Economic News
View all(62)Central Bank Net Buys US$ 64.2 Mn in Sept Amid Rupee Pressure 📈
• Foreign Exchange Operations: Central Bank net bought US$ 64.2 Mn in September 2026 (purchased US$ 85 Mn, sold US$ 20.8 Mn). Year-to-date net purchases reached US$ 1,548.8 Mn (compared to US$ 2 Bn in 2024). • Currency Movement: The Sri Lankan rupee depreciated by 0.9% in September, following downward pressure in May driven by higher fuel import bills and vehicle demand. • Strategic Reserves: Dollar purchases aim to boost reserves for IMF EFF targets, loan repayments, and sovereign bond obligations due in April 2028.
Sri Lanka Central Bank Expects Inflation to Decelerate to 5% by Q2 2027 📈
• Inflation Trajectory: Central Bank expects headline inflation to remain in high single digits through Q1 2027 before easing to the 5% target level from Q2 2027 onwards, assisted by favorable base effects. • Current Figures: September inflation reached a 37-month high of 8.0%, staying above the Central Bank's upper target limit of 7% for 3 consecutive months. Medium-term inflation expectations remain broadly anchored around 5%. • Global Oil Factor: Projections assume a eventual easing of the Middle East conflict. Baseline models rely on third-party institutional forecasts (e.g., IMF WEO, JP Morgan). While domestic models previously budgeted for oil near $80/barrel, Brent crude has currently passed US$100/barrel, which may prompt dynamic baseline adjustments.
Sampath Bank Economic Forum '26: Focus Shifts to Sustainable Growth 📈
• IMF EFF Programme Progress - Sri Lanka achieved ~85% of total IMF programme objectives under the Extended Fund Facility (EFF). - Discussions continue for the seventh review; absence of a mission-stage staff-level agreement does not mean the programme is off track. - Key macroeconomic gains noted in sustained growth, lower inflation, improved tax revenue, positive primary balance, and debt restructuring progress. • Governance & Anti-Corruption Concerns - IMF raised concerns over proposed Anti-Corruption Act amendments that could weaken transparency (e.g., asset declaration access and redaction rules). - Preserving legislative integrity remains vital for maintaining public trust. • Central Bank & Economic Priorities - CBSL Governor emphasized data-driven monetary policy, flexible inflation targeting, and continuous reserve buffer accumulation to absorb external shocks. - Critical growth enablers include removing trade barriers, streamlining licensing, and accelerating digitalisation. • Key Sector Focus & Next Steps - Transition requires boosting investment, expanding exports, and improving global market access. - Strategic priority sectors outlined for national growth include tourism, IT/BPO industry, shipping & logistics, and rural agriculture. - Call for unified action across financial institutions, businesses, and policymakers to convert market shifts into sustainable economic development.
Govt. and CBSL Renew Monetary Agreement to Target 5% Inflation 📈
The Government of Sri Lanka and the Central Bank of Sri Lanka (CBSL) have signed a new Monetary Policy Framework Agreement (MPFA) to maintain the national inflation target for the next three years. • Agreement Details: Signed on 1 October 2026 by President and Finance Minister Anura Kumara Dissanayake and CBSL Governor Dr. P. Nandalal Weerasinghe under the CBSL Act No. 16 of 2023. Published via Extraordinary Gazette No. 2508/28. • Core Target: Sets headline inflation at 5% quarterly with an accountability margin of ±2 percentage points (3% to 7% range), measured via average YoY changes in the Colombo Consumer Price Index (CCPI). • Target Continuity: Unchanged from the inaugural October 2023 agreement following a mandatory three-year review evaluating economic structure, empirical evidence, and international practices. • Current Economic Context: Headline CCPI inflation remained at 8.0% in September 2026 (matching August), staying above the 7.0% upper bound for a third straight month. Core inflation (excluding volatile food and energy) rose to 5.4% from 5.1%. • Economic Outlook: CBSL projects headline inflation to stay in high single digits through Q1 2027 before gradually easing toward the 5.0% mid-point target via data-driven policy decisions.
