Reassessing Sri Lanka’s 2026 outlook after Cyclone Ditwah

A balance sheet of the record of President Dissanayake’s National Peoples Power (NPP) Government could put the economy in the credit box.

- By Ganeshan Wignaraja

President and Finance Minister Anura Kumara Dissanayake

Sri Lanka’s economic recovery has continued marking a successful first year in office of the Government.Data for end November 2025 shows that Sri Lanka’s GDP grew by 5.4% in the 2025 Q3 (up from 4.9% in 2025 Q2), year on year National Consumer Price Index (NCPI) inflation fell to 2.4% and foreign currency reserves rose to $5.9 billion. However, estimated income poverty still affects about 22% of the population of 23 million and levels of child malnutrition remain high, stains on a country once described as a basic need's success story as early as the 1970s by Economics Nobel Laureate Professor Amartya Sen.

Nonetheless, this is a turnaround from the worst economic contraction and inflationary spiral in Sri Lanka’s post-independence history following the preemptive external debt default in April 2022. The recovery has been underpinned by a $2.9 billion 17th International Monetary Fund (IMF) program since 2023, $4 billion in emergency aid from India in 2022, and prudent monetary policy by the Central Bank of Sri Lanka led by Governor Dr. Nandalal Weerasinghe. The Government took the pragmatic decision to continue with the demanding revenue based fiscal consolidation IMF program despite the NPP having previously campaigned for a renegotiation of its terms.

A welfare Budget in November