The Sri Lanka development update report talks about the recent economic developments in Sri Lanka for the year 2015-2016. With no exception, Sri Lanka also faced the challenges of a trying global environment in 2015. Uncertainties in an election year that saw a major political transition contributed to elevate the risks stemming from global context. The accommodative policy choices supported economic growth. Authorities took policy measures aimed at stability, beginning 2016. The fiscal deficit rose sharply in 2015 due to increased expenditures in salary hikes and subsidies, one-off charges, reduced consumption taxes and increased interest costs on resultant deficit financing. A new IMF program is providing a solid platform for macro fiscal stability. World Bank supports the government's reform agenda, to eliminate obstacles to private sector competitiveness, enhance transparency and public sector management and improve fiscal sustainability. The government has undertaken to implement a medium-term reform agenda that aims to improve competitiveness, governance and public financial management that would bring in long-term benefits. These developments have contributed to an improved outlook. Growth is expected to remain unchanged in 2016 and grow marginally over 5.0 percent beyond, driven by private consumption and postponed FDI in 2015. The special focus section discusses the Systematic Country Diagnostic (SCD) for Sri Lanka, launched by the World Bank in February 2016. The SCD is an objective, evidence-based, candid assessment of the main challenges facing the country, without limitation to the areas where the WBG is currently engaged
