Sri Lanka set to regain economic output lost to crisis, says Dissanayake

The Hindu
The Hindu
33m ago 1 view
Sri Lanka's President announced the country has stabilized its economy and regained investor confidence after completing debt restructuring. This matters as it marks a significant recovery from the 2022 financial crisis.
Sri Lanka set to regain economic output lost to crisis, says Dissanayake
A What happened
On November 7, 2025, Sri Lanka's President Anura Kumara Dissanayake announced that the country is poised to regain the economic output lost during the 2022 financial crisis. He highlighted that the debt-to-GDP ratio, previously at 114%, is expected to decrease to 96% this year, with a target of 87% by 2030. The government aims for a primary surplus of 2.5% of GDP and a total revenue goal of 15.4% of GDP for the 2026 budget, which is designed to align with a $2.9 billion IMF program. Despite the recovery, the World Bank has noted that Sri Lanka's economic recovery remains incomplete and calls for urgent reforms. The government is also drafting tax laws to attract foreign investment, which is crucial for securing additional IMF funding. Overall, the budget reflects a commitment to fiscal consolidation and economic growth.

Key insights

  • 1

    Debt Reduction Goals

    Sri Lanka aims to reduce its debt-to-GDP ratio to 87% by 2030.

  • 2

    IMF Program Alignment

    The 2026 budget aligns with a $2.9 billion IMF program to stabilize the economy.

  • 3

    Growth Projections

    The World Bank projects growth rates of 4.6% in 2025 and 3.5% in 2026.

Takeaways

Sri Lanka's economic recovery is underway, with significant steps taken towards debt reduction and fiscal stability, although challenges remain in achieving comprehensive reforms.

Topics

Economy Policy & Regulation