Sunday, July 26 2026
Sunday, July 26 2026
ECONOMYNEXT – Sri Lanka's central bank has transferred a part of it profits in 2026 as permitted by its act, to the government, Governor Nandalal Weerasinghe said.
The central bank reported profits of 193 billion rupees in 2025, down from 274 in 2024. In 2024 most of the profits were used to cover brought forward losses in earlier years, made largely from fx swaps.
In 2025 the central bank again made swap losses as the practice was no banned by the parliament.
The central bank cannot transfer all the profits made to the government and it does not pay tax.
"There's a rule in the law, once we provide for everything else, balance will have to be transferred," Governor Weerasinghe told reporters after the July 2026 monetary policy decision.
"We have transferred that to the government, I think that happened somewhere back in February or March."
The central banks 2025 annual report said out of 193 billion rupees of profits, 44 billion could be transferred to the Consolidated Fund. But there was 3.4 billion to be recovered from the government.
After that 41.949 billion rupees could be transferred to the government.
There have been warnings that the profit transfer would trigger depreciation as the central bank is in the habit of not honoring the money it injects to the economy under the IMF-backed operating framework which is inflation biased and depreciation biased.
The rupee collapsed in the first quarter, after excess liquidity hit close to 290 billion rupees, or close to a billion dollars of pressure on the exchange rate.
If the transfer was made in foreign currency, there would be no depreciation, no impoverishment by destroying real wages of the working class and their provident funds, no threat of losing foreign reserves for imports, and the Treasury would get some non-debt dollars to repay debt.
The central bank could also cancel some of the bonds in return for the profits and prevent inflation, depreciation and social unrest. (Colombo/July25/2026)
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