CBSL Forecasts 4-5% Growth for 2026 Amid Resilience Drive 📈

The Central Bank of Sri Lanka (CBSL) has released its 2026 Policy Agenda, projecting steady economic expansion despite the impact of recent climate shocks like Cyclone Ditwah. • Overall Growth & Reserves • Real GDP growth is projected at 4-5% for 2026. • Gross Official Reserves reached US$ 6.8 Bn by end-2025, the highest since the crisis. • The external current account maintained a surplus for the 3rd consecutive year. • Monetary & Fiscal Highlights • Inflation is expected to align with the 5% target by H2 2026. • Credit to the private sector saw significant expansion, while public sector borrowing contracted. • Recovery is supported by a surge in vehicle imports and strengthened demand conditions. • Sector Resilience & Risks • Banking & Finance: Improved asset quality and capital buffers; introduction of Countercyclical Capital Buffers. • Agriculture & Infrastructure: Short-term supply chain disruptions from Cyclone Ditwah are expected to be offset by reconstruction spending. • Sustainability: Expansion of the Sustainable Finance Roadmap 2.0 to mitigate climate-related risks. • Strategic Outlook The CBSL emphasizes a shift from "recovery to resilience," focusing on data-driven monetary policy and the National Financial Inclusion Strategy (Phase II) to support underserved populations and green finance.