📈 Sri Lanka Economic & Political Update: Key Risk Indicators

Based on provisional data and analysis, Sri Lanka faces intense economic strains driven by external geopolitical shocks and internal financial mismanagement. • Overall Financial Figures IMF EFF Program: Sri Lanka has utilized US$ 2.40 Bn out of the approx. US$ 3.00 Bn package; official program concludes in November 2026. Foreign Reserves: Rose slightly by 1.6% from US$ 6.70 Bn in April to US$ 6.80 Bn in May, falling short of the revised US$ 8.00 Bn IMF target. External Debt Burden: Non-IMF external debt remains heavy, comprising US$ 10.70 Bn from bilateral lenders and US$ 10.30 Bn in International Sovereign Bonds (ISBs). Socio-Economic Impact: The national poverty level is at risk of climbing above 24% due to aggressive tax increases. • Macro Shocks & Sector Breakdowns Geopolitical Disruptions: Ongoing Middle East conflicts and transit drops in the Hormuz Strait led to a US$ 1.90 Bn spike in national imports, increasing fuel/food prices and disrupting key export markets like tea. Industrial Fallout: Escalating power and fuel costs are driving a collapse in the MSME sector. • Reported Financial Irregularities Revenue Leaks: US$ 23.71 million in LCs (1,782 vehicles) were opened hastily right before a 50% vehicle import surcharge in May 2026. Banking & Transaction Frauds: A multi-billion fraud involving a siphoning of Rs. 13.00 Bn was flagged at the National Development Bank, alongside a wrongly processed US$ 2.50 million external transfer from Treasury accounts.