Sri Lanka, March 17 -- Sri Lanka's macrofinancial conditions strengthened throughout 2025, fueling a major expansion in credit despite persistent external vulnerabilities. According to recent year-end data, the financial sector has shifted its focus heavily toward the private sector, supported by a broad-based recovery and accommodative monetary policy.
The banking sector saw credit growth accelerate to 21.4% year-on-year by the end of 2025, a massive leap from the 4.1% growth recorded in 2024. This expansion reached across multiple sectors, including manufacturing, construction, and trade.
Notably, the quality of these loan portfolios has improved for the first time in years. The stage 3 loans ratio dropped to 9.7%, marking its return to...