📈 IRD Revenues Surge 24% to Rs. 2.04 Trillion in Nine Months
The Inland Revenue Department (IRD) has recorded a significant increase in tax collections, positioning it within close range of achieving its full-year financial targets. • Overall Revenue Growth: Total collections rose by 24.2% YoY to Rs. 2.04 trillion during the first nine months ending September 2026, up by Rs. 398 billion compared to Rs. 1.64 trillion recorded in the same period of 2025. • Monthly Performance: Growth accelerated sharply in September 2026, with revenue expanding by 33.3% YoY (up by Rs. 72 billion) to reach Rs. 288 billion, compared to Rs. 216 billion in September 2025. • Annual Target Outlook: The nine-month collection accounts for 85% of the IRD’s full-year target of Rs. 2.4 trillion for 2026. The department requires an additional Rs. 361 billion over the final quarter to meet its annual projection.
📊 CBSL Releases "Sri Lanka Socio-Economic Data – 2026" Booklet
• Overview: The Central Bank of Sri Lanka (CBSL) has released the 49th edition of its annual "Sri Lanka Socio-Economic Data" folder for 2026. • Key Coverage: The quick-reference booklet covers socio-economic statistics across 14 key categories, including National Accounts, Prices and Wages, External Trade and Tourism, External Finance, and Government Finance. • Sectoral Scope: Provides detailed indicators on critical sectors such as agriculture, industry, human resources, and money & banking to assist policymakers, researchers, and the general public. • Access: Electronic versions are accessible via the official CBSL website, and printed copies are available for purchase at the CBSL Sales Counter for Rs. 100.
📈 ADB Outlook: Developing Asia Growth to Moderate to 5.0% in 2026 Amid Resilient Demand
Economic growth across developing Asia and the Pacific is projected to moderate to 5.0% in 2026 before picking up to 5.1% in 2027, according to the Asian Development Bank's (ADB) September 2026 report. • Regional Figures & Inflation: • Regional GDP growth for 2026 revised up slightly by 0.1 percentage points📈 ADB Forecast: Developing Asia Growth to Slow to 5% in 2026 amid Resilient South Asian Outlook The Asian Development Bank (ADB) projects economic growth in developing Asia and the Pacific to moderate to 5.0% in 2026 (up 0.1 percentage points from July's outlook) and edge up to 5.1% in 2027, following 5.5% expansion in 2025. • Regional Outlook & Key Drivers: • Regional inflation is projected at 4.2% for 2026 and 3.5% for 2027. • Growth is anchored by strong investment, government stimulus, and robust technology exports driven by the global AI investment cycle. • Subregional Performance: • South Asia: Growth forecast upgraded to 6.4% for 2026 (up from 6.0%), fueled by strong public investment and export growth in India. 2027 projection revised down to 6.5% due to trade, energy, and weather shocks affecting neighboring economies. • Southeast Asia: Outlook raised to 4.7% (2026) and 4.9% (2027) on strong H1 performance. • Pacific: Saw the largest cuts, down to 3.0% (2026) and 2.9% (2027) due to energy disruptions and El Niño impacts on agriculture and mining. • Key Downside Risks: • A strengthening El Niño persisting into Q1 2027 threatens agricultural production, food security, and hydropower capacity. • Geopolitical conflicts (Middle East, Russia-Ukraine) keeping global energy and commodity prices volatile. • Tightening financial conditions, potential AI equity corrections, and trade policy uncertainty.
📊 CBSL Releases 49th Edition of "Sri Lanka Socio-Economic Data – 2026"
• Overview: The Central Bank of Sri Lanka (CBSL) has officially released the 2026 edition of its annual socio-economic data folder, marking the 49th volume in the series. • Scope & Coverage: The publication compiles key statistical indicators categorized across 14 core sectors, including national accounts, agriculture, industry, external trade & tourism, external finance, and government finance. • Target Audience: Designed as a concise resource to inform macroeconomic planning and research for policymakers, academics, professionals, and the general public. • Accessibility: Available digitally on the official CBSL website, with printed physical copies available at the Central Bank Sales Counter in Colombo for Rs. 100.
