Sri Lanka’s foreign exchange reserves, though showing modest recovery, remain under pressure as rising import expenditure and continued foreign currency outflows strain the island’s external position.

According to Central Bank of Sri Lanka (CBSL) and international data, gross official reserves stood at US$ 6.3 billion by April 2025, slightly lower than US$ 6.47 billion recorded in October 2024. By September 2025, reserves edged up to US$ 6.24 billion, indicating some improvement but still far below sustainable levels.

These reserves cover only about 3.4 months of imports, leaving the country with little cushion against external shocks. Meanwhile, import pressures continue to intensify. In September 2025, import expenditure surged to US$ 2.048 billion, while exports were limited to US$ 1.139 billion, producing a trade deficit exceeding US$ 900 million.

During the first seven months of 2024, import spending grew 9.1% year-on-year, outpacing the 5.6% growth in exports a clear signal of widening foreign exchange leakage. Fuel imports, intermediate goods, and raw materials continue to dominate the import bill, while renewed private-sector credit growth further drives import demand.

CBSL data also show that December 2024 recorded the highest import bill of the year, widening the merchandise trade deficit even further. Part of the reserve buildup during late 2024 came from currency-swap arrangements and unsterilised foreign-exchange purchases, raising questions about the true level of usable reserves. Analysts estimate reserves could be overstated by around US$ 1.4 billion, due to the inclusion of a RMB 10 billion Chinese swap that does not meet full international reserve standards.

To stabilize the situation, policymakers face a dual challenge: boosting foreign-currency earnings through tourism, remittances, and services exports, while curbing non-essential imports and maintaining transparent reserve management. CBSL has emphasized the need for cautious reserve-building and clearer reporting to restore investor confidence.

Governor Nandalal Weerasinghe has set a target of US$ 7 billion in reserves by end-2025, a goal that depends on sustained export recovery and disciplined fiscal management. Failure to control import-driven outflows and narrow the structural foreign exchange gap could expose the economy to renewed currency volatility and external debt risks.

In essence, Sri Lanka’s reserve recovery remains a fragile balancing act. To convert its modest buffer into genuine resilience, the nation must strengthen export competitiveness, attract stable foreign inflows, and ensure transparency in managing its limited reserves.

Trade, Commerce, Food Security and Cooperative Development Minister Wasantha Samarasinghe told Parliament yesterday that the Government has taken necessary measures to provide a fair and sustainable solution to the challenges faced by potato and big onion farmers.

Responding to a point of order raised by SJB MP Dayasiri Jayasekara, the Minister said that Rs. 1,000 million has been allocated under the 2026 Budget to implement a long-term programme for the purchase and storage of potatoes and big onions.

“The Government has already made the required interventions to ensure a fair solution to farmers’ issues,” Minister Samarasinghe said. “Although the Opposition has attempted to turn this matter into a national crisis, we have been implementing a structured programme for potatoes and big onions since August.”

He emphasized that addressing these issues requires strategic, long-term planning, particularly to stabilize market prices and ensure adequate storage facilities for local produce.

Raising the matter in Parliament, MP Jayasekara said that farmers continue to suffer due to the absence of a formal government mechanism for purchasing their harvests. He urged the Government to establish a consistent and transparent system to protect the farming community from financial losses.

Minister Samarasinghe reiterated that the Government remains committed to safeguarding farmers’ livelihoods and ensuring price stability through effective intervention and storage strategies.

The Sri Lanka Police have urged the public to avoid posting photos, selfies, or status updates revealing their current locations on social media platforms during holiday trips, pilgrimages, or family excursions.

Police Media Spokesman ASP F. U. Wootler cautioned that sharing real-time travel information online can expose individuals and families to potential security risks, including theft and burglary.

