMYNEXT – Sri Lanka has sold a total of 45.843 billion rupees of Treasury bills at an auction and on tap last week, data from the Ministry of Finance’s Public Debt Management Office showed.

The 3-month yield was down 1 basis point at 7.51 percent, with 10 billion rupees of bills offered at the auction on Tuesday, and 3.86 billion sold.

The 6-month yield was unchanged at 7.91 percent, with 23 billion rupees offered and 9.33 billion sold.

The 12-month yield was unchanged at 8.03 percent with 15 billion rupees offered and 2.63 billion bills sold.

At the auction a total of 15,843 million was sold.

Another 30,000 million was raised at phase II, from the 6-month bill at the weighted average yield rate of 7.91 percent, determined at the auction.

The PDMO under the Ministry of Finance, Planning and Economic Development commenced its operations with effect from December 1. (Colombo/Dec6/2025)

Saturday December 6, 2025 9:04 pm

ECONOMYNEXT – Sri Lanka’s foreign reserves dropped to 6,083 million US dollars by end November 2025, lower by 133 million dollars from a month earlier, official data shows.

Sri Lanka has not been able build reserves on a gross basis since October 2024, a few weeks after inflationary open market operations were aggressively deployed against monetary stability, printing around 100 billion rupees in a creditable imitation of a floor system (a true single policy rate).

RELATED : Sri Lanka prints Rs100bn through open market operations

In the first quarter inflationary open market operations were reversed in strong deflationary policy and in March 400 million dollars were bought in the market driving reserves to 6,531 million dollars.

Gross official reserves also include Treasury receipts of loan proceeds and IMF tranches.

In May 2025 rates were cut which critics said was mis-signalling the banking system, even though a scarce reserve regime has been re-established, at a time when private credit was expanding steeply and deposit rates were bottoming out.

The central bank also engaged in buy-sell swaps injecting money and driving up rupee credit, further reducing its ability to buy dollars outright, though some of it has been unwound since then extinguishing rupees, helping retain reserves.

Analysts had warned that Sri Lanka cannot cut rates claiming that statistical inflation was low in the past 12 -months (flexible inflation targeting) and the actual interest rate is the rate determined by domestic credit and the reserve target.

For the central bank to collect reserves (unlike any other agency including the Treasury) it has to run deflationary policy.

The reserve target includes any debt repayment.

The practice of cutting rates as private credit recovered had led to reserve targets not being met or actual reserve losses within IMF programs (2012 and 2018), and eventual sovereign default when rates cuts were enforced with inflationary open market operations.

Sri Lanka’s central bank is operating some deflationary policy through the coupons on its bond stock which allows it to retain some of the dollars it bought.

However, over-purchasing dollars above its deflationary policy had led to the rupee being steeply depreciated over 2025, despite record current account surpluses from debt repayments.

The central bank itself had repaid its own debt (reserve related liabilities) to the IMF, and Reserve Bank of India taken after inflationary rate cuts and sell-buy fx swap unwinding to cut rates 2014/15 claiming historical 12-month inflation was low and aggressive macro-economic policy in 2020 for potential output targeting.
In December, Sri Lanka is expected to get 400 million dollars from the Asian Development Bank (370 budget support) and another 100 million was approved last week.

The IMF program is expected to be delayed February with additional funds to come in a new program. (Colombo/Nov06/2025)

Saturday December 6, 2025 3:01 pm

ECONOMYNEXT – Sri Lanka’s Abans Finance PLC said it plans a debenture sale to raise up to 1.5 billion rupees.

15 million listed, rated, senior, unsecured, redeemable debentures will be offered, it said in stock exchange filing.

The issue is subject to obtaining all necessary regulatory and other approvals. (Colombo/Dec6/2025)

Saturday December 6, 2025 8:37 am

ECONOMYNEXT – Sri Lanka’s Road Development Authority has re-opened all major roads after Cyclone Ditwah, and the Kandy – Colombo road is open in the daytime from December 05, Director General Wimal Kandamby said.

Cyclone Ditwah had blocked 256 major roads in 298 places and 40 bridges were damaged.

Some roads were impassable due to flood inundation, but there were also rock falls, trees falling and landslides, he said.

By December 05, 252 locations had been cleared, Kandamby said.

“RDA staff, from Deputy Directors, to Provincial Directors, District Engineers, Executive Engineers, Technical Officers, Supervisors and labourers worked 24 hours to re-open these 252 roads,” he said during a discussion at Sri Lanka’s Government Information Department.

“In the next three days we will re-open all sections by working day and night.”

At the beginning Kandy, Nuwara Eliya, Anuradhapura and Puttalam was completely cut-ff.

The Kandy Colombo Road was blocked due to landslides and rock falls in lower Kadugannawa and a subsidence in Yakkala near Colombo.

The road subsidence in the Western Province was fixed in three days and all four lanes were opened on December 05.

In Kadugannawa one lane was opened on December 04, under police supervision.

Sri Lanka’s bizarre cyclone Ditwah that stayed and stayed and rained and rained

Due to cars halting near large rockfalls for sightseeing which was dangerous, on December 04, traffic was limited to essential services.

From December 05, Kandy – Colombo road was opened for all traffic from 0600 am to 0600 pm.

From 600pm to the following morning 0600am RDA staff was clearing the road and blasting rock, which were very large, he said.

