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No shortcut to building Sri Lanka’s reserves: CBSL Governor

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Dr. P. Nandalal Weerasinghe

by Sanath Nanayakkare

“There is no shortcut to sustainable reserve accumulation,” Central Bank Governor Dr. P. Nandalal Weerasinghe said yesterday, warning that rebuilding Sri Lanka’s foreign-exchange buffers must be underpinned by sound economic fundamentals, policy credibility and institutional discipline rather than short-term fixes.

Addressing the inaugural Reserve Management Conference 2026 in Colombo, Dr.Weerasinghe said the task of building reserves had become increasingly difficult as geopolitical fragmentation, trade tensions, sanctions, volatile commodity prices, changing interest-rate cycles and rapidly shifting capital flows reshape the global financial environment.

For Sri Lanka, which experienced the consequences of depleted reserves during the 2022 economic crisis, the issue is particularly important.

“When reserves become critically low,” the Governor said, the consequences extend well beyond the Central Bank’s balance sheet. Imports become constrained, debt servicing becomes difficult, exchange-rate pressures intensify, inflationary pressures can increase and confidence deteriorates.

Most importantly, he said, the policy space available to respond to further shocks becomes severely constrained.

Foreign reserves should therefore be viewed not simply as financial assets but as a country’s “first line of defence” against external shocks, providing confidence, policy space and the ability to meet essential external obligations.

But Weerasinghe cautioned that reserve accumulation was not a linear process. A country could build reserves during favourable periods only to see them drawn down rapidly by an external shock.

The more important questions, therefore, were how resilient the reserves were, how accessible they were, how quickly they could be mobilised and whether they would be sufficient for the next shock.

Sri Lanka has made considerable progress since the crisis, with macroeconomic stabilisation and structural reforms strengthening the external sector compared with the difficult period of 2022–2023, he said.

However, sustainable reserve accumulation could not be separated from the broader macroeconomic policy framework.

Foreign exchange generated through exports, tourism, remittances, services and capital inflows ultimately provides the foundation for stronger reserves. When foreign-exchange inflows exceed outflows, reserves can rise, but maintaining that process while preserving exchange-rate flexibility, price stability, external debt-servicing capacity and market confidence remains a delicate policy challenge.

Dr.Weerasinghe warned against relying excessively on central-bank intervention, monetary expansion or external borrowing to rebuild buffers. Such measures could distort market signals, generate inflationary pressures or simply create future debt-service obligations.

“The most sustainable reserve accumulation strategy is therefore not simply to acquire reserves,” he said. “It is to build an economy that naturally generates and retains foreign exchange.”

The Governor said geopolitical risk had now become an integral part of reserve management. Strategic competition among major economies, sanctions and financial fragmentation were forcing reserve managers to reconsider the risks associated with particular currencies, jurisdictions and financial markets.

Although the US dollar continues to dominate international trade, finance and global reserves, diversification has a role to play. But diversification for its own sake could reduce liquidity and operational efficiency, he cautioned.

For official reserves, safety and liquidity must remain paramount, particularly because reserves may have to be deployed precisely when financial markets are under severe stress.

Sri Lanka’s vulnerability to energy and geopolitical shocks also makes the issue particularly acute. As an energy-importing country, a sharp rise in global oil prices can rapidly increase the import bill. At the same time, geopolitical tensions can weaken tourism and other sources of foreign exchange, producing the potentially damaging combination of rising outflows and declining inflows.

Climate-related disasters could create similar pressures by disrupting agriculture, infrastructure, tourism and imports.

Dr. Weerasinghe said reserve adequacy should therefore no longer be judged by a single number or conventional indicator such as import cover. Short-term external liabilities, debt-service requirements, capital-flow volatility, exchange-rate flexibility, contingent financing and the probability and magnitude of external shocks should also be considered.

He also highlighted the growing role of gold, technology and artificial intelligence in reserve management, while stressing that innovation should never compromise safety and liquidity.

Ultimately, the Governor said, reserves were not managed simply to earn a return but to protect economic stability and preserve confidence.

“Buffers must be built before they are needed,” he said, “because by the time an external crisis arrives, it may already be too late to begin building them”.



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Global regulators convene in Colombo for key IOSCO enforcement and cooperation discussions

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Dignitaries at the wide-ranging discussions.

The Securities and Exchange Commission of Sri Lanka (SEC) successfully hosted a series of high-level meetings of the International Organization of Securities Commissions (IOSCO), bringing together leading securities regulators and enforcement officials from around the world to discuss emerging regulatory challenges, strengthen international cooperation, and enhance collective efforts to combat cross-border securities market misconduct.

The meetings, held at the Hilton Colombo from 13 to 16 October 2026, included sessions of the IOSCO Enforcement and Cooperation Committee and its Screening Group (Committee 4/SG), as well as meetings of the Monitoring Group and the Steering Committee. The event attracted approximately 50 senior representatives from securities regulators and exchanges across several jurisdictions, including Australia, Japan, the United States, the United Kingdom, France, Italy, Canada, New Zealand, India, Germany, Belgium, Singapore, China and Spain, reflecting the global significance of the discussions and the growing importance of international regulatory collaboration.

Welcoming delegates to Sri Lanka, Senior Professor D.B.P.H. Dissabandara, Chairman of the SEC, emphasized the critical role of international cooperation in safeguarding market integrity and investor confidence in an increasingly interconnected financial landscape.

