An Echelon Media Company
Wednesday October 14th, 2026

Sri Lanka CB Governor meets exporters and importers

ECONOMYNEXT – Newly re-appointed Central Bank Governor Nivard Cabraal has met Sri Lanka’s key exporters and importers shortly after taking office as the country face foreign exchange shortages and reserve depletions.

“The exchange of views with the main #Importers & #Exporters in Sri Lanka was very helpful,” Cabraal said in a twitter.com

“Their commitment to stabilize our economy is very encouraging. I look forward to working with them.”

Sri Lanka’s exporters have been hoarding dollars amid record low interest rates enforced by liquidity injections via domestic operations amid and expanding budget deficit and recovering private credit.

Importers also have been given incentives to bet against the rupee by with low rates making stock holding cheap.

The liquidity injections were mainly effected by scuttling bond auctions through price controls, leading to a failure to channel private savings in the budget deficit and an expansions of central bank credit which then hit forex reserves as the new rupees were used.

Cabraal lifted the price controls pushing allowing the rates to rise across maturities at this week’s auction, in a move that will help reduce foreign reserve depletion.

However two days later, data showed that domestic operations had injected 87-day money into an existing liquidity short at below the 3-month rate and as low as 6.08 percent, or providing 87-day money at only 08 basis points higher than the overnight rates.

Related

Sri Lanka prints Rs103.5bn below 3-month Treasuries yield to reverse SRR

There have been calls to shut down the domestic operations department (re-create an East Asia style currency board) to ensure that liquidity injections cannot de-stabilize the external sector, generate import controls and social unrest, or a return to rule-based monetary regime involving low inflation targeting with an independently floating exchange rate.

Sri Lanka has a highly discretionary monetary regime which has no credible domestic anchor (‘flexible’ inflation targeting) with an inflation target as high as 6.0 percent, which had already been exceeded.

Neither is there a credible external anchor due to a ‘flexible’ exchange rate, though foreign reserve collection is a clearly articulated goal in all monetary policy statements.

Analysts warned in late 2019 that the obsession with low rates would land the country in trouble. Long term watchers of central bank policy errors have observed that whatever is said to the contrary the actual final target seems to be interest rates.

Related

Sri Lanka heading for uncertainty with low rate obsession: Bellwether

The rupee has fallen from 131 to 203 officially over the last 5-years amidst the anchor conflicts and forex markets are still dysfunctional.

Amid Covid-19 lockdown driven slowdowns in private credit slowdowns most South and East Asian central bank’s with more credible central banks have collected foreign reserves, generating foreign asset driven excess liquidity and low interest rates. (Colombo/Sept24/2021)

Sri Lanka’s Standard Capital exits loss-making paints subsidiary

ECONOMYNEXT — Sri Lanka listed investment company Standard Capital has disposed of its stake in subsidiary Standard Paints (Pvt) Ltd for a nominal consideration of 1650 rupees, saying the move would improve its financial position as the subsidiary carried a negative equity value.

In a disclosure to the Colombo Stock Exchange, Standard Capital said its board had previously decided on August 24, to either strike off the subsidiary or dispose of its equity stake for a nominal value.

The company subsequently sold its holdings in Standard Paints on September 28, comprising a 65 percent stake represented by 6.5 million ordinary voting shares and 100 percent of the subsidiary’s 10 million preferential shares.

The shares were disposed of for a total consideration of 1650 rupees. (Colombo/Oct14/2026)

Continue Reading

Global borrowing costs rise as bond yields increase: Fitch

Fitch Ratings-London: The recent sharp and widespread increase in government bond yields represents a significant increase in real global borrowing costs.

Bond yields have risen to multi-decade highs in the US, Germany, UK and Japan in recent weeks, as highlighted in Fitch Ratings’ latest Economic Monitor chart pack.

Ten-year government bond yields have risen in major global markets since the previous Fitch-20 Economic Monitor in June. US yields averaged 4.99% in September, up from 4.47% in June; 3.50% from 3.00% in Germany;
5.46% from 5.06% in the UK; and 2.99% from 2.65% in Japan. In Korea there also was a marked increase, with yields averaging 4.45% from 4.18% in June.

The chart pack highlights another notable development: the pick-up in world trade growth, driven by an IT investment boom that has boosted capital goods imports in the US. Trade growth has surged in several countries, including Mexico, Korea, Canada and Indonesia.

The quarterly ‘Fitch-20 Economic Monitor’ (formerly ‘20/20 Vision’) chart pack covers the 20 major economies (the Fitch-20) that are the focus of Fitch’s Economics team’s global macro analysis, and plots five years of high-frequency economic data for 20 variables, with consistent coverage across each country.

‘Fitch-20 Economic Monitor: September 2026’ is available by clicking the link above or at www.fitchratings.com.