“The rocks are very large, and we have to blast them,” Kandamby said. “There are also large amounts of earth. It has to be done in a scientific way, otherwise more earth will come down and also endanger workers.”

The Kadugannawa section will only be open from 0600am to 0600pm until further notice, he said. (Colombo/Dec06/2025)

Friday December 5, 2025 11:32 pm

ECONOMYNEXT – Sri Lanka’s Central Bank has announced relief measures for individuals and firms hit by the Cyclone Ditwah-hit disaster after considering the proposals of the Sri Lanka Banks’ Association (SLBA).

The Central Bank has issued a circular on the need to grant effective relief to those affected without unduly compromising financial system stability to all licensed banks.

Accordingly, licensed banks have been requested to provide following relief measures, upon receiving a request from such borrowers in writing or through electronic means, by 15.01.2026.

Temporary Debt Relief:

(a) Suspend the repayments of capital and/or interest of existing credit facilities of the affected borrowers, for a period of 3 to 6 months, on a case-by-case basis.

(b) In this regard, licensed banks have been requested not to charge an interest rate above the applicable contract rate of interest during the period of suspension and to ensure that any interest will not be charged on the deferred interest payments.

New Loan Facilities to the Affected Borrowers:

Grant new loan facilities to affected individuals and businesses on a case-by-case basis, considering the repayment capacity of the borrower. In this regard, licensed banks have been requested to ensure that:

(a) repayment of the new loan will commence after a minimum grace period of 3 months beyond the expiry of the suspension period referred to in paragraph (1) above;

(b) any new loan granted up to a period of 2 years, to be charged at a maximum fixed interest rate of 9% p.a. or the contract interest rate applicable to the respective borrower for overdrafts or loan facilities as at the date of this Circular, whichever is lower.

(c) For any new loan granted for a longer tenor beyond 2 years, the interest rate may be revised by the licensed bank to a rate linked to Average Weighted Prime Lending Rate (AWPR) at the end of 2 years as specified in the loan facility agreement with the borrower.

In addition, licensed banks have been requested to suspend charging for cheque returns, stop payments, late payment fees, credit restructuring/modification fees and penal interest on all credit facilities of affected borrowers during the period up to 31.01.2026.

Where charges are levied through automatic system generated entries, such charges should be refunded to the relevant account within 3 business days of being charged.

Further, licensed banks were requested to clearly inform the terms and conditions of any loan restructuring /reschedulement and the breakdown of capital, interest and other charges of credit facilities to the respective borrower, prior to approval and the consent of the borrower shall be obtained in writing or through electronic means. In the case of a rejection of providing above reliefs, inform the borrower in writing of the reasons for such rejection and advise the borrower that there is an opportunity to appeal against such rejection to the Director, Financial Consumer Relations Department of CBSL.

Further, licensed banks have been advised not to decline new loan applications from borrowers solely based on adverse records of Credit Information Bureau (CRIB).

The affected individuals and businesses may avail the above reliefs in addition to the various disaster relief measures implemented by the Government of Sri Lanka with a view to normalizing the livelihoods and reviving of businesses in a timely manner. (Colombo/November 05/2025)

NATIONAL QUESTION : Even if we sell it who will buy it?

Friday December 5, 2025 11:15 pm

ECONOMYNEXT – Sri Lanka President Anura Kumara Dissanayake announced sweeping relief for people who are affected by Cyclone Ditwah-hit devastation from 72.2 billion rupees over the next 25 days.

He disclosed how this money will be spent:

Each affected family for cleaning – Rs. 25,000
One off grant per household, to purchase essential kitchen equipment – Rs. 50,000
Monthly payment for families who lost houses (extendable for 6 months)– Rs. 25,000
Monthly payment for families who lost houses from Dec-March – Rs. 50,000
Grant for affected paddy fields (per hectare) – Rs. 150,000
Grant for affected vegetable fields (per hectare) – Rs. 200,000
Grant for affected livestock farm registered with veterinary office– Rs. 200,000
Grant for affected registered fishing boats – Rs. 400,000
Grant for affected school child to purchase educational materials – Rs. 25,000
Compensation for business premises damaged – – Rs. 5,000,000
Compensation for those who have no lands – up to Rs. – Rs. 5,000,000
Compensation for partially damaged houses – Rs. 2,500,000 (under four bands)
Compensation for the relatives of deceased – Rs. 1,000,000

(Colombo/December 05/2025)

Friday December 5, 2025 8:13 pm

ECONOMYNEXT – A supplementary estimate of 500 billion rupees will be made to parliament to get extra funds Cyclone Ditwah linked spending in 2026, President Anura Kumara Dissanayake said.

For 2025, a supplementary estimate of 50 billion rupees will be made, President Dissanayake told parliament Friday.

The government plans to spend around 72 billion rupees in Cyclone Ditwah related recovery work and relief in 2025 he said.

Some of the spending for fixing roads can be accommodated within maintenance funds already allocated he said.

The government will sharply increase compensation for people hit by Cyclone Ditwah compared to previous disaster.

Sri Lanka’s bizarre cyclone Ditwah that stayed and stayed and rained and rained

More than 800 dead or missing in Sri Lanka from Cyclone Ditwah

People who lost their houses in landslides will be given 5 million rupees and state land to relocated or another 5 million to buy a land.

Other people will be given 5 million to rebuild a completely destroyed house.

Businesses, rice and vegetable farmers, chicken and pig farmers will also be compensated. (Colombo/Dec05/2025)