📈 Govt. Maintains 5% Growth Target, Targets 7% Medium-Term Expansion

Sri Lanka's government remains confident in hitting its 5% economic growth target for 2026, supported by a strong 5.1% GDP expansion in Q1, according to Deputy Finance Minister Dr. Anil Jayantha Fernando. Key Insights: • Growth Targets: The state is holding its 2026 growth target at 5% and eyes a medium-term goal of 7% inclusive growth to combat poverty and income inequality. • Interest Rates: Despite rising interest rates temporarily dampening demand, the government does not expect a significant contraction in economic activity and anticipates conditions to normalize. • Capital Expenditure: Addressing concerns over lagging state spending, the ministry noted capital expenditure does not follow a strict monthly arithmetic pattern due to extensive procurement and preparatory work in large projects like the Bandaranaike International Airport (BIA) expansion. • Budget Utilization: The government expects strong capital budget utilization by year-end, mirroring last year's 75% utilization rate, by working with line ministries to expedite procedural delays.