Annual Economic Review 2024 – Central Bank of Sri Lanka (CBSL)

The Central Bank of Sri Lanka (CBSL) today released its Annual Economic Review 2024, fulfilling its statutory mandate under Section 80(3) of the Central Bank of Sri Lanka Act, No. 16 of 2023. The comprehensive report was formally handed over to President Anura Kumara Dissanayake, who also serves as the Minister of Finance, Planning, and Economic Development.

The 2024 Review presents an in-depth analysis of the Sri Lankan economy’s performance during a year marked by a steady and broad-based recovery following the severe economic crisis experienced in 2022.

In his official letter to the President, CBSL Governor Dr. P. Nandalal Weerasinghe highlighted that the report was approved by the Governing Board and includes detailed assessments of the Bank’s policy measures and the state of the financial system throughout 2024.

Key Highlights of the Report:

• Economic Recovery: The Sri Lankan economy recorded a 5.0% GDP growth in 2024, reversing the contractions of the previous two years. The recovery was driven by strong performance in the industrial sector, improved investor confidence, and successful reforms.
• Inflation and Prices: Inflation fell sharply, with headline inflation turning negative from September 2024. Year-end inflation stood at -1.7%, primarily due to reductions in energy prices and appreciation of the rupee.
• External Sector: The current account posted a surplus for the second consecutive year. The country’s foreign exchange reserves improved significantly, aided by strong tourism earnings, remittances, and a favorable external debt restructuring process.
• Monetary and Fiscal Policy: The Central Bank maintained an accommodative monetary policy under the Flexible Inflation Targeting (FIT) framework, while fiscal performance improved with a primary surplus recorded for the second year in a row.
• Financial Sector: Banking sector reforms and improved macroeconomic conditions contributed to enhanced financial stability. Special attention was given to supporting MSMEs and promoting financial inclusion.
• Future Outlook: The report underscores the need for continued structural reforms, improved governance, and vigilance amid global geopolitical tensions, especially with potential external shocks from proposed tariffs by global powers.

The report reflects the success of policy coordination between the Government and the Central Bank, with the IMF-EFF programme, debt restructuring efforts, and fiscal reforms playing a pivotal role in Sri Lanka’s economic stabilization and forward momentum.