Sri Lanka's economy continues to evolve with significant developments in renewable energy and fiscal management. On January 20, 2025, President Anura Kumara Dissanayake announced that the joint venture solar power plant in Sampur will sell electricity at a competitive rate of 5.97 US cents per unit. This price marks a significant reduction from initial negotiations, which began at 7.00 US cents and were subsequently lowered to 6.69 cents. The project, a collaboration between the Ceylon Electricity Board and India's National Thermal Power Corporation (NTPC), will have a capacity of 135 MegaWatts. This initiative aligns with Sri Lanka's strategy to attract investments and avoid further debt, particularly following the cancellation of a planned 500 MegaWatt coal plant. [b3fe5e04]
In the context of broader economic recovery, Sri Lanka's Central Bank reported that net foreign exchange reserves rose to $310 million in November 2024, contributing to a total of $6.4 billion in gross official reserves. These figures reflect a gradual stabilization of the economy following a period of severe financial distress. [b3fe5e04]
Moreover, ongoing discussions are taking place for a joint venture oil refinery with India, which could further enhance Sri Lanka's energy security and economic resilience. Analysts have noted that while the levelized cost of solar energy appears attractive, it may not fully reflect the true costs associated with energy intermittency. [b3fe5e04]
In conjunction with these energy initiatives, Sri Lanka's economic outlook remains cautiously optimistic. The Central Bank has projected a GDP growth of 5.2% for 2024, driven by successful debt restructuring and ongoing reforms under the IMF Extended Fund Facility program. [3b360b5a] The country has also seen a significant increase in foreign reserves, which have risen from US$4 billion to over US$6 billion, bolstering investor confidence. [3b360b5a]
The recent approval of a debt restructuring plan by bondholders for US$12.55 billion of international bonds has further solidified Sri Lanka's path to recovery. With 97.86% of bondholders voting in favor, the restructuring introduces governance-linked bonds, which will help stabilize the economy while promoting accountability. [e3a474e2]
Despite these advancements, challenges remain. S&P Global Ratings has maintained Sri Lanka's sovereign rating at selective default due to ongoing restructuring efforts related to a $175 million bond for SriLankan Airlines. [f70b237b] Additionally, the country has faced inflationary pressures, with the Central Bank projecting that the cost of living will rise to 5-7% in the second half of 2025. [3c7157e9]
Overall, Sri Lanka's commitment to renewable energy, alongside its economic recovery efforts, positions the nation for a more sustainable and resilient future. The government is optimistic that these initiatives will attract further foreign investment and enhance the overall economic landscape. [b3fe5e04]