Trade policy shift needed for growth phase amid reforms fatigue risk

Talal Rafi speaking at Softlogic Stockbrokers Investor Forum 2026 calls for disciplined transition from stabilisation to growth which requires focusing on structural reforms

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ECONOMIST Talal Rafi said Sri Lanka has made measurable progress in stabilising the economy following the crisis, but cautioned that sustaining recovery and shifting to a growth trajectory will require continued fiscal discipline, external sector resilience and trade and productivity-driven reforms.

Speaking at the Softlogic Stockbrokers Investor Forum 2026, Rafi divided his remarks into four areas: the current macroeconomic position, sustainability of recovery, macroeconomic risks and opportunities ahead.

He noted that the period from 2022 to 2024 was defined by stabilisation, and that from 2025 onwards the country must transition into growth mode. However, he stressed that growth cannot come at the expense of stability. “There cannot be long-term growth without fiscal and monetary stability,” he said.

Rafi pointed to improvements in key indicators, including inflation returning towards target, exchange rate stability and a reduction in public debt-to-GDP from around 128% at its peak to near 100%.

Gross financing needs have declined from about 34% of GDP towards 20%, while interest payments to revenue have eased from around 80% to near 50%. IMF projections place growth at 2.9% this year and 3.1% next year, though the Central Bank is more optimistic.