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Krishani
Krishani
Oct 05 2026
22Sri Lanka’s banks have built up their foreign currency holdings abroad while cutting what they owe overseas, and private companies have continued to repay more foreign debt than they take on, the Central Bank of Sri Lanka’s (CBSL) External Sector Bulletin for August 2026 showed.
The banking sector’s foreign assets, which include deposits and placements with banks abroad and holdings of foreign securities, rose to $ 6.6 billion by end-July from $ 5.5 billion at end-2025.
Its foreign liabilities, which include foreign borrowings, credit lines, and deposits from non-residents, eased to $ 5 billion from $ 5.5 billion over the same period.
That left banks with net foreign assets of about $ 1.6 billion, the widest gap in the bulletin’s data series, which begins in 2015.
The position has reversed over the decade. In 2015, banks held $ 2 billion in foreign assets against $ 9.1 billion in foreign liabilities. Liabilities declined steadily thereafter, falling to $ 5.4 billion in 2022, while assets rose to $ 4 billion that year. Assets first overtook liabilities in 2023, at $ 5 billion against $ 4.9 billion.
Interest paid by deposit-taking institutions on foreign loans rose 13.3% to $ 40.3 million in January to August 2026, from $ 35.6 million a year earlier.
Net foreign borrowing by the private sector, the difference between new foreign loans and repayments of existing ones, was negative at $ 94 million in the first half of 2026. This means companies repaid more foreign debt than they raised. Net repayments were $ 183 million in 2025 and $ 575 million in 2024.
Repayments since the start of 2023 total about $ 1.1 billion. The private sector has been a net repayer of foreign loans every year since 2019, with the exception of 2022, when it recorded a marginal net inflow of $ 9 million. Net foreign borrowing peaked at $ 211 million in 2017.
Gross official reserves, including the swap facility with the People’s Bank of China (PBOC), stood at $ 6.9 billion at end-August 2026.
