Sri Lanka’s central bank is discreetly allowing billions in government bonds to fade from its balance sheet, part of a subtle unwind that’s raising new concerns around liquidity, debt management, and the nation’s monetary direction following its economic crisis.
According to Anil Perera, head of the bankโs Market Operations Department, the central bank has begun letting a portion of its marketable government bonds expire without renewing them. Of the Rs. 2,508 billion in government securities currently held, around Rs. 16.5 billion are in bonds that will now simply mature without replacement. The majority of the portfolio still consists of Treasury bills that were converted to step-down securities during the crisis.
Perera noted that these remaining bonds were bought before the crisis, largely through direct purchases aimed at injecting liquidity into the system. Now, as the economy stabilizes, the central bank is gradually letting these securities roll off its books. โThe bonds will progressively go out of the balance sheet as they mature,โ he said, reflecting a deliberate move to reduce exposure to marketable holdings.
At the start of the year, the bank held Rs. 2,515.62 billion in government securities. That figure dipped to Rs. 2,511.92 billion by January 15, fell further to Rs. 2,509.42 billion by May 5, and stood at Rs. 2,508.92 billion as of June 2โwhere it has remained since.
This controlled drawdown shows the bankโs cautious approach to managing post-crisis monetary policy, aiming to steer clear of shocks to the bond market or liquidity conditions.
