By Uditha Jayasinghe
COLOMBO, Jan 26 (Reuters) – Sri Lanka’s central bank is expected to maintain its key interest rate at 7.75% on Wednesday, a Reuters poll found, as an International Monetary Fund delegation reviews the sixth tranche of a crucial $2.9 billion package.
The poll of a dozen economists unanimously forecast no change to the benchmark overnight policy rate, citing stable inflation, healthy credit growth, and consistent economic expansion.
The Central Bank of Sri Lanka has held rates steady since last May, as the nation recovers from a 2022 financial crisis driven by a severe dollar shortage.
But Sri Lanka’s tentative recovery was impacted by Cyclone Ditwah, which killed 649 people and affected nearly 10% of the 22 million population, in late November.
Damage to houses, roads and other critical infrastructure has been estimated at $4.1 billion by the World Bank.
“There seems to be stimulus potential from cyclone rebuilding. We have had seven quarters of good growth so the consistency has been fantastic. There is scope for growth to bounce back,” said Raynal Wickremeratne, co-head of research at Softlogic Stockbrokers.
The IMF downgraded Sri Lanka’s growth for 2026 from 3.1% to 2.9% last month and warned inflation would reach 5.4%, slightly higher than the central bank’s projection of 5%.
Inflation was 2.1% at the end of 2025.
The global lender also approved $206 million in emergency funding to Sri Lanka to assist with immediate recovery efforts.
The IMF delegation will wrap up their fact-finding mission on Wednesday.
CBSL expects 4%-5% growth for this year, partly supported by higher public spending to rebuild after the cyclone. Colombo also approved 500 billion Sri Lankan rupees ($1.62 billion) in additional spending last month to support cyclone-affected people.
($1 = 309.4000 Sri Lankan rupees)
(Reporting by Uditha JayasingheEditing by Ros Russell)
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