ECONOMYNEXT — Sri Lanka’s absence from the Real GDP growth projection in the IMF’s World Economic Outlook (April 2026), highlights its ongoing struggle to transition from short-term crisis management to long-term economic transformation, Ganeshan Wignaraja, former Director of Research at the ADB Institute, Tokyo, has said.
The latest IMF World Economic Outlook (WEO) features blank spaces where Sri Lanka’s 2026 GDP numbers should be, placing the country in a “club” alongside conflict-affected places like the Palestinian Territories of West Bank and Gaza, Syria, Lebanon and Afghanistan.
“Sri Lanka doesn’t have a number, you can look at that and there is no number. And I find that absolutely fascinating. Middle income country, 4,000 plus dollars a head… but no number for Sri Lanka,” Wignaraja said, suggesting the omission is likely tied to the incomplete debt restructuring process.
Data and projections for Sri Lanka for 2025–31 are excluded from publication owing to ongoing discussions on restructuring of sovereign debt, according to the IMF report.
Speaking at a recent Strategic Dialogue organized by The Regional Centre for Strategic Studies (RCSS), Wignaraja noted that while the IMF is “very happy” with Sri Lanka’s progress the real economy tells a more complex story.
While the immediate fires have been put out, the path toward sustainable growth remains obscured, he said.
Ganeshan warned that the cost of living remains the primary pain point for citizens.
The current economic uptick, he said, is largely a “cyclical recovery” driven by the “base effect” of a collapsed economy and the relaxation of import controls, rather than new investment.
“When we congratulate ourselves on recovery, it is certainly a congratulatory moment… however, it is a cyclical recovery on the base effect with relaxation of import controls and some return to some confidence,” Wignaraja said.
The country still lacks the “stable economic foundation” needed to meet massive debt repayments starting in 2028, he said.
The path to growth is further hindered by domestic governance failures and “unproductive” habits, Ganeshan said pointing to recent issues at the Treasury and internal frauds in the banking sector as significant blows to investor confidence.
“Why would anyone want to invest in a country that has a cyber issue in their treasury?” he asked, noting that as a country in default, Sri Lanka is under intense scrutiny from rating agencies and global lenders.
To escape a cycle of being trapped in low economic growth Ganeshan argued that Sri Lanka must move beyond “off-the-wall” monetary experiments and commit to hardcore reforms in factor markets, specifically land and labor.
He noted that the country’s high number of holidays and outmoded labor laws continue to act as a deterrent to manufacturing hubs.
“We’re still in the recovery room in terms of hospital analysis, where we have to start thinking in terms of building up those reserves to a level where we have a much more stable economic foundation,” he warned.
Without more “growth-enhancing” economic reforms and a strategic shift toward supply-chain integration with India, Ganeshan suggests the island risks a return to the “hospital” once the current cushion of borrowed time runs out. (Colombo/May5/2026)