External Sector Stability and Investor Confidence on the Rise

COLOMBO (News 1st); Dr. P. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, has highlighted the near completion of the Government’s external debt restructuring and significant progress under the IMF-EFF programme as key factors in boosting investor confidence and ensuring the stability of the external sector.

Dr. Weerasinghe emphasized that the Central Bank will closely monitor developments and risks on the external front to advocate appropriate policies promptly. He noted that Sri Lanka has recorded a current account surplus for two consecutive years, in 2023 and 2024. However, with the anticipated increase in economic activity, the external current account is likely to record a deficit in 2025. Maintaining the external current account at sustainable levels over the medium term is crucial.

A gradual recovery in import expenditure is expected, particularly with the planned relaxation of vehicle import restrictions in 2025 by the Government. Additionally, the external current account will be supported by inflows from the services trade and workers’ remittances, which are projected to reach historically high levels.

Dr. Weerasinghe stressed that the journey towards long-term stability in the external sector will be built upon the ongoing IMF-EFF programme, which aims to implement reforms and promote overall macroeconomic stability. The Central Bank is committed to rebuilding external buffers under the programme by purchasing forex from the foreign exchange market. This buildup of external buffers will be facilitated by sufficient foreign exchange inflows from enhanced earnings from merchandise and services exports, workers’ remittances, and foreign direct investment.