COLOMBO, 03 October 2026 – In a significant move towards bolstering economic stability and transparency, the Government of Sri Lanka has formalized a new Monetary Policy Framework Agreement. The agreement, signed on October 1st, 2026, between the Minister of Finance, Planning and Economic Development and the Central Bank of Sri Lanka (CBSL), sets a clear inflation target for the nation.
The landmark document, published as Gazette Extraordinary No. 2508/28, outlines the parameters and objectives for the country’s monetary policy, aiming to provide a predictable and stable economic environment.
A Mandate from the Central Bank Act of 2023
This agreement is a direct fulfillment of Section 26 of the Central Bank of Sri Lanka Act, No. 16 of 2023. It formalizes the collaboration and responsibilities between the government’s financial leadership and the nation’s apex monetary authority, ensuring a structured approach to economic management.
Key Details of the New Framework
The core of the newly established framework focuses on a specific inflation target:
- The Central Bank of Sri Lanka is mandated to aim for a quarterly headline inflation rate of 5 per cent.
- For the purpose of Section 26(5) of the Central Bank Act, a margin of ±2 percentage points has been stipulated, providing the CBSL with operational flexibility while maintaining accountability to its primary objective.
The agreement also precisely defines the terms used within its context:
- “CCPI” refers to the Colombo Consumer Price Index published by the Department of Census and Statistics, Sri Lanka.
- “Quarterly headline inflation rate” is defined as the simple average of the year-on-year percentage changes in the monthly CCPI for the three months of the corresponding calendar quarter.
Signatories and Economic Impact
The Monetary Policy Framework Agreement was formally signed by Anura Kumara Dissanayake, in his capacity as Minister of Finance, Planning and Economic Development, and also the President of the Democratic Socialist Republic of Sri Lanka.
Representing the Central Bank, Dr. P. Nandalal Weerasinghe, Chairman of the Governing Board and the Monetary Policy Board, and Governor of the Central Bank of Sri Lanka, affixed his signature to the agreement.
This agreement underscores a commitment to a rules-based monetary policy, enhancing transparency and predictability in the nation’s economic landscape. It is widely expected to bolster investor confidence, facilitate long-term planning for businesses, and ultimately contribute to a more stable and prosperous economic environment for all Sri Lankans.
Effective Date
The framework agreement became effective as of its signing date, October 1st, 2026. Its implementation will be closely observed by economic analysts, financial markets, and the public as Sri Lanka continues its journey towards sustainable economic growth.
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