📈 Sri Lanka Targets Early Capital Market Access Post-Fitch Upgrade
• Macroeconomic & Market Outlook Following Fitch Ratings' upgrade of Sri Lanka to 'B-' (Stable Outlook) from 'CCC+', Standard Chartered CEO Bingumal Thewarathanthri suggested entering global capital markets before the IMF Extended Fund Facility (EFF) program ends in 2027. However, he cautioned against aggressive debt creation to avoid past vulnerabilities. IMF assumptions and Fitch both project market re-entry around 2027. • Bond & Equity Performance Restructured 2036 and 2038 sovereign bonds reached record highs of ~103 cents on the dollar, emerging among top global performers. Domestic markets gained as the ASPI rose 74.83 points to 21,054.01 and the S&P SL20 grew by 0.70%. • Key Economic Metrics & Fiscal Constraints Fitch projects foreign exchange reserves at US$ 7.7 Bn (2.9 months of imports) by end-2026. The interest-to-revenue ratio is forecasted to ease to 41% in 2026, though still significantly above the 'B' median of 12.7%. • Sector & Structural Reforms CBSL Governor Dr. Nandalal Weerasinghe highlighted a shift from stabilization to long-term productivity and investment. Highlights include: • Sustainable Finance: Implementation of the National Climate Finance Strategy (2025–2030) and Sustainable Finance Roadmap 2.0 (2025–2029) to issue green, blue, and sustainability-linked bonds. • Tourism & Digital Payments: LANKAQR integration with international payment platforms including UPI, UnionPay, Alipay+, WeChat Pay, and NepalPay to boost tourist spending.
📊 CBSL to Announce Monetary Policy Review No. 05 of 2026
• Announcement Schedule: The Central Bank of Sri Lanka (CBSL) will officially release its Monetary Policy Board decision on Wednesday, 30 September 2026, at 7:30 a.m. • Dissemination Channels: The decision will be accessible via the official CBSL website and its primary media channels. • Economic Context: This upcoming review will outline key policy rates impacting banking, financial services, and overall market liquidity across Sri Lanka.
📈 Global Goods Trade Gains Momentum Amid AI Demand
• Overall Figures: The WTO Goods Trade Barometer rose to 102.0 (up from 101.7 in June), signaling above-trend growth in global merchandise trade despite ongoing geopolitical and trade policy uncertainties. • Sector Breakdown & Drivers: - Electronic Components: Highest reading at 104.9, driven by strong global demand for ICT/AI-enabling goods. - Export Orders: Rose to 103.5, indicating strong short-term growth ahead. - Air Freight: Reached 102.8, reflecting solid logistics activity. - Agricultural Raw Materials: Climebd to 102.6, relevant for global agricultural supply chains including tea and raw commodities. - Automotive Products: Modest growth at 101.5. - Container Shipping: Slightly below trend at 99.6. • Global Forecast & Outlook: - World merchandise trade volume growth is forecast at 1.9% for 2026 under the baseline scenario, and 1.4% under a high-energy-price scenario. - Sustained investment in AI technology could add 0.5 percentage points to overall trade growth. - Middle East tensions and shipping disruptions in the Strait of Hormuz present headwinds, with full Q2 impact to be reflected in upcoming provisional data.
🇱🇰 Finance Ministry Clarifies Status of Latest IMF Talks
The Finance Ministry has refuted reports that recent discussions ended without a staff-level agreement, clarifying that the talks held in Colombo (10–23 Sept) were a technical round ahead of the 7th EFF review, not final negotiations for the 7th tranche. • Program Context: The 4-year IMF Extended Fund Facility (EFF) arrangement, approved in March 2023, totals ~$3 Bn (SDR 2.3 Bn). Cumulative disbursements reach ~$2.4 Bn following the May 2026 completion of the 5th and 6th reviews (~$695 Mn unlocked). • Official Position: Deputy Minister Dr. Anil Jayantha Fernando stated the technical round evaluated progress with Finance Ministry and CBSL officials. He emphasized that past economic stabilization efforts have boosted domestic revenue and foreign reserves for essential imports. • Next Steps: The Ministry noted staff-level agreements are routinely finalized after missions conclude. No specific date for the 7th review agreement was disclosed.