MONETABRIEF – Sri Lanka's poverty is projected to fall to 15.8 percent in 2026, down from the 16.9, a year earlier, the World Bank said, releasing a new Development Update.
The number is still higher than 11.5 percent in 2019, before an economic crisis hit the country.
Sri Lanka's currency collapsed to 340 in 2022, from 184 to the US dollar, driving up inflation to 70 percent in a year and poverty to 20.7 percent in 2023, after the central bank engaged in aggressive 'policy support' (rate and SRR cut) to target potential backed up by tax cuts (stimulus).
The central bank started to print money to close a so-called 'output gap' which the International Monetary Fund gave assistance to calculate, under cover of a 5 percent inflation target, blowing the balance of payments apart.
Rates are then hiked after the currency collapses.
The rupee also collapsed in 2026, and inflation has shot up to 8 percent, above its controversial 7 percent target, just as some people are emerging out of poverty.
Rates were hiked suddenly in May 2026. (Colombo/Oct06/2026)