Publication: Sri Lanka Development Update, April 2025: Staying on Track
Loading...
Published
2025-04-23
ISSN
Date
2025-04-23
Author(s)
Editor(s)
Abstract
The Sri Lanka Development Update (SLDU) has two main aims. First, it reports on key developments over the past 12 months in Sri Lanka’s economy, places these in longer term and global contexts, and updates the outlook for Sri Lanka’s economy. Second, the SLDU provides a more in-depth examination of selected economic and policy issues. It is intended for a wide audience, including policymakers, business leaders, financial market participants, think tanks, non-governmental organizations and the community of analysts and professionals interested in Sri Lanka’s evolving economy.
The report is based on published data available on or before March 18, 2025.
Link to Data Set
Citation
“World Bank. 2025. Sri Lanka Development Update, April 2025: Staying on Track. © World Bank. http://hdl.handle.net/10986/43112 License: CC BY-NC 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Sri Lanka Development Update, April 2024: Bridge to Recovery(Washington, DC: World Bank, 2024-04-02)The Sri Lankan economy has shown early signs of stabilization with improved fiscal and external balances, supported by a recovery in remittances and tourism and the continued debt service suspension. However, this will be insufficient to reverse crisis-induced welfare losses as poverty levels remain elevated. The narrow path to restoring growth and prosperity will hinge on a successful debt restructuring, adequate support to the most poor and vulnerable, and continued reform implementation despite upcoming elections.Publication Sri Lanka Development Update, October 2025: Better Spending for All(Washington, DC: World Bank, 2025-10-06)The Sri Lanka Development Update (SLDU) has two main aims. First, it reports on key developments over the past 12 months in Sri Lanka’s economy, places these in longer term and global contexts, and updates the outlook for Sri Lanka’s economy. Second, the SLDU provides a more in-depth examination of selected economic and policy issues. It is intended for a wide audience, including policymakers, business leaders, financial market participants, think tanks, non-governmental organizations and the community of analysts and professionals interested in Sri Lanka’s evolving economy. Looking ahead, Sri Lanka does not have room to significantly increase public expenditure and therefore, can focus on maximizing the development outcomes from its existing levels of public spending. Comprehensive reforms are required to enhance the efficiency and effectiveness of every rupee spent. The public wage bill and capital expenditures are good places to start. Other aspects of spending, including subsidies and transfers, are discussed in more detail in World Bank. Reforms to public capital expenditure can ensure better return on investment, alleviate critical bottlenecks in the economy, and boost long-run economic growth.Publication Nepal Development Update, April 2025(Washington, DC: World Bank, 2025-04-08)The Nepal Development Update is produced twice a year to report on key economic developments that occurred during the year, placing them in a longer-term and global perspective. The Update is intended for a wide audience including policymakers, business leaders, the community of analysts and professionals engaged in the economic debate, and the general public.Publication Maldives Development Update, April 2025(Washington, DC: World Bank, 2025-04-23)In 2024, economic growth remained robust with an estimated real GDP growth of 5.5%, primarily driven by a strong performance in tourism, which saw a 7.1% growth in the first three quarters. Tourist arrivals increased by 8.9% to a record 2.05 million. However, headline inflation surged in the last quarter, averaging 1.4% for the year, with food inflation remaining elevated at 6.6%. The fiscal deficit widened to MVR 12.7 billion (11.7% of GDP) due to increased expenditure, while revenue collection rose by 3.7%. The current account deficit (CAD) remained high, with the trade deficit widening to US$3.3 billion. Foreign exchange reserves fell to critically low levels but recovered to US$832.1 million by February 2025, supported by a currency swap agreement with the Reserve Bank of India. The financial sector's exposure to sovereign and state-owned enterprises (SOEs) debt increased, while credit growth to the private sector moderated. Public and publicly guaranteed (PPG) debt rose to US$9.4 billion (134.2% of GDP). Medium-term growth is projected to be 5.7% in 2025, supported by increased tourist arrivals due to the completion of a new terminal at Velana International Airport. Inflation is expected to rise, potentially increasing poverty unless targeted cash transfers are introduced. The fiscal deficit is likely to remain elevated, with public debt projected to rise to 135.7% of GDP by 2027. Significant downside risks include global trade uncertainties and elevated external and fiscal vulnerabilities. Urgent fiscal consolidation and a clear financing strategy are required to reduce vulnerabilities and ease liquidity pressures.Publication South Asia Development Update, April 2025: Taxing Times(Washington, DC: World Bank, 2025-04-23)Growth prospects for South Asia have dimmed. The global economic environment has become more challenging and is a source of heightened downside risks. After a decade of repeated disruptions, South Asia’s buffers to cushion new shocks are slim. Tackling some of its greatest inefficiencies and vulnerabilities could help South Asia navigate this unusually uncertain outlook: unproductive agricultural sectors, dependence on energy imports, pressures from rising global temperatures, and fragile fiscal positions. For most South Asian countries, increased revenue mobilization is a prerequisite for strengthening fiscal positions. Even taking into account the particular challenges of collecting taxes in South Asian economies—such as widespread informal economic activity and large agriculture sectors—South Asian economies face larger tax gaps than the average emerging market and developing economy (EMDE). This suggests the need for improved tax policy and administration. Until fiscal positions have strengthened, the burden of climate adaptation will disproportionately fall on the private sector. If allowed sufficient flexibility, private sector adaptation could offset about one-third of the likely climate damage by 2050. This may, however, require governments to remove obstacles that prevent workers and firms from moving across locations and activities. As growth prospects dim, the challenge grows to create jobs for South Asia’s rapidly expanding working-age population. South Asia’s large diasporas could become a source of strength if their knowledge, networks, and other resources can be better tapped for investment and trade.