“We are entering the festive season, and many families will be travelling on vacations, pilgrimages, or excursions,” ASP Wootler said, speaking at a media briefing at the Police Media Division in Battaramulla. “We have observed that some people announce or post their travel plans, or share selfies from places like Nuwara Eliya, Galle, or Kataragama. This is unwise, as it could provide useful information to criminals monitoring public posts.”

He warned that such social media activity can alert criminals to the absence of residents from their homes, making properties more vulnerable to break-ins.

ASP Wootler also advised the public to be vigilant when arranging transport for holiday trips, especially when children are involved. “The bus or vehicle, the driver, and the owner should all be verified beforehand. Ensure that the driver is responsible and that the vehicle is mechanically sound before your journey,” he said.

The Police emphasized the importance of discretion and personal security during the upcoming festive period, urging citizens to share travel photos only after returning home.

The Cabinet of Ministers has approved a proposal to introduce new laws preventing the arbitrary nationalisation of private enterprises and properties, as part of broader efforts to strengthen investor confidence and ensure long-term policy stability in Sri Lanka.

Announcing the decision at the weekly Cabinet media briefing, Cabinet Spokesman and Health and Mass Media Minister Dr. Nalinda Jayatissa said the initiative, first proposed in the 2025 Budget, includes the creation of an Investment Security Board to serve as a dedicated dispute resolution mechanism for investors.

Dr. Jayatissa explained that the upcoming Investment Protection Act will establish a comprehensive legal frameworkdesigned to prevent politically motivated or arbitrary takeovers of private businesses, assets, or properties.

“Over the years, certain government actions have led investors to lose trust in Sri Lanka,” he said. “It has therefore become necessary to introduce legal safeguards to protect investments and rebuild confidence.”

He added, “If investors fear that their assets might be taken over when governments or ministers change, they will hesitate to invest. This affects both local and foreign investors. It is essential to demonstrate that Sri Lanka is firmly committed to upholding investment security.”

The Minister also stressed that policy inconsistency has long been a deterrent to investment and that the new legislation seeks to guarantee a stable and predictable policy environment.

To advance this initiative, the Cabinet has approved the proposal submitted by President Anura Kumara Dissanayake, in his capacity as Minister of Finance, Plan Implementation, and Economic Development, to instruct the Legal Draftsman to prepare the draft Bill.

A committee of officials has already been appointed to develop the initial concept paper for the proposed Act, which will guide the drafting process.

Sri Lanka’s Minister of Foreign Affairs, Vijitha Herath, held discussions with the Chief Executive Officer of the Saudi Fund for Development (SFD), Sultan Abdulrahman Al-Marshad, on the sidelines of the TOURISE Global Summit 2025 in Riyadh.

During the meeting, Minister Herath expressed Sri Lanka’s deep appreciation for the SFD’s longstanding development partnership and its continued financial assistance during the country’s recent economic challenges.

The Minister also reaffirmed Sri Lanka’s commitment to enhancing cooperation with the SFD in key development sectors in the years ahead.

Following the meeting, Minister Herath posted on X (formerly Twitter):

“I conveyed Sri Lanka’s gratitude to the SFD’s longstanding development assistance to Sri Lanka and their continued disbursement of funds, even during the country’s recent economic downturn. I also expressed Sri Lanka’s commitment to further strengthening cooperation with SFD in the years ahead.”

Foreign Minister Vijitha Herath is currently in Riyadh to participate in the 26th Session of the UN World Tourism Organization (UNWTO) General Assembly and related events, including the TOURISE Global Summit 2025.

Showers or thundershowers will occur at most parts of the island after 1.00 p.m.

Fairly heavy falls above 75 mm are likely at some places in Central, Sabaragamuwa, Southern and Uva provinces and in Kalutara and Ampara districts.

Showers may occur in Northern province and in Trincomalee district during the morning too.
Misty conditions can be expected at some places in Western, Sabaragamuwa, Central, Southern and Uva provinces and in Ampara district during the early hours of the morning.

The general public is kindly requested to take adequate preca