Washington, DC: The Executive Board of the International
Monetary Fund (IMF) approved today a 48‑month extended arrangement under the Extended Fund Facility (EFF) with an amount of SDR 2.286 billion (395
percent of quota or about US$3 billion).
Sri Lanka has been hit hard by a catastrophic economic and humanitarian
crisis. The economy is facing significant challenges stemming from
pre-existing vulnerabilities and policy missteps in the lead up to the
crisis, further aggravated by a series of external shocks.
The EFF-supported program aims to restore Sri Lanka’s macroeconomic
stability and debt sustainability, mitigate the economic impact on the poor
and vulnerable, safeguard financial sector stability, and strengthen
governance and growth potential. The Executive Board’s decision will enable
an immediate disbursement equivalent to SDR 254 million (about US$333
million) and catalyze financial support from other development partners.
Following the Executive Board discussion on Sri Lanka, Ms. Kristalina
Georgieva, Managing Director, issued the following statement:
“Sri Lanka has been facing tremendous economic and social challenges with a
severe recession amid high inflation, depleted reserves, an unsustainable
public debt, and heightened financial sector vulnerabilities. Institutions
and governance frameworks require deep reforms. For Sri Lanka to overcome
the crisis, swift and timely implementation of the EFF-supported program
with strong ownership for the reforms is critical.
“Ambitious revenue-based fiscal consolidation is necessary for restoring
fiscal and debt sustainability while protecting the poor and vulnerable. In
this regard, the momentum of ongoing progressive tax reforms should be
maintained, and social safety nets should be strengthened and better
targeted to the poor. For the fiscal adjustments to be successful,
sustained fiscal institutional reforms on tax administration, public
financial and expenditure management, and energy pricing are critical.
“Having obtained specific and credible financing assurances from major
official bilateral creditors, it is now important for the authorities and
creditors to make swift progress towards restoring debt sustainability
consistent with the IMF-supported program. The authorities’ commitments to
transparently achieve a debt resolution, consistent with the program
parameters and equitable burden sharing among creditors in a timely
fashion, are welcome.
“Sri Lanka should stay committed to the multi-pronged disinflation strategy
to safeguard the credibility of its inflation targeting regime. As the
market regains confidence, the authorities’ recent introduction of greater
exchange rate flexibility will help to rebuild the reserve buffer.
“Maintaining a sound and adequately capitalized banking system is
important. Implementing a bank recapitalization plan and strengthening
financial supervision and crisis management framework are crucial to ensure
financial sector stability.
“The ongoing efforts to tackle corruption should continue, including
revamping anti-corruption legislation. A more comprehensive anti-corruption
reform agenda should be guided by the ongoing IMF governance diagnostic
mission that conducts an assessment of Sri Lanka’s anti-corruption and
governance framework. The authorities should step up growth-enhancing
structural reforms with technical assistance support from development
partners.”
Sri Lanka: Selected Economic Indicators 2019-2026 1/
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2019
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2020
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2021
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2022
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2023
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2024
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2025
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2026
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Act.
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Act.
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Act.
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Prel.
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Proj.
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Proj.
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Proj.
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Proj.
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GDP and inflation (in percent)
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Real GDP growth
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-0.2
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-3.5
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3.3
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-8.7
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-3.0
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1.5
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2.6
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3.0
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Inflation (average) 2/
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4.3
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4.6
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6.0
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46.4
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28.5
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8.7
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5.6
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5.2
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Inflation (end-of-period) 2/
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4.8
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4.2
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12.1
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57.2
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15.2
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6.7
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5.6
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5.2
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GDP Deflator growth
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3.9
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3.1
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8.1
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46.6
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30.0
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10.7
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5.6
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5.2
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Nominal GDP growth
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3.6
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-0.4
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11.7
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33.9
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26.0
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12.3
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8.3
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8.4
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Savings and investment (in percent of GDP)
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National savings
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32.0
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32.3
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31.5
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24.8
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26.4
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28.0
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28.9
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29.3
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Government
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-2.5
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-8.2
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-7.3
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-6.7
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-4.4
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-2.0
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-0.6
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-0.4
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Private
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34.6
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40.5
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38.8
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31.5
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30.9
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30.0
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29.5
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29.7
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National Investment
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34.1
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33.7
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35.3
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26.8
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28.0
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29.4
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30.3
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30.7
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Government
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6.6
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6.4
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7.0
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5.2
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4.5
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5.0
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5.0
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5.0
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Private
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27.5
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27.3
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28.2
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21.5
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23.5
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24.5
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25.3
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25.7
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Savings-Investment balance
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-2.1
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-1.4
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-3.8
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-1.9
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-1.6
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-1.4
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-1.4
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-1.4
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Government
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-9.2
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-14.6
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-14.3
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-11.9
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-9.0
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-7.0
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-5.6
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-5.4
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Private
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7.1
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13.2
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10.5
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9.9
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7.4
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5.6
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4.2
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4.0
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Public finances (in percent of GDP)
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Revenue and grants
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11.9
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8.7
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8.3
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8.5
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11.0
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13.3
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14.9
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15.0
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Expenditure
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19.5
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20.7
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19.9
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18.9
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19.0
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19.7
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19.9
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19.9
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Primary balance
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-1.9
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-5.9
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-5.7
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-3.8
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-0.7
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0.8
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2.3
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2.3
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Central government balance
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-7.5
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-12.1
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-11.6
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-10.4
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-8.0
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-6.4
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-5.0
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-4.8