“No regulator can effectively address cross-border misconduct in isolation. The speed with which information, transactions and illicit activities can move across borders requires an equally coordinated and timely regulatory response. Strong international cooperation, effective information sharing and mutual trust among regulators are essential to maintaining fair, transparent and resilient capital markets,” he stated.

The discussions focused on a range of enforcement and cooperation matters, including mechanisms for enhancing cross-border information exchange, strengthening investigative collaboration among regulators, addressing increasingly sophisticated forms of securities fraud and market abuse, and promoting the effective implementation of international standards and best practices. Participants also exchanged experiences and insights on emerging enforcement challenges arising from technological developments, digitalization of financial services, and increasingly interconnected global markets.

IOSCO is recognized as the leading international body that brings together the world’s securities regulators and serves as the global standard setter for securities regulation. Through its policy work and cooperative initiatives, IOSCO plays a central role in promoting investor protection, ensuring that markets are fair, efficient and transparent, reducing systemic risk, and strengthening confidence in capital markets worldwide.

Sri Lanka has maintained a strong and active relationship with IOSCO for more than three decades. The SEC became an Ordinary Member of IOSCO in 1993 and has been a signatory to the IOSCO Multilateral Memorandum of Understanding (MMoU) since 2004. The MMoU is the internationally recognised benchmark for cooperation and information sharing among securities regulators and serves as a critical tool in facilitating cross-border investigations and enforcement actions.

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Pan Asia Bank partners Ideal Motors to offer leasing solutions

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Representatives of both parties are seen exchanging the agreement (Standing from left to right) Officials from Ideal motors: Trevene Ferdinand, AGM - Corporate/Tender; Dinesh Manage, Business Development Manager; Kasun Fernando, General Manager - Commercial Vehicles; Nimisha Welgama, Director – Legal and Corporate Affairs; Officials from Pan Asia Bank: Naleen Edirisinghe, Director/CEO; Yohan Ebell, Head of Retail Credit; Sudharshana Hettiarachchi, Officer in Charge – Leasing; and Kanchana Kannangara, National Sales Manager – Leasing.

Pan Asia Bank recently entered into a one-year Memorandum of Understanding (MOU) with Ideal Motors (Pvt) Ltd, creating a new financing avenue for customers purchasing vehicles from the authorised Mahindra dealer. The strategic partnership will enable customers of Ideal Motors to access leasing facilities from Pan Asia Bank, making vehicle financing more convenient while supporting their mobility and business requirements. The agreement also provides an opportunity for the Bank to expand its leasing portfolio and strengthen its presence in Sri Lanka’s vehicle financing market.

Ideal Motors is the authorised dealer for the Mahindra vehicle range in Sri Lanka, including the Mahindra Bolero CPU Truck and Scorpio Jeep/Pickup. The vehicles cater to a range of requirements, from commercial and business applications to personal mobility, making accessible financing an important part of the purchasing decision.

The Bank’s vehicle leasing facilities are designed to simplify the financing process, with convenient repayment options and professional support to help customers select a solution suited to their requirements. For customers, the arrangement brings vehicle selection and financing closer together, reducing the need to navigate the two processes separately.

“Our partnership with Ideal Motors enables us to bring financing closer to customers at the point of vehicle purchase. We remain focused on providing convenient and flexible leasing solutions that support both personal mobility and the needs of businesses,” said Naleen Edirisinghe, Director/CEO of Pan Asia Bank.

Pan Asia Bank and Ideal Motors will work closely during the one-year partnership to maximise business opportunities and deliver a seamless financing experience to customers. The collaboration is expected to strengthen both organisations’ ability to respond to demand for commercial and personal vehicles while creating greater value for customers.

Yohan Ebell, Head of Retail Credit, Pan Asia Bank, said: “Through this partnership, we aim to make vehicle financing simpler and more accessible, with leasing solutions designed to meet the varied requirements of Ideal Motors’ customers.”

The collaboration also reflects Pan Asia Bank’s commitment to building partnerships that make financial services more accessible and responsive to the needs of individuals and businesses.

Pan Asia Bank has established a growing presence in vehicle financing, offering leasing solutions designed around customer convenience and flexibility. Its leasing proposition is supported by a nationwide branch network and a customer-focused approach, enabling customers to obtain guidance on financing options while completing their vehicle purchase.

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Heritance Hotels and Resorts secures four wins at World Travel Awards 2026

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Heritance Hotels and Resorts has secured four distinguished titles at the World Travel Awards 2026, with three national awards recognising its Sri Lankan properties and an international title for Heritance Aarah in the Maldives.

The three Sri Lankan titles recognise Heritance Tea Factory as Sri Lanka’s Leading Heritage Hotel 2026, Heritance Ahungalla as Sri Lanka’s Leading Luxury Hotel 2026, and Heritance Kandalama as Sri Lanka’s Leading Wedding Hotel 2026. Heritance Aarah was named the Indian Ocean’s Leading All-Inclusive Resort 2026.

Internationally recognised within the global travel and tourism industry, the World Travel Awards celebrate excellence across hotels, resorts, and destinations. Recognition at this level affirms the quality, distinctiveness, and consistency of the experiences delivered by Heritance Hotels and Resorts.

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