Business Correspondent at theCapitalist.lk
As Sri Lanka continues its journey of economic recovery in 2025, several key developments have shaped the nation’s business landscape.
IMF Agreement and Economic Projections
In April 2025, Sri Lanka reached a staff-level agreement with the International Monetary Fund (IMF) on the fourth review of its Extended Fund Facility program. Upon approval by the IMF Executive Board, this agreement will unlock approximately $344 million in financing, supporting the country’s ongoing recovery from a severe financial crisis that began three years prior. The IMF highlighted the need for reforms, including raising power prices, cutting tax exemptions, and strengthening foreign exchange reserves, to sustain progress.
The World Bank projects Sri Lanka’s economy to grow by 3.5% in 2025, maintaining the same forecast from October 2024. This projection comes despite challenges such as high U.S. tariffs on Sri Lankan exports and persistent poverty levels. The World Bank emphasizes the importance of maintaining macroeconomic stability and stimulating trade investment for long-term growth.
Energy Sector Developments
Sri Lanka is set to commence discussions in May 2025 with India and the United Arab Emirates to develop a new energy hub in the eastern harbor city of Trincomalee. The proposed energy hub will include a multi-product pipeline, bunkering facilities, a potential refinery, and the redevelopment of a World War II-era storage tank farm. Additionally, China’s Sinopec has agreed to invest $3.2 billion in an oil refinery in Hambantota, further strengthening Sri Lanka’s energy infrastructure.
Tourism Sector Recovery
Sri Lanka’s tourism sector has shown a strong start in 2025, attracting 112,415 visitors in the first two weeks of January, marking a 21.11% year-on-year growth compared to the same period in 2024. India led the arrivals, followed by Russia and the UK. The country aims to attract 3 million tourists and generate $5 billion in revenue in 2025.
Sustainability Reporting Initiatives
In March 2024, the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) unveiled a comprehensive implementation roadmap to support the adoption of the International Sustainability Standards Board’s global sustainability disclosure standards. The adoption of the Sri Lanka Sustainability Disclosure Standards commenced in January 2025, with full implementation planned by 2030. By 2025, the first 100 listed entities on the Colombo Stock Exchange are expected to mandatorily comply with the new sustainability standards.
Government’s Economic Initiatives
President Anura Kumara Dissanayake announced that Sri Lanka is poised to achieve an economic growth rate exceeding 4% in 2025. The government has introduced measures to streamline investment processes, reducing the timeline for approvals to attract more investors. Additionally, the upcoming budget is expected to allocate Rs. 1.35 trillion for government capital investment expenditure, marking the highest capital expenditure by any government in recent times.
Digital Transformation: GovPay Launch
In February 2025, the Government of Sri Lanka launched GovPay, a digital payment platform developed by the Information and Communication Technology Agency (ICTA) in collaboration with LankaPay. GovPay aims to streamline and modernize payment processes for government services, enhancing efficiency, transparency, and accessibility in citizen-government financial interactions.
As Sri Lanka navigates through 2025, these developments reflect a nation striving for economic stability and growth amidst global and domestic challenges.
