The Sri Lankan economic recovery (from my email)

Hi,

I’m a macroconsultant/analyst based in Sri Lanka. Was suddenly reminded of your 2023 MR piece on Sri Lanka – soon after the depth of the crisis locally.
Since then, Sri Lanka has seen what I think to many is a remarkable turnaround on both the macro fundamentals and the social indicators (admittedly data is very divergent on social).
A few specific points on the macro –
– 2 years of twin surpluses (after 70+ years of twin deficits)
– Looks in line to do a 3rd year of twin surpluses alongside 5% growth
– Income tax collections growing 20%+ YoY without any text increases
– 4% of GDP in net government LCY balances vs historic deficits
– Gross capital formation rising dramatically without government capex spending
– Credit recovery without government spending to support private income
– Remittances (possibly cyclical), oil imports (massive distributed solar), and net port services (ME diversion+new capacity) overperforming IMF numbers by 1-2% of GDP
– Net foreign assets of banking system at ~2% of GDP
– Currency appreciated and stable from crisis peaks
– Inflation averaging 0% 3 years after crisis (+ energy driven deflation spots)

TC again: thanks to Chayu Damsinghe from Frontier Research.  A true reversal of fortune, at least for the time being…