Sri Lanak manages budget deficit with new Central Bank Act

State Minister of Finance Shehan Semasinghe announced that the government is independently managing the budget deficit through the implementation of a new Central Bank Act. 

Posting on 'X' (formerly Twitter), Semasinghe revealed that in the first half of 2024, the government repaid Rs 129 billion more than it borrowed through treasury bonds and bills. He noted that the government borrowed a total of Rs 4,852 billion through these instruments but repaid Rs 4,981 billion by rolling over the same instruments. 

"Therefore, it’s important to highlight the net borrowing rather than the gross borrowing," he stated.

Semasinghe further explained that prior to the economic recovery, the government had relied on central bank financing, resulting in an inflation rate as high as 70%. With the new Central Bank Act in place, the government now manages the budget deficit independently, he added.