The Central Bank of Sri Lanka (CBSL) is committed to make $ 2.65 billion net foreign purchases from the domestic market between November 2024 and end 2025 to build its reserves.

The staff report by the IMF said that Sri Lanka should achieve a 3.2 month import cover of $ 7,056 million foreign reserves by the end of 2025.

“We stand ready to undertake outright FX purchases on a net basis of $ 2.65 billion between November 2024 and end-2025 to meet reserves targets,” Sri Lanka said in its letter of intent to the IMF.

This is after the Central Bank collected the highest ever net foreign exchange purchases of $ 2.8 billion in 2024.

Sri Lanka said it is gradually rebuilding gross international reserves including through outright foreign exchange purchases in the market.

This is supported by a non-interest current account surplus, new external financing and other non-debt creating inflows, and sovereign debt relief.

Sri Lanka is also expecting $ 783 million through the foreign program financing associated with the IMF programme.

Moreover, amidst strong external sector developments, the authorities plan to continue building up reserves through outright purchases, targeting a positive Net International Reserves (NIR) of $ 2,606 million by end-2025.

“We strive to save any overperformance in NIR accumulation. As a signal of our proactive approach to reserves accumulation, we have a cap on the adjustor for the NIR target in cases of shortfall in project financing,” authorities said.

Authorities said that if the NIR outcome outperforms its program target, the CBSL will consult with IMF staff on raising the targets for subsequent test dates to safeguard such overperformance.