📈 Sri Lanka Must Shift to FX Creation After 47 Deficit Years

Sri Lanka faces a structural external constraint, having recorded current-account deficits in 47 of the 51 years from 1975 to 2025 (surpluses occurred only in 1977, 2023, 2024, and 2025). • Current Account Reversal: Following a US$ 1.7 Bn surplus in 2025 (~1.6% of GDP), 1H 2026 recorded a US$ 245 Mn deficit, triggered by Middle East fuel cost hikes, vehicle import resumption, and lower services revenue. • Debt Servicing Burden: External debt service is estimated at ~US$ 5.1 Bn for 2025 and projected between US$ 3.9 Bn and US$ 5.5 Bn annually from 2026 to 2032. • Core Sectors: • Traditional FX earners—including apparel & textiles, tea, ICT/BPM, tourism, logistics, and remittances—must expand value addition and productivity. • Policy Recommendations: • Net Foreign Currency Contribution (NFCC): Adopt NFCC as a screening metric to measure net dollar gains (e.g., deducting imported input costs like fabric in apparel & textiles vs. low-import-cost ICT/BPM exports). • National FX Pathway Accelerator: Establish a cross-institutional mechanism to clear barriers, scale new FX pathways, and drive non-traditional foreign currency generation.