Sri Lanka’s Economic Recovery and FDI Targets in 2025
Following the 2022–2023 balance of payments crisis and amidst a nearly $3 billion IMF support program, Sri Lanka aims to attract approximately $1.1 billion in foreign direct investment (FDI) in 2025.
According to EconomyNext, the $1.1 billion figure includes project-tied loans. By September 2025, realized FDI had surged by 138% year-on-year, signaling a recovery in capital inflows, albeit at a smaller scale compared to regional economies.
Xinhua reports that the Sri Lanka Board of Investment (BOI) recorded $827 million in FDI for the first nine months of 2025, a 138% increase from the same period in 2024. This growth is attributed to new equity, reinvestment, and foreign project loans. However, BOI acknowledges the need for policy improvements to ensure sustainable capital flows in the coming quarters.
Policy reforms under the IMF program remain critical to restoring investor confidence.
Reuters highlights that the IMF Executive Board has approved multiple disbursements, with the latest staff-level agreement on October 9 unlocking $347 million, bringing total disbursements to over $2 billion. The IMF emphasizes the need for strengthened tax revenue, broadened tax bases, and transparent investment incentives in the 2026 budget.
International media note key policy messages. Reuters reports that BOI leadership aims to double FDI to $2 billion next year through selective tax incentives for projects exceeding $50 million. However, operational targets in various statements range between $1–2 billion, significantly lower than pre-crisis levels.
In contrast, Vietnam recorded robust FDI results for the first nine months of 2025, both in disbursed and registered capital.
The General Statistics Office reports that realized FDI reached $18.8 billion, an 8.5% year-on-year increase and the highest for the same period in five years. Additionally, VnEconomy cites official data showing total registered capital (new, incremental, and equity/share purchases) at $28.54 billion, up 15.2% year-on-year.
A direct comparison reveals a significant gap in capital attraction between the two economies. Sri Lanka’s 2025 FDI target of $1.1 billion is dwarfed by Vietnam’s nine-month disbursed capital of $18.8 billion (17 times higher) and registered capital of $28.54 billion (26 times higher).
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