Sri Lanka is poised to fall short of its 2025 export revenue target by nearly US$ 1 billion, highlighting vulnerabilities in both the economy and its external financial buffers. The Export Development Board (EDB) projects total exports for the year to reach between US$ 17-17.5 billion, below the planned US$ 18.2 billion.
The shortfall stems primarily from severe domestic disasters, including floods and storms, which have disrupted agriculture and production, alongside global market pressures.
Source - aljazeera
Over the first ten months of 2025, merchandise and services exports collectively amounted to US$ 14.4 billion. While this reflects a 6% growth over the previous decade considered a notable improvement it remains insufficient to meet targets and address structural weaknesses in the export sector.
The underperformance has implications far beyond the headline numbers, as Sri Lanka relies heavily on export earnings to sustain foreign-exchange inflows, stabilize the currency, and maintain macroeconomic stability.
The export shortfall coincides with the country’s ongoing effort to rebuild reserves under the International Monetary Fund (IMF) Extended Fund Facility. Authorities have indicated a gross official reserve projection of around US$ 7 billion by the end of 2025.
However, experts clarify that this figure is a projection rather than a mandatory requirement. What truly matters is the accumulation of Net International Reserves (NIR) fully liquid, internationally recognized foreign assets excluding conditional swap lines.
For instance, approximately US$ 1.4 billion in swap agreements included in headline reserve figures are not immediately available for international obligations, meaning actual usable reserves are lower than publicized.
The shortfall in export revenue directly constrains the country’s ability to maintain these reserves. Reduced inflows limit Sri Lanka’s capacity to finance imports, service external debt, and support a stable exchange rate.
Analysts warn that without corrective measures, the combined effect of weaker exports and uncertain reserve liquidity could exacerbate currency volatility and inflationary pressures, deepening macroeconomic fragility.
In response, the EDB is pursuing structural reforms through the upcoming National Export Development Plan (NEDP) for 2026–2030.
The strategy includes diversifying export products beyond traditional commodities like apparel, tea, and rubber, developing high-potential sectors such as ICT/BPM, logistics, electronics, and mineral-based exports, and targeting new regional markets in Africa, Asia, and the Middle East. Strengthened economic diplomacy and modernization of trade processes, including online integration via the National Single Window, are expected to bolster resilience.
But , analysts caution that achieving these ambitious goals requires careful alignment of policy, investment, and disaster preparedness.
The recent export shortfall underscores the fragility of Sri Lanka’s current external position and the urgent need to ensure that growth targets are realistic and supported by resilient, disaster-proof economic infrastructure.
The missed US$ 1 billion export target may be a temporary setback, but its ripple effects on reserve adequacy, currency stability, and investor confidence make it a critical warning for policymakers and the business community alike.
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