📈 Fitch Ratings: SL Recovery Facing Fragile Growth & Fiscal Risks

Fitch Ratings maintains Sri Lanka’s rating at ‘CCC+’, warning that while fundamentals have improved, the economy remains exposed to energy shocks and high debt. • Macroeconomic Outlook • GDP growth is forecast to slow to 3.7% in 2026, down from 5.0% in 2025. • Inflation is expected to rise to 6.0% following a period of 0.5% deflation in 2025. • Debt remains a significant burden, projected at 93% of GDP by 2027. • Fiscal & External Balances • Fiscal deficit is expected to widen to 4.0% of GDP in 2026 (from 2.3% in 2025) due to energy costs and disaster recovery. • Current account to shift from a 1.6% surplus to a 0.7% deficit in 2026. • FX Reserves are projected to rise slightly to US$ 7.3 Bn from US$ 6.8 Bn. • Key Risks & Drivers • Energy & Petroleum: High exposure to Middle East shocks; oil at US$ 100/bbl poses a major downside risk. • Remittances: Remittances surged 23% in 2025; steady flows are critical for external stability. • Multilateral Support: IMF program remains on track with approx. US$ 700 Mn expected by May 2026, alongside ADB and World Bank funding. _Summary based on Fitch Ratings provisional update (April 2026)._