Continue Reading

Sri Lanka to get $100mn ADB loan to strengthen skills training

ECONOMYNEXT – Sri Lanka’s cabinet has approved obtaining a 100 million dollar results-based loan from the Asian Development Bank (ADB) to implement a Skills Development System Transformation Programme aimed at strengthening the country’s technical and vocational education and training (TVET) sector.

“The financing package comprises 50 million dollars in regular ordinary capital resources and 50 million dollars in concessional ordinary capital resources,” minister Nalinda Jayatissa said.

The funds are intended to support sector reforms and the development of a more effective skills development system aligned with labour market needs, he claimed. (Colombo/Oct14/2026)

Continue Reading

Fitch rates Sri Lanka Sampath Bank’s Rs10bn debenture issue A(lka)

Fitch Ratings – Singapore: Fitch Ratings has assigned Sampath Bank PLC’s (AA-(lka)/Stable) proposed Sri Lankan rupee-denominated Basel III-compliant subordinated debentures of up to LKR10 billion a final National Long-Term Rating of ‘A(lka)’.

The proposed debentures, which will mature in five and seven years, will be listed on the Colombo Stock Exchange. The bank plans to use the proceeds to supplement its Tier 2 capital base to maintain capital adequacy compliance as well as to support loan book growth.

The proposed debentures will qualify as Basel III-compliant regulatory Tier 2 capital. The debentures include a non-viability clause that states they will convert to ordinary voting shares upon the occurrence of a trigger event, as determined by the Governing Board of the Central Bank of Sri Lanka.

The final rating is the same as the expected rating assigned on 10 September 2026 and follows the receipt of documents conforming to information already received.

Key Rating Drivers

Fitch rates the proposed Basel III Tier 2 debentures two notches below the bank’s National Long-Term Rating of ‘AA-(lka)’. This reflects Fitch’s baseline notching for loss severity for this type of debt and our expectations of poor recoveries. There is no additional notching for non-performance risks, as the proposed debentures do not incorporate going-concern loss-absorption features.

Sampath’s National Long-Term Rating is used as the anchor rating for this instrument because the rating reflects the bank’s standalone financial strength and best indicates the risk of the bank becoming non-viable.

Fitch affirmed Sampath’s ratings on 17 August 2026. See our latest rating action commentary, Fitch Affirms Sampath Bank at ‘AA-(lka)’; Outlook Stable , for the key rating drivers and sensitivities.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of the bank’s National Long-Term Rating will lead to a downgrade of the subordinated debt rating.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of the bank’s National Long-Term Rating will lead to an upgrade of the subordinated debt rating.

Continue Reading

Oman’s OQ Trading wins Sri Lanka LPG deal at Aramco price plus $133.93

ECONOMYNEXT – Sri Lanka’s cabinet has approved the proposal to award the contract for the supply of 420,000 metric tonnes (±20%) of Liquefied Petroleum Gas (LPG) to Oman’s OQ Trading Limited for a period of 12 months commencing 1 January 2027, minister Nalinda Jayatissa said.

The contract provides for the supply of 420,000 metric tonnes (±20%) of LPG, including a guaranteed minimum quantity of 336,000 metric tonnes, at a price of Saudi Aramco Contract Price plus US$133.93 per metric tonne on a Cost, Insurance and Freight (CIF) basis, Jayatissa said.

International competitive bids were invited for the procurement, and 4 bids were received.

“The contract was awarded to M/s OQ Trading Limited, the lowest substantially responsive bidder,” he told reporters. (Colombo/Oce14/2026)

Continue Reading

Sri Lanka stocks continue to slide, ASPI drops 0.14-pct

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange were trending down on Wednesday, nearing the psychological 20,000 mark, CSE data showed, with the benchmark All Share Price Index moving down 0.14 percent.

The ASPI was down 27.26 points at 20,050.22, while the more liquid S&P SL20 was down 0.02 percent, or 0.96 points, at 5,729.14.

Positive contributors to the ASPI were LOLC Holdings (up 3.08 percent at 418.00 rupees), Vallibel One (up 2.21 percent at 87.90 rupees), Asiri Hospital Holdings (up 4.98 percent at 25.30 rupees), Ambeon Holdings (up 3.45 percent at 33.00 rupees), and Haycarb (up 1.55 percent at 197.00 rupees).

Commercial Bank of Ceylon (down 0.25 percent at 198.00 rupees), SMB Finance (flat at 1.00 rupee), Hayleys (down 0.23 percent at 221.50 rupees), and Odel (down 7.41 percent at 10.00 rupees) were top negative contributors.

Market turnover was 318.20 million rupees. Retailing led turnover with 100.89 million rupees. (Colombo/Oct14/2026)

Continue Reading