Sri Lanka is now in a stronger position to withstand global economic shocks, including rising oil prices and Middle East tensions, according to Central Bank Governor Nandalal Weerasinghe.  

In an interview with Bloomberg, he highlighted that the country’s foreign reserves have increased from near-zero to over $7 billion, providing a vital buffer.

Domestic inflation has dropped sharply from 70% to 1.6%, giving the Central Bank room to manage external shocks without destabilizing the economy.  

Weerasinghe clarified that current risks are related to global supply logistics, not a lack of foreign exchange domestically. The exchange rate will be used as a shock absorber to protect fiscal stability.  

Regarding the International Monetary Fund (IMF) program, negotiations are expected to resume in March, with hopes for approval by May 2026. The Governor expressed optimism about a near 5% GDP growth this year, surpassing initial IMF estimates. 

He warned that prolonged Middle East conflicts could threaten the recovery, but for now, Sri Lanka’s buffers remain sufficient to maintain stability.