"The borrowings will take place as and when the government needs it."
Bond market participants said they were instructed not to sell bonds to foreigners temporarily this week by the government's debt office, which is a unit of the Central Bank.
Yield on bonds spiked slightly by about 10 basis points early Thursday. Two year bonds which traded around 10.90 percent a day earlier traded around 11.0 percent today.
Sri Lanka has set a limit of 10 percent of outstanding bonds to be sold to foreign buyers and has now reached a limit of around 8.0 percent.
Yields on bonds have been falling steeply in recent weeks.
At Tuesday's auction, 3-month Treasuries moved to single digits, falling 34 basis points to 9.70 percent. The Central Bank said auction rates have fallen 956 basis points so far this year.
Sri Lanka bond yields have fallen steeply helped by inflows to the bond markets, with an International Monetary Fund deal also in place.
Tax revenues have also been picking up, the IMF said.
However the flows into Treasuries markets from bond buyers are excluded from the foreign reserve targets in the program.
The Central Bank has been steadily sterilizing inflows into the bond market. By Wednesday its Treasury bill stock was down to 16.3 billion rupees, leaving it with little ammunition to sterilize future inflows.
The Central Bank has set a limit of 10 percent of outstanding rupee bonds for foreign purchases.
Sterilizing future inflows with its own securities results in a net interest burden to the Central Bank, as earnings from foreign reserves are less than the cost of sterilization.