President Anura Kumara Dissanayake has stressed that Sri Lanka must build an economy capable of withstanding global shocks and external crises to prevent a recurrence of the economic collapse that caused severe hardship to the public.
Addressing the centenary annual general meeting of the Government Surveyors’ Association in Battaramulla, the President reviewed the factors that led to the country’s economic crisis and outlined the need to establish a stronger and more resilient economic foundation.
He identified two major causes behind the collapse: the government’s failure to generate sufficient revenue to meet its financial obligations and the country’s inability to earn adequate foreign exchange to sustain the economy.
The President explained that revenue shortfalls had forced successive authorities to print money or borrow from the banking system to cover funding gaps. The situation became particularly severe in 2022, when the Treasury account was operating with an overdraft of nearly Rs. 700 billion.
The second major weakness was Sri Lanka’s inability to generate sufficient foreign exchange to meet its external financial requirements, he said.
Highlighting improvements in the country’s external position, President Dissanayake said Sri Lanka recorded a current account surplus of approximately US$1.8 billion in 2025.
He noted that positive current account balances had been rare in the country’s economic history, with the combined improvement recorded during three earlier instances amounting to around US$300 million. The latest surplus, he said, represented a significant improvement in Sri Lanka’s external financial position.
However, the President warned that the recovery was now facing fresh challenges arising from international developments, particularly the conflict in the Middle East, which has increased pressure on energy costs and foreign exchange requirements.
Sri Lanka spent approximately US$4 billion on oil imports throughout last year, while the same amount had already been spent by the end of August this year, he said.
If the trend continues, the annual oil import bill could exceed US$6 billion, placing further pressure on foreign exchange reserves and increasing demand for US dollars.
President Dissanayake said managing this growing demand for foreign currency while maintaining economic stability remained one of the key challenges facing the country.
He explained that while domestic economic disruptions could be managed to some extent through control over the local currency, external shocks were more difficult to address because they originated beyond Sri Lanka’s borders.
Such developments could affect tourism earnings, reduce remittances from Sri Lankans working overseas and increase the cost of fuel and other imported goods, he cautioned.
The President said the government was therefore moving beyond the immediate objectives of economic recovery and stabilisation towards creating an economy capable of absorbing external pressures and maintaining stability during periods of global uncertainty.
“We must build an economy that can withstand shocks coming from outside our borders. That is exactly what we are planning to do,” he said.
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