Users also downloaded
Showing related downloaded files
Publication Comoros Country Climate and Development Report(Washington, DC: World Bank, 2025-06-18)The Union of the Comoros (The Comoros) has significant vulnerability to climate change-related risks but has considerable opportunities to strengthen preparedness and resilience against these challenges. According to the Notre Dame Global Adaptation Index, the Comoros is the 29th-most vulnerable country to climate change and the 163rd most ready to adapt (out of 191). The Comoros archipelago is exposed to many natural hazards that adversely affect the country’s natural capital, people, and physical infrastructure. In 2014, the economic cost of climate-related disasters was estimated at 5.7 million dollars annually, equivalent to 9.2 percent of Gross Domestic Product (GDP). Between 2018 and 2023, as many as 11 tropical depressions or cyclones impacted the country, with Cyclone Kenneth causing the greatest damage, equivalent to 14 percent of GDP, resulting in total economic growth falling from 3.6 percent in 2018 to 1.9 percent in 2019. More than 345,000 people (40 percent of the population) were affected by the cyclone, with 185,000 people experiencing severe impacts and 12,000 people displaced. However, there is an opportunity for the country to grow more robust and shock-responsive, and to establish pre-positioned funding mechanisms to enhance future crisis response efforts. For the Comoros, adaptation and climate-resilient development are the key climate change focus areas, with the country projected to face 836 million dollars 2050 in additional costs due to climate-related impacts. Current plans to adapt to the impacts of climate change in the Comoros include efforts to improve water management, strengthen coastal protection, and develop climate-smart agriculture practices. Given the country’s reliance on its natural resource base for economic growth and mobility, protection of these resources from climate change will be essential for promoting resilient growth and development. In addition to growing the adaptive capacity of the country’s natural resource sectors, strategic economic diversification will be important to help minimize future climate impacts, and development activities will need to be undertaken in such a way as to attract low-carbon co-benefits. The Union of the Comoros is committed to addressing climate change through its Nationally Determined Contribution (NDC) and national priorities. The country’s NDC (which was revised in 2021 for a ten-year horizon) sets ambitious targets, with a goal of reducing greenhouse gas emissions by 23 percent by 2030. The country also plans to significantly increase the share of renewable energy in its energy portfolio, reaching 33 MW by 2030. This will not only promote low-carbon development but also reduce the country’s dependency on imported oil and coal, which currently make up 95 percent of the energy mix. Additionally, the Comoros has declared its intention to increase CO2 removals by 47 percent by 2030, compared to BAU.Publication Guinea-Bissau Country Climate and Development Report(Washington, DC: World Bank, 2024-10-23)Guinea-Bissau is endowed with a wealth of natural resources, with the highest natural capital per capita in West Africa (US3,874 dollars per capita), which could be leveraged for sustainable and resilient growth. However, Guinea-Bissau faces significant development hurdles, such as high poverty rates, political instability, and economic challenges, including an over-reliance on cashew nuts. Rural poverty has increased, and the nation's infrastructure, education, and health care systems are underdeveloped. Climate change poses a severe threat, potentially impacting agriculture, fisheries, and infrastructure. Without adaptation, it could lead to a significant cut in real GDP per capita (minus 7.3 percent by 2050) and increase in poverty (with up to over 200,000 additional poor by 2050, that is, 5 percent of the expected population, in the worst scenario). The country's low greenhouse gas emissions are expected to rise, mainly due to agriculture and land-use changes, with deforestation being a major contributing factor. Although Guinea-Bissau is a low emitter, it has high mitigation ambitions, targeting a 30 percent reduction in greenhouse gas emissions by 2030. The Nationally Determined Contribution outlines significant climate actions, with initiatives focused on forest conservation, sustainable agriculture, and community development. However, the country's political instability, institutional weaknesses, and limited financial resources pose challenges to implementing these climate commitments, which depend heavily on external funding. The financial sector's underdevelopment and vulnerability to external shocks limit its ability to support green investments, though reforms could enhance resilience. Guinea-Bissau must consider its climate financing as development financing and vice-versa, engage the private sector, and integrate climate goals with national development plans to ensure a sustainable future. Concessional climate financing is vital due to the underdeveloped financial sector and the