In a startling revelation that could shake public trust and investor confidence, Sri Lanka’s foreign reserves have reportedly been overstated by a massive USD 1.4 billion, according to an investigative analysis by FactCheck.lk. The discrepancy stems from the continued inclusion of a currency swap from China that, according to international standards, shouldn’t be counted as usable reserves.
The swap in question valued at RMB 10 billion (approximately USD 1.4 billion) was arranged with the People’s Bank of China but comes with restrictive conditions. Under International Monetary Fund (IMF) guidelines, reserve assets must be liquid, available on demand, and free of constraints. The Chinese swap, however, fails to meet those standards, yet it remains factored into Sri Lanka’s official figures.
What does this mean in real terms? In May 2025, the Central Bank of Sri Lanka claimed USD 6.3 billion in reserves. But strip away the ineligible Chinese component, and the true usable reserves stand closer to just USD 4.9 billion.
This discrepancy isn’t new the issue dates back to April 2022, with government officials and politicians regularly presenting inflated figures to signal a recovery that may not be as strong as advertised. According to the report, these figures have been selectively used in public statements to create the illusion of financial stability a tactic that now appears deeply misleading.
Experts quoted in the analysis are raising serious alarms. “This kind of misrepresentation not only breaks with global financial reporting norms but also erodes trust among foreign investors and global lenders,” they said. They emphasized that only IMF-compliant reserve figures should be presented as part of Sri Lanka’s economic metrics especially after the country’s 2022 sovereign debt default.
With Sri Lanka now aggressively courting international creditors and seeking to revive economic momentum, this revelation could not come at a worse time. Transparency and credibility, analysts warn, will be crucial if the nation is to rebuild its shattered financial reputation.
The burning question now: Why hasn’t this swap been removed from official calculations and who’s benefiting from the illusion?
