Former United National Party Deputy Leader and Parliamentarian Ravi Karunanayake has warned that the Central Bank’s policy of purchasing excess US dollars from commercial banks using newly issued Sri Lankan rupees could have a serious impact on small and medium-sized enterprises.
Karunanayake said the Central Bank had stepped up dollar purchases from the domestic market as part of efforts to reduce the country’s structural foreign exchange deficit. He noted that net dollar purchases in July alone amounted to US$348.6 million.
According to the MP, these purchases have helped Sri Lanka remain around US$700 million above the minimum net reserve threshold of minus US$2.035 billion set for the relevant IMF review period.
He also referred to the Central Bank’s decision in May 2026 to raise its policy interest rate by 100 basis points to 8.75%. He said the move helped contain inflation expectations amid the Middle East energy crisis and supported stability in the rupee, which remained around Rs. 332.75–332.95 against the US dollar.
However, Karunanayake argued that the measures have also restricted credit expansion and placed pressure on the profit margins of local small and medium-sized businesses.
He warned that while the policies may help stabilize foreign exchange and inflation, excessive restrictions on credit could make it more difficult for SMEs to finance operations, invest and expand, potentially affecting broader economic growth.
