Reply To:
Name - Reply Comment
Sri Lanka’s foreign reserves overstated by USD 1.4 billion, Report reveals
Colombo, June 15, 2025 - Sri Lanka’s official foreign reserves have been overstated by approximately USD 1.4 billion due to the inclusion of a currency swap from China that does not meet international standards, a new report published by FactCheck.lk said.
The report, titled “Reservations on Sri Lanka’s Reporting of Foreign Reserves”, highlights that the discrepancy stems from the inclusion of a RMB 10 billion (roughly USD 1.4 billion) swap agreement with the People’s Bank of China. Under the guidelines of the International Monetary Fund (IMF), only assets that are readily available and free from conditions can be classified as reserve assets. The Chinese swap, however, carries restrictions that disqualify it from being considered usable reserves.
As a result, Sri Lanka’s official reserves appear higher than they actually are. In May 2025, for instance, the Central Bank reported reserves of USD 6.3 billion. But after excluding the Chinese swap in line with IMF standards, the usable reserve figure would be closer to USD 4.9 billion.
The report also criticizes the inconsistent reporting practices by Sri Lankan officials since April 2022. It notes that both public officials and politicians have selectively used reserve figures to paint an overly optimistic picture of economic recovery, contributing to public confusion.
Experts cited in the report stress the importance of adhering to the IMF’s definition of "usable reserves" when measuring reserve growth. They argue that including ineligible assets like the Chinese swap undermines transparency and weakens the credibility of Sri Lanka’s financial reporting.
The revelation comes at a critical time as Sri Lanka continues efforts to rebuild confidence among international lenders and investors following its 2022 debt default.
Comments - 34
Recommended
You May Also Like
Trending
