WB Urges Stronger Data & Verification for Aswesuma Program 📈
The World Bank (WB) has stressed the critical need for maintaining an accurate, up-to-date data system to correctly identify eligible beneficiaries for the Aswesuma Social Security Program. • Key WB Recommendations: • Inclusion in the database alone does not qualify citizens; data must be verified and analysed to accurately determine eligibility. • Establishing a comprehensive system is a "productive investment" for the country, requiring continuous updates. • The WB is ready to provide technical assistance and international expertise to strengthen the system. • Local Implementation Issues: • Members of Parliament suggested selecting beneficiaries through local committees and publicly displaying the list in villages to ensure transparency. • Officials noted initial challenges stemmed from inadequate information provided to implementing officers (Divisional Secretaries, Grama Niladhari), but steps are being taken to address this. • Economic Context: • WB reiterated that Sri Lanka's economy is still below 2018 levels. • Poverty, while expected to decline, remains twice as high as pre-crisis 2019 levels, with approximately 22% of the population currently below the poverty line.
SL, Australia Finalize Bilateral Debt Restructuring Deal 🤝
• The Governments of Sri Lanka and Australia have formally signed bilateral agreements on external debt restructuring. • This marks a significant milestone in Sri Lanka’s efforts to restore debt sustainability and follows the Memorandum of Understanding (MoU) reached with the Official Creditor Committee (OCC). • Key Figure: The total outstanding debt obligations restructured under these agreements is estimated at approximately USD 39 million. • The deal provides essential debt relief, contributing to the path toward economic stability and strengthening the deep, longstanding relationship between the two nations.
APAC Fiscal Consolidation Stressed by External Headwinds 📉
• External Headwinds, primarily US tariffs on exports and weaker global demand, are impacting fiscal consolidation efforts across the Asia-Pacific (APAC), according to Fitch Ratings. • Growth Outlook: APAC growth is still forecast to remain higher than other regions, with some mitigation expected from US dollar weakness and central bank policy rate cuts. • Fiscal Pressure: Governments are increasing spending to support households amid the high cost of living (often signalling weak domestic activity). Spending pressure may also rise due to protests in countries like Nepal, Indonesia, and the Philippines. • Sovereign Outlooks: Most APAC sovereigns are on a Stable Outlook. Thailand is the key exception, receiving a Negative Outlook due to increased public finance risks from political uncertainty and growth headwinds. • YTD Rating Changes: • Upgrades: Pakistan (to 'B-' from 'CCC+') and Uzbekistan (to 'BB' from 'BB-'), reflecting progress in reform implementation and funding support. • Downgrade: China was downgraded in April (to 'A' from 'A+') due to expectations of continued weakening public finances and a rapidly rising public debt trajectory.
📈 Customs Hits Record Rs. 24.9 Bn Single-Day Revenue!
• Sri Lanka Customs (SLC) achieved its highest-ever single-day revenue collection on 15 October 2025, recording Rs. 24.9 billion. • The cumulative revenue collected for 2025 has reached Rs. 1.86 trillion. • SLC remains on track to meet its annual revenue target of Rs. 2.11 trillion. • A key driver for this significant revenue surge was the resumption of vehicle imports to the country, according to SLC officials.
📈 IPS Report 2025: SL Must Convert Rebound to Structural Growth.
• The Institute of Policy Studies (IPS) urges Sri Lanka to convert its post-crisis cyclical rebound into a structurally driven growth process, warning that sustaining recovery hinges on deeper productivity and efficiency gains. • GDP growth of 4.9% in H1 2025 reflects a stable policy environment. However, continued momentum requires structural reforms, particularly tackling rigidities in land and labour markets, and increasing openness to trade and investment. • Digitalisation and technology infusion are key to accelerating productivity gains while broader institutional reforms take effect. • Key Digital Data/Opportunities: • National computer literacy remains low at 39% (falling to 17.9% in the estate sector), highlighting the need for targeted investment. • Digital payments are strong among vulnerable groups, with 42% of the poorest 40% of households already using them, which can strengthen e-commerce. • Extending digital tools to agriculture will enhance export competitiveness via product traceability and reduced trade costs. • Policymakers must balance long-term reform goals with immediate short-term social demands as the country prepares to resume its external debt service obligations.
📈 Sept PMI: Manufacturing Gains Momentum; Services Expansion Eases
• Both Manufacturing and Services sectors continued to expand in September, as per the CBSL's Purchasing Managers’ Index (PMI) data. • Manufacturing PMI rose slightly to 55.4 (up from 55.2 in August), indicating a faster pace of expansion. • Growth was mainly driven by New Orders and Production, largely attributed to the textiles and wearing apparel sector. • Stock of Purchases increased in preparation for the upcoming festive season. • A key concern: The Employment sub-index fell below the neutral threshold due to difficulties in retaining/attracting skilled workers. • Services PMI registered 58.7, showing accelerated expansion but at a slower pace compared to the 68.9 recorded in August. • Expansion was strongly supported by performance in wholesale and retail trade and improving financial services (underpinned by increased lending activity). • Employment in Services continued to increase to meet operational requirements. • Outlook for both sectors over the next three months remains positive, supported by the expectation of strong year-end seasonal demand and favourable macroeconomic conditions.
