Sri Lanka to issue domestic dollar bonds to boost foreign exchange liquidity

The Sri Lankan Cabinet of Ministers has approved a proposal to issue domestic dollar-denominated bonds as a debt instrument, a government spokesman said on Tuesday.

Cabinet spokesman Nalinda Jayatissa stated that the decision was made as foreign exchange inflows into the country have increased, thereby strengthening liquidity in the domestic foreign exchange market, reports Xinhua.

Targeting Sri Lanka's commercial banks, the move aims to provide opportunities for investments using foreign currency deposits by issuing domestic debt instruments denominated in foreign currency, he said.

According to the Public Debt Department of the Central Bank of Sri Lanka, a market survey conducted in August 2025 to assess investor interest confirmed that investors expressed willingness to invest up to 100 million U.S. dollars in varying amounts, with maturities ranging from less than one year to three years, he said.

Accordingly, the Cabinet has approved a proposal presented by President Anura Kumara Dissanayake to initiate the issuance of domestic dollar bonds within the existing legal framework as a short-term liquidity instrument.