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The Central Bank set the record straight this week on where they have to end up in the external reserves by the end of the year as reports circulating are carrying various numbers claiming what the Central Bank has to have by the year-end as part of the country’s agreement with the International Monetary Fund (IMF). Speaking at a media briefing this week, Central Bank Governor Dr. Nandalal Weerasinghe asserted Sri Lanka is well on its way to achieve in what they call the Net International Reserve (NIR) target although they may end up slightly below the Gross Official Reserve (GOR) estimate of around US$ 7.0 billion. have been reports, some quoting the Governor himself, that the Central Bank has a Gross Official Reserve target of US$ 7.0 billion or more to be met by the end of 2025. But he, making it clear he said, “The US$ 7.2 billion GOR by the end of this year which we agreed with the IMF is not a target but just an estimate”. “Our responsibility is actually for what we call, the Net International Reserves”, he added. In fact, in line with the ongoing IMF programme, the Central Bank has a target to collect or purchase US $ 2.65 billion in foreign currency on a net basis from November 2024 through December 2025. So far in the first eight months of this year, the Central Bank has purchased US$ 1.24 billion in foreign currency, which further goes up to US$ 1.78 billion including the final two months of last year. This leaves the Central Bank with about US$ 870 million to be purchased in the next four months, which appears to be somewhat within the reach. The level of NIR therefore depends largely on how much the Central Bank can collect from the market in foreign currency. “We are already ahead of the target based on the NIR standard,” Dr. Weerasinghe said. While the Central Bank did not explicitly say what their NIR target is by the year’s end, the target is reported to be at the level of US$ 2.6 billion. However, the level of GOR, which is often watched and published every month by the Central Bank is depended on many other things such as the foreign currency loans to the government through multilateral agencies such as the Asian Development Bank (ADB), the World Bank and the likes and also the bilateral loans from countries such as Japan and India. GOR also captures the short term swaps the Central Bank either enters into or becomes matured and also the programme tranches the government receives from the IMF at least twice a year. An IMF team is currently in town and authorities expect the review to be successfully concluded, unlocking another programme tranche of around US$ 340 million before the end of the year. This should also strengthen the GOR position of the country. The Governor said the slow progress in the GOR rebuilding this year was partly due to the delays in some of the project loans from the likes of the ADB and the WB due to the elections held in the mid of the year and also the delays in getting some of the projects off the ground by the government. Hence he also said there is a possibility that the country might end up slightly below US$ 7.0 billion gross reserve buffer too by the end of this year.  He mostly attributed the foreign currency debt servicing this year to the slow progress in the gross reserve buffer as Sri Lanka resumed settling part of the loans after the conclusion of the debt restructure last year. Sri Lanka had a GOR of US$ 6.17 billion by the end of August from US$ 6.12 billion by the end of December in 2024. In any case, Sri Lanka has continuously been servicing both the interest and capital on multilateral loans throughout, irrespective of the debt standstill. While these debt repayments are from the side of the government, the Central Bank also has started meeting some debt obligations too this year such as the US$ 2.6 billion currency swap with the Reserve Bank of India where the Central Bank is currently in the process of repaying. Furthermore, the government also settled some trade credit it received from India in the height of the economic crisis in 2022 too. However, Dr. Weerasinghe assuaged concerns of Sri Lanka possibly coming short of US$ 7.0 billion by the end of this year because they are well on track to meet the NIR target which turned positive from negative levels as a result of the continuous purchases of foreign currency from the banking system.