Sampath Bank leads discourse on Sri Lanka’s recovery
View(s):Sri Lanka’s fragile yet recovering economy was placed under the spotlight at the Sampath Bank Economic Forum 2025, held recently at Cinnamon Life, Colombo. Themed “Sri Lanka at the Crossroads: Navigating Trade Turbulence, Currency Risk & the Global Reset”, organised exclusively for the bank’s trade, treasury and corporate customers. The event reinforced Sampath Bank’s commitment to providing foresight and strategic guidance amidst global economic shifts, bringing together policymakers, economists, and corporate leaders to debate the country’s position in an increasingly uncertain global order, the bank said in a media release.
Opening the discussion, Sampath Bank Chairman Harsha Amarasekera set the tone by warning that geopolitical realignments, volatile capital flows, and recalibrating financial markets are reshaping the very foundation of Sri Lanka’s growth model. “Trade turbulence, currency risk and the global reset are no longer abstract concepts,” he noted. “Each of these forces touches every business, every investor and every household in our country.”
Mr. Harsha Amarasekera
Mr. Amarasekera urged stakeholders to look beyond defensive strategies, stressing that resilience in trade is now an imperative rather than an option. Traditional export markets are no longer guaranteed, he argued, and Sri Lanka must diversify, innovate, and move exports higher up the value chain. He also highlighted the necessity of managing currency exposure through hedging and deeper financial market reforms to anchor long-term stability.
Delivering the keynote address, Central Bank Governor Dr. Nandalal Weerasinghe described Sri Lanka’s economic recovery since the 2022 crisis as remarkable, highlighting both progress made and the challenges that remain. He noted that the country broke a six-quarter streak of economic contraction in late 2023 and has sustained positive growth since then, with GDP expected to expand by around 4.5 per cent in 2025, exceeding projections by several international agencies.
On external balances, Dr. Weerasinghe highlighted a historic turnaround: the current account returned to surplus in 2023 for the first time in decades, and the country is on track to record three consecutive years of surpluses by end-2025. Foreign reserves have been rebuilt to levels exceeding 2016, supported by remittances, tourism, and export gains, with reserve accumulation now largely organic rather than debt driven.
Sri Lanka’s economy faces a critical juncture, driven by structural reforms, private sector momentum, and a rapidly shifting global landscape. Moderated by Frontier Research’s Chayu Damsinghe, the discussion highlighted how the country can sustain its recovery and avoid repeating past crises.
Former Central Bank Governor Dr. Indrajith Coomaraswamy argued that a qualitative shift in macroeconomic management has taken place, built on five critical reforms:
- The Public Finance Management Act, which enforces a primary surplus and addresses the fiscal root of instability.
- The Central Bank of Sri Lanka Act, which enhances autonomy, prohibits routine monetary financing of government deficits, and embeds flexible inflation targeting.
- The forthcoming Public Debt Management Act, designed to replace a fragmented debt management system with a single professional office.
- Cost-reflective pricing of state-owned enterprises, particularly in energy and utilities, reducing budgetary pressure while enabling targeted cash transfers for social protection.
- The Anti-Corruption Act and IMF-governance action plan, which Dr. Coomaraswamy described as vital since corruption functions as a hidden levy on development by distorting resource allocation.
Dr. Coomaraswamy emphasised that the current reforms are legally embedded, but their sustainability depends on collective vigilance. Maintaining the integrity of reforms from debt management to flexible inflation targeting and SOE pricing is critical for sustained growth. The panel stressed that all stakeholders, including the private-sector and civil society, play a role in preventing backsliding, highlighting that protecting the framework is as important as implementing it.
On growth dynamics, Dr. Coomaraswamy emphasised that unlike past cycles fuelled by unsustainable fiscal deficits, the present recovery is underpinned by external surpluses and declining government borrowing, leaving more credit available to the private sector. Private credit is expanding by nearly 18 per cent year-on-year, making the current cycle more sustainable than past episodes, provided reforms are protected.
Adding to this, Murtaza Jafferjee, Chair of the Advocata Institute, cautioned that the greatest threat to reform is not institutional rollback but short-term memory and poor economic literacy. Without a broad understanding of economic fundamentals, he argued, the public could be swayed by populist narratives, risking a reversal of hard-won gains.
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