Central Bank of Sri Lanka (CBSL) had to bear a Day One Loss of over Rs. 760 billion after restructuring Rs. 2.5 trillion worth of CBSL debt through the Domestic Debt Optimisation (DDO), Governor of CBSL, Dr. Nandalal Weerasinghe said.

Speaking to the media yesterday (7), he said that the CBSL reported a net loss of Rs.114 billion in 2023 was mainly due to the one-off loss of Rs 766.4 billion to the balance sheet due to the DDO adjustment.

He said even though the CBSL used to provide Rs. 300 billion in profits to the Government in other years, last year's loss was due to the DDO loss and by taking a hit to the balance sheet CBSL has provided a huge contribution to reducing the overall debt of the Government.

“Therefore, this is a huge relief to the people,” he added.

According to the financial statements, CBSL reported a net loss of Rs. 114.4 billion in 2023 compared to a net loss of Rs. 374.3 billion in 2022, mainly due to the exchange revaluation gain of Rs. 140.1 billion in 2023 as opposed to the exchange revaluation loss of Rs. 610.1 billion in 2022. 

“Higher interest income earned due to the increased level of foreign reserves, increased trading gains and higher unrealized mark-to-market gains from Forex (FX) and FX SWAPS resulted in increased net operating income.” the CBSL said.

CBSL’s Provisional Advances to the Government and Treasury Bills purchased from the Government amounting to Rs. 345 billion and Rs. 2,368 billion respectively were restructured and converted into new Treasury Bonds and Bills with a stepped-down coupon interest profile. 

Treasury bills received consisted of maturity dates varied between February 2024 to September 2024 and Treasury Bonds received consisted of maturities between 6 years to 15 years at step coupon interest of 12.4% until 2024 (incl.), 7.5% until 2026 (incl.) and 5% from 2027 until maturity. 

However, the Day One Loss of DDO of Rs. 766.4 billion resulted in a net loss of Rs. 114.4 billion which could have otherwise ended up in a net profit for the year 2023.