### CBSL Likely to Maintain Policy Rates Amid IMF Review 📈

The Central Bank of Sri Lanka (CBSL) is expected to keep the benchmark Overnight Policy Rate steady at 7.75% this Wednesday, according to a unanimous Reuters poll. The decision aligns with the ongoing sixth review by the International Monetary Fund (IMF) for the US$ 2.9 Bn bailout package. Key Economic Indicators: • Policy Rate: Forecast to remain at 7.75%, unchanged since May 2025. • Inflation: Ended 2025 at 2.1%; however, IMF warns of a rise to 5.4% in 2026, slightly above CBSL’s 5% target. • GDP Growth: CBSL projects 4%–5% growth for 2026, despite IMF’s recent downgrade to 2.9% following climate impacts. Sectoral Impact & Recovery: • Infrastructure & Housing: Severe damage from Cyclone Ditwah (Nov 2025) is estimated at US$ 4.1 Bn by the World Bank. • Public Spending: Govt approved LKR 500 Bn (US$ 1.62 Bn) in additional stimulus for rebuilding efforts, expected to boost the construction and retail sectors. • Emergency Funding: IMF has already released US$ 206 Mn in immediate disaster relief. Outlook: The economy shows "fantastic" consistency with seven quarters of expansion. While rebuilding provides a stimulus potential, the CBSL remains cautious, balancing growth with projected inflationary pressures from increased public spending.