Central Bank assets, liabilities increase in 2025
The Central Bank of Sri Lanka’s (CB) balance sheet has seen increases in both assets and liabilities, with a notable rise in official reserve assets and a reduction in the budget deficit in April 2025 compared to a considerable contraction in 2024.
The balance sheet summarising the financial position, listing its assets, liabilities, and equity of the CB has increased to Rs. 4.17 trillion in April 2025 from Rs 4.15 trillion in March this year, a recent financial statement showed.
The policy interest rate, specifically the Overnight Policy Rate (OPR) of the bank was 7.75 per cent in June 2025. This was a result of a 25 basis point reduction from the previous rate,
The budget deficit for 2025 was revised down to 6.5 per cent of GDP, compared to the previous estimate of 6.7 per cent, due to a lower-than-expected interest bill and slower capital expenditure, according to the Fiscal Strategy Statement of the Finance Ministry.
However the CB has posted a considerable contraction in assets as well as liabilities, which was the outcome of changing monetary policy, debt operations, as well as foreign exchange movements.
This apparently complex financial situation notwithstanding, the overall performance of the monetary authority reflected an improvement, with foreign reserves increasing and profitability seeing a large boost, several economic analysts observed
According to the recent Financial Statements and Operations report of the Central Bank, its overall asset base declined by 8.4 per cent , i.e. a fall of Rs. 117.4 billion, whereas total liabilities lagged behind at Rs. 84.3 billion in 2024.
These figures may appear contradictory at first glance, but they emerge from several deliberate financial actions taken throughout the year by the Central Bank.
The key factor for the decline in assets was a 25.1 per cent drop in local currency assets, amounting to Rs. 628.7 billion. This was due to the maturing and offloading of Treasury bills and bonds, which shrank holdings by Rs. 295.4 billion.
Additionally, reverse repo transactions dropped Rs. 307.8 billion, while loans extended to other institutions fell Rs. 38.2 billion due to repayments.
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