government’s limited borrowing capacity. Addressing Guinea-Bissau's vulnerability to climate change and its structural issues requires a cohesive approach that integrates development and climate strategies. This could involve improving governance, diversifying the economy, protecting natural capital, developing human capital, and investing in sustainable agriculture and infrastructure. The transition to a more sustainable and inclusive development pathway that supports economic growth is possible, but requires focusing on key strategic sectors, enhancing institutional capacity, and creating the conditions to mobilize finance. As a highly vulnerable country, there are myriad needs in the different sectors; however, to be more efficient and effective, Guinea-Bissau should prioritize actions in a few sectors, especially actions on biodiversity, agriculture, and social protection. Low carbon development, especially in energy and forestry sectors, could provide cost-efficient solutions and attract climate finance, including from the private sector, which will support the overall development agenda.Publication Kyrgyz Republic Country Climate and Development Report(Washington, DC: World Bank, 2025-11-03)This Country Climate and Development Report (CCDR) on the Kyrgyz Republic aims to support the country’s development goals amid a changing climate. The CCDR considers two policy scenarios up to 2050: the business-as-usual (BAU) and high-growth scenarios. As it quantifies the likely impacts of climate change on the Kyrgyz economy between now and 2050, the report highlights key government actions to best prepare for and adapt to climate impacts (referred to as “with adaptation” measures), with a particular focus on the time horizon up to 2030. The CCDR also outlines a path to net zero emissions by 2050 (referred to as “with mitigation” measures, “decarbonization,” or, simply, “net zero 2050”), highlighting associated development co-benefits.Publication Gabon Country Climate and Development Report(Washington, DC: World Bank, 2025-11-01)Gabon has a unique opportunity to drive inclusive growth, reduce poverty, and build a resilient post-oil economy, with climate action accelerating progress toward these goals. The country’s main development challenge is achieving higher growth and poverty reduction, as stronger growth is needed regardless of projected climate shocks to create jobs, raise living standards, and enable a viable post-oil economy. While pursuing growth-promoting economic reforms, climate action that prioritizes people must remain central to its development pathway. However, climate change risks exacerbating poverty and regional inequalities in a country already facing long-term challenges in expanding economic opportunities and basic public services, especially in rural areas. Climate shifts compound these challenges, making stronger private sector-led growth driven by reforms essential for resilience, diversification, job creation, and poverty reduction, though targeted investments in adaptation will still be required to mitigate climate shocks. Using a whole-of-economy approach, the Gabon Country Climate Development Report (CCDR) estimates that climate change impacts could result in GDP losses of 3.5 to 5.3 percent per year through 2050 compared to a business-as-usual baseline trajectory.Publication Jobs in a Changing Climate: Insights from World Bank Group Country Climate and Development Reports Covering 93 Economies(Washington, DC: World Bank, 2025-11-05)The World Bank Group’s Country Climate and Development Reports (CCDRs) provide a crosscutting look at how countries’ development prospects, and the job opportunities they offer to their people, can be threatened by climate impacts and supported by climate policies. Climate change and policies affect jobs through impacts on productivity, energy and material efficiency, and physical, human, and natural capital. They can also transform employment opportunities, especially through complementary measures that help workers and firms adapt to and benefit from new technologies and production practices. Prepared by the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), CCDRs integrate country perspectives, climate science and economic modeling, private sector information, and policy analysis to assess how countries can successfully grow and develop their economies and create jobs despite increasing climate risks and while achieving their climate objectives and commitments. Each CCDR starts from the country’s development priorities, opportunities, and challenges, and is developed in close consultation with governments, businesses, and civil society, ensuring the recommendations reflect national priorities. By combining evidence on adaptation, resilience, and emissions pathways, CCDRs highlight where climate action can reinforce development and job creation, and where targeted policies are needed to manage risks and smooth labor market transitions. Taken together, these elements can help create local jobs, ensure economic transitions are just and inclusive, and equip workers and firms to navigate the disruptions and opportunities of a changing climate and changing technologies.