Sri Lanka Government Bonds
& Treasury Securities
Sri Lanka’s government securities market — comprising Treasury Bills and Treasury Bonds — offers investors a sovereign-backed, default-risk-free investment avenue with market-determined yields, secondary market tradability, and full repatriation rights for foreign investors.
Sri Lanka’s Government Securities Market
The government securities market is administered by the Central Bank of Sri Lanka (CBSL) and forms the backbone of the domestic debt capital market, providing a benchmark for short-term and long-term interest rates nationwide.
Market Structure
The Government of Sri Lanka raises domestic currency debt through two key instruments:
- Treasury Bills (T-Bills): Short-term debt instruments issued under the Local Treasury Bills Ordinance No. 8 of 1923
- Treasury Bonds (T-Bonds): Medium to long-term debt instruments under the Registered Stock and Securities Ordinance No. 7 of 1937
Both are issued in scripless form and registered in the Central Depository System (CDS), linked to an automated Scripless Securities Settlement System (SSSS) for real-time settlement.
Regulatory & Monetary Context
The new Central Bank Act (September 2023) established a modernised framework emphasising full monetary policy independence, flexible exchange rate management, an inflation targeting framework, and a prohibition on monetary financing of government deficits.
As of early 2026, the Standing Lending Facility Rate (SLF) stands at 9% and the Standing Deposit Facility Rate (SDF) at 8%, following cautious monetary easing from peak crisis rates. Gross official reserves reached approximately US$6.1 billion by end-2024.
Treasury Bills (T-Bills)
Treasury Bills are Sri Lanka’s primary short-term government debt instruments, offering high liquidity, sovereign backing, and a market-determined return with no withholding tax.
Day T-Bill
3-Month Maturity · Highest Liquidity
Auctioned weekly · Discount basis
Day T-Bill
6-Month Maturity · Mid-term liquidity
Bi-weekly auctions · Discount basis
Day T-Bill
1-Year Maturity · Short-term benchmark
Monthly auctions · Discount basis
Discount Pricing
Treasury bills are issued at a discount and repaid at face value at maturity. The difference represents the investor’s return — currently exempt from withholding tax under Sri Lankan law.
Secondary Market Tradability
T-Bills are fully tradable in the secondary market through licensed banks and Primary Dealers, making them highly liquid money market instruments and a superior alternative to fixed deposits.
Benchmark Rate Function
Treasury bill rate movements provide the benchmark for the short-term credit market throughout Sri Lanka’s financial system, influencing borrowing costs for banks and corporates.
Open Market Operations Collateral
T-Bills and T-Bonds are accepted as collateral by the Central Bank under its Open Market Operations (OMO), ensuring banks can use them for short-term liquidity management.
Treasury Bonds (T-Bonds)
Treasury Bonds offer investors medium to long-term fixed income exposure backed by Sri Lanka’s sovereign credit, with semi-annual coupon payments and maturities from 2 to 30 years.
| Feature | Details |
|---|---|
| Maturity Range | 2 to 30 years |
| Coupon Payment | Bi-annual (semi-annual) coupon payments |
| Repayment | At face value at maturity |
| Issuance Price | At discount, par, or premium |
| Yield Determination | Market-determined at primary auction |
| Secondary Trading | Fully tradable via banks and Primary Dealers |
| Form | Scripless (electronic / CDS registered) |
| Withholding Tax | 0% — None under current Sri Lankan law |
| Joint Investment | Permitted |
| Collateral Use | Accepted for CBSL Open Market Operations |
Sovereign Guarantee
Considered default-risk free as obligations of the sovereign government of Sri Lanka, backed by the full faith and credit of the state.
Zero Withholding Tax
Government securities are not subject to withholding tax under current Sri Lankan law — a significant advantage over most other fixed-income instruments.
Full Repatriation Rights
All receipts of interest and maturity proceeds by foreign investors are fully repatriable through Inward Investment Accounts (IIAs).
Attractive Real Yield Environment
With inflation subdued and policy rates elevated relative to regional peers, Sri Lanka’s bond market offers attractive real yield opportunities for investors with appropriate risk appetite.
How to Invest in Sri Lanka Government Securities
For Domestic Investors
Open a Securities Account
Open a CDS account through any licensed bank or Special Primary Dealer (SPD).
Place Bids via Primary Dealers
Submit competitive or non-competitive bids through your chosen Primary Dealer for T-bill and bond auctions held by the CBSL.
Secondary Market Purchase
Alternatively, purchase existing T-Bills and T-Bonds at any time from the secondary market at prevailing market prices.
Receive Payments
Coupon payments and maturity proceeds are credited directly to your bank account through your dealer on due dates.
For Foreign (Non-Resident) Investors
Open an Inward Investment Account (IIA)
Non-resident investors must open a rupee-denominated IIA with a licensed commercial bank in Sri Lanka. Valid identification and KYC documentation are required.
Open CDS Securities Account
Through your licensed bank acting as Dealer Direct Participant, open a CDS Securities Account in your name. Ownership is recorded here in real time.
Invest Subject to Limits
Non-resident holdings are capped at 5% of outstanding T-Bills and T-Bonds separately at any given time. Confirm current headroom with your Primary Dealer.
Repatriate Freely
All interest receipts and maturity proceeds are fully repatriable. Consult CBSL’s Department of Foreign Exchange for detailed regulations.
Sri Lanka’s Economic Recovery & IMF Programme
IMF Extended Fund Facility (2023–2027)
GDP Growth 2024 (exceeded expectations)
Gross Official Reserves (End 2024)
Government Tax Revenue Growth (Jan–May 2025)
Access Sri Lanka’s Government Securities Market
Sri Lanka’s government securities offer compelling risk-adjusted returns with zero withholding tax and full repatriation rights. The sovereign credit trajectory is improving, with the IMF programme on track and fiscal discipline maintained.
Sources & Citations
- Central Bank of Sri Lanka (2024). Government Securities Market. cbsl.gov.lk
- Central Bank of Sri Lanka (2026). Monetary Policy Review – No. 1 of 2026.
- U.S. Department of State (2025). 2025 Sri Lanka Investment Climate Statement.
- Varners Law (2025). Doing Business in Sri Lanka 2025. Chambers and Partners.
- CAL Securities (2025). Treasury Bill and Bond Rates. cal.lk
- International Monetary Fund (2025). Sri Lanka – IMF EFF Review 4, July 2025.