IMF Global Growth Outlook: Fragile at 3.2%, India Sees Upgrade 📈
• The International Monetary Fund (IMF) pegs global growth to hold steady at 3.2% in 2025, but the outlook is deemed fragile. • Key Risks: Trade tensions and China’s slowing, export-reliant model are weighing on demand. An escalation of tariffs could cut global output by about 0.3 percentage points. • India's Performance: • India's 2025-26 growth projection was revised upward by 0.2 percentage points to 6.6%. • Domestic momentum, driven by resilient private consumption (7.8% in Apr-Jun quarter), is expected to offset external drag from higher US tariffs. • China's Challenges: • China faces persistent property-sector weakness, soft domestic demand, and a risk of debt deflation. • The IMF urged China to pivot towards consumption-led growth, flagging risks of misallocation from large subsidies in sectors like EVs and solar.
📈 Migrant Remittances Surge: Nears US$ 7 Bn Target
• September 2025 Remittances: Reached US$ 695.7 Mn, marking a significant year-on-year (YoY) increase of US$ 140.1 Mn compared to September 2024. • Year-to-Date (Jan-Sept 2025) Total: Remittances hit US$ 5.81 Bn, reflecting robust growth of 16.65% compared to the US$ 4.84 Bn recorded during the same period in 2024. • The foreign employment sector is highlighted as a key pillar strengthening national foreign reserves. • Outlook: The SLBFE projects remittances to surpass US$ 7 Bn by the end of 2025. This is supported by efforts to promote new overseas employment opportunities, with an estimated 300,000 Sri Lankans projected to take up foreign employment this year. Streamlined processes are in place for job placements in Israel, Japan, and South Korea.
🇱🇰💊 Govt. Approves Rs. 2.5 Bn Medical Supplies Procurement
• The Cabinet has sanctioned key medical procurements worth approximately Rs. 2.5 billion to ensure a steady supply of essential medicines and equipment across State hospitals. • Key Procurements Approved: • Epoetin Syringes: 2.25 million pre-filled syringes (for chronic kidney disease) from Reliance Life Sciences Ltd. (India). Total value: US$ 1.989 million. • Infliximab Vials: 24,000 vials (a biological drug for Crohn’s disease/arthritis) from Celltrion Inc. (South Korea) for US$ 3 million. • Human Growth Hormone (Somatropin): 448,000 IU (for growth deficiencies) via A. Baur & Co. Ltd., for Rs. 860.5 million. • Colistimethate Sodium: 218,000 vials of the antibiotic (for severe bacterial infections) via Ceyoka Ltd., for Rs. 32.48 million. • Soft Cloth Liner Tape: 500,000 rolls (for bandaging) approved for George Steuart Health Ltd. for Rs. 270.56 million (excluding VAT). • All procurements followed international competitive bidding and were evaluated by the High-Level Standing Procurement Committee and Procurement Appeal Board, emphasizing transparency in strengthening the public health supply chain.
💰 Cabinet Okays Foreign Currency Bond Sale Locally
• The Cabinet has approved the issuance of foreign currency–denominated Bonds for sale in the domestic market. • This policy decision is designed to tap into local investor demand for foreign exchange instruments. • A recent survey indicated a strong initial investor appetite, estimating demand at approximately US$ 100 million. • The Bonds will be structured as short- to medium-term instruments, with maturities ranging from less than one year up to three years.
Moody's Review: SL Growth Momentum & Fiscal Progress Continue 📈
• Moody's completed its periodic review of Sri Lanka's Caa1 foreign-currency long-term issuer ratings, maintaining a Stable Outlook. No credit rating action was announced. • Economic Performance & Outlook: • Real GDP growth remained robust at 4.8% YoY in the first half of 2025, following 5% in 2024. • Full-year growth is projected to moderate to around 4.5%. • Growth is led by the services sector, with tourism arrivals steadily recovering to pre-pandemic levels. Strong inward remittance growth is expected to help preserve a current account surplus. • Fiscal Consolidation: • Government revenues grew strongly by 26.5% YoY in the first seven months of 2025. • Goods & Services tax revenues increased by ~33% YoY, while Income Tax revenues grew by ~8.3% YoY. Revenue was notably boosted by vehicle import duties after restrictions were removed. • The Fiscal Deficit is expected to narrow to around 6.0%-6.5% of GDP in 2025 (down from 6.8% in 2024), with the primary balance remaining in surplus. • Key Challenges: The rating remains constrained by the government's weak debt affordability and high debt burden, as well as the economy's heavy reliance on external financing and exposure to climate risks. Continued implementation of structural reforms is crucial.