📈 CBSL Alleged to Have Expanded Money Supply by Over Rs. 610 Bn in 1Q 2026

• Overall Figures: The Free Lawyers Organisation alleges the Central Bank of Sri Lanka (CBSL) expanded the M2b monetary supply by Rs. 1,653 Bn in 2025 and an additional Rs. 610.7 Bn between January and March 2026, bringing total M2b money supply to Rs. 16,585.7 Bn by March 2026. Government debt is also claimed to have risen to Rs. 29,994.69 Bn in 2025 from Rs. 28,240.22 Bn in November 2024. • Core Allegation: The organization claims CBSL "printed" money by purchasing US dollars from commercial banks using rupee liquidity to build reserves, contributing to current forex pressures and rupee volatility. • CBSL Counter-Argument: CBSL’s 2025 report clarifies that net forex operations injected ~Rs. 788.9 Bn in rupee liquidity (not the full M2b expansion claimed), which was partially absorbed by Rs. 356.1 Bn in government net foreign loan repayments and Rs. 210.2 Bn in currency withdrawals. CBSL Governor Dr. Nandalal Weerasinghe strongly dismissed the claims, cautioning against oversimplified narratives on monetary policy. • Market Impact & Context: While critics link liquidity expansion to rising interest rates, fuel price hikes, and disruptions in the vehicle market, analysts emphasize that recent rupee volatility is also heavily driven by external shocks. These include the Middle East conflict, higher global oil prices, stronger dollar demand, panic importer behavior, and delayed exporter conversions.