Colombo, Sri Lanka – 11 September 2026: The Central Bank of Sri Lanka (CBSL) today released its ‘Weekly Economic Indicators’ for the period ending 11 September 2026, presenting a comprehensive overview of the nation’s economic pulse. The report highlights a significant surge in global crude oil prices driven by geopolitical tensions, alongside encouraging movements in domestic monetary and fiscal sectors, offering a mixed yet cautiously optimistic picture of the Sri Lankan economy.
Real Sector Navigates Global Headwinds
The global real sector faced considerable pressure this week as crude oil prices escalated sharply. Amidst concerns over prolonged conflicts in the Middle East and potential supply disruptions, both Brent and WTI crude oil prices soared past US dollars 100 per barrel. By the end of the period, Brent had increased by US dollars 12.00 per barrel, and WTI by US dollars 10.77 per barrel, compared to the previous week. This surge, attributed to heightened geopolitical tensions and intensifying attacks along key shipping routes, poses a notable challenge for import-dependent economies like Sri Lanka.
Domestically, inflation indicators show ongoing monitoring. The National Consumer Price Index (NCPI) headline inflation registered a year-on-year change of 7.2 per cent in July 2026, while the Colombo Consumer Price Index (CCPI) headline inflation stood at 8.0 per cent in August 2026, both indicating continued price stability efforts are essential.
Monetary Sector Sees Easing Lending Rates and Credit Expansion
In a welcome development for borrowers, the Weekly Average Weighted Prime Lending Rate (AWPR) for the week ending 11 September 2026 saw a decrease of 19 basis points (bps) to 10.73 per cent from the previous week. This downward trend in lending rates could provide impetus for economic activity.
Broad money (M2b) demonstrated robust expansion, growing by 12.1 per cent on a year-on-year basis in July 2026. This was supported by a significant increase in outstanding credit extended to the private sector, which rose by Rs. 169.1 billion in July 2026, recording a healthy year-on-year growth of 26.4 per cent. Conversely, Net Credit to the Government from the banking system decreased by Rs. 165.9 billion, and outstanding credit to public corporations decreased by Rs. 23.6 billion during the same month. The Average Weighted Call Money Rate (AWCMR) marginally increased to 8.87 per cent.
Market liquidity remained comfortably in surplus, with total outstanding market liquidity recorded at Rs. 366.11 billion by 11 September 2026, an increase from Rs. 355.30 billion a week prior. However, the Colombo Stock Exchange experienced a downturn, with the All-Share Price Index (ASPI) decreasing by 1.10 per cent to 21,382.74 points and the S&P SL 20 Index falling by 0.93 per cent to 6,002.46 points compared to last week.
Fiscal Performance Shows Marked Improvement
Sri Lanka’s fiscal landscape displayed significant improvement over the first seven months of 2026. Government revenue and grants surged by 25.1 per cent to Rs. 3,421.3 billion, a substantial increase from Rs. 2,734.9 billion in the corresponding period of 2025. While total expenditure and net lending also increased by 7.3 per cent to Rs. 3,531.0 billion, the overall budget deficit considerably narrowed to Rs. 109.7 billion, a dramatic reduction from Rs. 556.1 billion recorded in the same period last year.
Net domestic financing decreased to Rs. 81.9 billion (from Rs. 601.7 billion), reflecting healthier fiscal management, while net foreign financing amounted to Rs. 27.9 billion, a positive shift from a net repayment of Rs. 45.6 billion in the corresponding period of 2025. Outstanding central government debt stood at Rs. 30,795.04 billion at the end of May 2026. Treasury Bill yields remained largely stable, and the rupee value of Treasury Bills and Treasury Bonds held by foreign investors increased by approximately 1.3 per cent, indicating renewed investor confidence.
External Sector: Rupee Depreciation and Remittance Growth
The Sri Lanka rupee depreciated by 5.7 per cent against the US dollar year-to-date as of 11 September 2026. Workers’ remittances, a crucial source of foreign exchange, amounted to US dollars 748.6 million in August 2026. While this marked a slight decrease from US dollars 777.6 million in July 2026, it represents a notable increase compared to US dollars 680.8 million in August 2025, demonstrating sustained support from expatriate workers.
The gross official reserves were provisionally estimated at a robust US dollars 6,905 million as at end August 2026. This figure includes proceeds from the People’s Bank of China (PBOC) swap arrangement, underscoring efforts to bolster the country’s external buffers.
Overall, the latest economic indicators reveal a resilient Sri Lankan economy navigating global challenges, particularly the sharp rise in oil prices, while demonstrating significant progress in fiscal consolidation and an easing monetary policy stance aimed at fostering growth.
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