Secondary Bond market rallies ahead of Rs. 57 b Treasury Bill auction

THE secondary Bond market saw yields decline yesterday following news of an impressive fiscal outperformance for January-September 2025, exceeding several IMF benchmarks.

- BY WEALTH TRUST SECURITIES

According to the Ministry of Finance's Fiscal Review, the nominal budget deficit narrowed by 54.5% to Rs. 441.4 billion (from Rs. 970.0 billion a year earlier), driven largely by a 31.0% rise in Government revenue-including grants-to Rs. 3,834.9 billion (from Rs. 2,927.8 billion).

In addition, the primary surplus of the budget was Rs. 1.46 trillion by September, compared with a primary balance indicative target of Rs. 300 billion in the IMF program. Sri Lanka's tax revenue (excluding grants) grew 32.5% to Rs. 3.56 trillion in the nine months to September, beating an International Monetary Fund program target, according to provisional data released by the nation's finance ministry. The IMF program's indicative target floor on Government revenues is Rs. 2.75 trillion for end-September.

This bullish momentum was supported by a Bloomberg report titled "Sri Lanka Inflation May Remain Below Target in 4Q, CenBank Says" which stated that Sri Lanka's inflation is likely to remain below target in the fourth quarter of this year even as demand picks up, the central bank said in a report to the nation's parliament.