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Central government gross financing needs
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21.7
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26.1
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31.0
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34.5
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26.6
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17.9
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15.4
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15.9
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Central government debt
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82.6
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95.7
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102.2
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117.7
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100.0
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101.6
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103.3
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102.2
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Public debt 3/
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89.0
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104.0
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114.3
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128.1
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111.2
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108.5
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107.8
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106.8
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Money and credit (percent change, end of period)
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Reserve money
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-3.0
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3.4
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35.4
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3.3
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23.5
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11.2
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7.3
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8.4
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Broad money
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7.0
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23.4
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13.2
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15.5
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22.6
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11.2
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7.3
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8.4
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Domestic credit
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6.5
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24.6
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19.5
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18.8
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11.4
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3.2
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1.5
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2.5
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Credit to private sector
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4.2
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6.5
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13.1
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6.4
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11.2
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8.1
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8.6
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9.2
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Credit to private sector (adjusted for inflation)
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-0.1
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1.9
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7.2
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-40.0
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-17.3
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-0.6
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3.1
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4.0
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Credit to central government and public corporations
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10.4
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53.6
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26.5
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31.1
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11.5
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-0.8
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-4.7
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-4.2
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Balance of payments (in millions of U.S. dollars)
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Exports
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11,940
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10,048
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12,499
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13,106
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13,666
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14,517
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15,270
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16,065
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Imports
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-19,937
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-16,055
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-20,638
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-18,291
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-20,597
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-21,479
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-22,506
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-23,794
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Current account balance
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-1,844
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-1,187
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-3,343
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-1,458
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-1,184
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-1,092
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-1,077
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-1,124
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Current account balance (in percent of GDP)
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-2.1
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-1.4
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-3.8
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-1.9
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-1.6
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-1.4
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-1.4
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-1.4
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Current account balance net of interest (in percent of GDP)
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-0.2
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0.5
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-2.2
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-0.5
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0.2
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0.9
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1.1
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0.8
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Export value growth (percent)
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0.4
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-15.9
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24.4
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4.9
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4.3
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6.2
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5.2
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5.2
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Import value growth (percent)
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-10.3
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-19.5
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28.5
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-11.4
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12.6
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4.3
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4.8
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5.7
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Gross official reserves (end of period)
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In millions of U.S. dollars
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7,642
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5,664
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3,139
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1,898
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4,431
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6,128
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8,520
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10,888
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In months of prospective imports of goods & services
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5.0
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3.2
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1.9
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1.0
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2.2
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3.0
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3.9
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4.8
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In percent of ARA composite metric
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61.6
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45.8
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24.5
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16.3
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36.1
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48.7
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65.5
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80.7
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Usable Gross official reserves (end of period) 4/
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|
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In millions of U.S. dollars
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7,642
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5,664
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1,565
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462
|
2,995
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4,692
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8,520
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10,888
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In months of prospective imports of goods & services
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5.0
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3.2
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1.0
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0.2
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1.5
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2.3
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3.9
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4.8
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In percent of ARA composite metric
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61.6
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45.8
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12.2
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4.0
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24.4
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37.3
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65.5
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80.7
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External debt (public and private)
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|
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In billions of U.S. dollars
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54.6
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53.4
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57.3
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58.7
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56.2
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58.3
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61.1
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63.9
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As a percent of GDP
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61.4
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62.6
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64.4
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78.0
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74.7
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76.7
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78.0
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78.6
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Sources: Data provided by the Sri Lankan authorities; and
IMF staff estimates.
1/ This table is based on data as of March 6.
2/ Colombo CPI.
3/ Comprising central government debt, publicly guaranteed
debt, and CBSL external liabilities (i.e., Fund credit
outstanding and international currency swap arrangements).
4/ Excluding PBOC swap ($1.4bn in 2022) which becomes
usable once GIR rise above 3 months of previous year's
import cover.
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