• Sustaining 5% economic growth tied to boosting dollar earnings and navigating US tariff negotiations
• Potential US tariffs and EU trade reviews pose risks to Sri Lanka’s critical export markets

Sri Lanka needs to earn more dollars to keep its economic growth at 5% and it won’t be easy to shift US exports elsewhere if tariff talks fail, Bloomberg said.

A Bloomberg report said that Sri Lanka has kept its economic growth up around 5%, and tax revenues as a share of GDP are higher by more than two-thirds.

“But maintaining the recovery momentum won’t be easy. Sri Lanka needs to earn more dollars, both to buy imported fuel and to pay down debt,” it said.

However, it said a quarter of Sri Lanka’s exports go to the US, while President Donald Trump’s original set of “reciprocal” tariffs threatened to impose a 44% rate on those goods.

“That would make President Anura Dissanayake’s job much tougher, if not impossible.”

Bloomberg said that it will also be challenging for Sri Lanka to shift those exports elsewhere.

Although Sri Lankan goods have duty-free access to European markets under the EU’s Generalised Scheme of Preferences (GSP). But Brussels bureaucrats review that privilege regularly; it’s linked to economic need and social progress, including on human rights.

If Sri Lanka loses zero-tariff access to Europe, then it will miss out on more than a billion dollars a year, Bloomberg said.

Thus, President Dissanayake has been forced to promise Europe that he will repeal some of his country’s most draconian anti-terrorism legislation.

Sri Lanka has already been bailed out 16 times by the International Monetary Fund (MF), and Dissanayake has promised that this 17th package will be the last.

But he will also need to keep the US and Europe open to his goods, assuage domestic critics, and maintain cordial relations with the military while cutting it down to size. If he fails in even one of these tasks, Sri Lanka will be faced with yet another crisis.