Sri Lanka’s official foreign reserves have been overstated by around USD 1.4 billion due to the inclusion of a Chinese currency swap that does not meet international standards, according to a new report by FactCheck.lk.
The report, titled “Reservations on Sri Lanka’s Reporting of Foreign Reserves”, attributes the overstatement to a RMB 10 billion (approximately USD 1.4 billion) swap agreement with the People’s Bank of China.
Under International Monetary Fund (IMF) guidelines, only assets that are readily available and free of conditions qualify as usable reserve assets, a criterion the Chinese swap fails to meet due to its restrictions.
Consequently, Sri Lanka’s reported foreign reserves appear inflated; in May 2025, the Central Bank stated reserves at USD 6.3 billion, but after adjusting for the Chinese swap, the usable reserves drop to about USD 4.9 billion.
The report criticizes Sri Lankan authorities for inconsistent reserve reporting since April 2022, noting that officials and politicians have selectively used figures to present an overly positive economic outlook.
Experts quoted in the report emphasize the importance of aligning with IMF standards to ensure transparency and credibility in financial reporting.
This revelation emerges at a crucial time as Sri Lanka seeks to regain the trust of international creditors and investors in the aftermath of its 2022 debt default.
