⚠️ Sri Lanka Recovery Strong, But Reform Fatigue Risks Progress: CAL Warns 📈

Sri Lanka’s macroeconomic foundations are at their strongest in years following a crisis-to-credibility recovery. However, Capital Alliance Holdings PLC (CAL) warns that persistent reform fatigue, high poverty, and capital spending under-execution pose domestic risks. • Macroeconomic Milestones • Reserves: Gross official reserves reached US$ 7.3 Bn by Feb 2026 (up from 0.3 months cover in end-2022). • Inflation: Drop from peak 69.8% (Sep 2022) to -0.4% (Q4 2024), settling at 2.2% YoY by Mar 2026. • Fiscal Anchor: IMF $ 3 Bn EFF program active; 2024 primary surplus hit 2.2% of GDP (surpassing 0.8% target). • Policy Rate: CBSL rate maintained at 7.75% before rising +100 bps to 8.75% as private credit grew. • Key Risks & Vulnerabilities • Reform Burden: 3 straight years of fiscal consolidation impact households; poverty remains high at 24.5% (2x 2019 levels). • Capital Spending: Capex averaged only 3% of GDP vs. 5-6% budgeted (2022–2025). • Sectors & Corporate Growth • Growth supported by construction (residential and public infrastructure), with post-Cyclone Ditwah rebuilding to boost 2026. • CAL Group: Reported PBT of Rs. 4.2 Bn on Rs. 8 Bn operating income. CAL Investments becomes Sri Lanka's largest asset manager (AUM > US$ 1 Bn). • Advisory: CAL Partners advised DFCC Bank on acquiring Standard Chartered's wealth & retail banking Sri Lanka unit. • Regional Strategy • Target market of 750M+ people via global footprint across Singapore (CAL Global), UAE, and Bangladesh (50 employees). This video offers deeper insights into Sri Lanka's macroeconomic trajectory, key market drivers, and potential growth risks: [Sri Lanka Macro & Market Outlook](https://www.youtube.com/watch?v=rBPPfX_-B7s)