IMF says Sri Lanka GDP up by 4.2%

Colombo: Sri Lanka’s economic recovery momentum continued in the second quarter of 2026 with a 4.2% GDP expansion, marking 11 consecutive quarters of growth, according to the International Monetary Fund (IMF).

It added that the island country's gross official reserves rose to 6.9 billion U.S. dollars, according to local media, citing Evan Papageorgiou, who led an IMF team from Sept. 10 to 23 to review the country's recent macroeconomic developments, progress under the EFF program and policy priorities under the 2026 Article IV Consultation.

However, the IMF warned of downside risks from the Middle East conflict, global trade uncertainty and El Nino-related weather effects. Headline inflation rose to 8 percent in August amid higher global oil prices.

The IMF called for continued revenue mobilization, a broader tax base, stronger tax administration and prudent fiscal policy. It also advised the central bank to retain its 5-percent inflation target with a tolerance band of plus or minus 2 percentage points.