By: Staff Writer
February 05, Colombo (LNW): The February issue of LMD, a leading business magazine, highlights a significant surge in the Business Confidence Index (BCI) for the fourth consecutive month, reflecting strengthened economic indicators.
According to the latest LMD-PEPPERCUBE report, the BCI climbed by 24 basis points in January, reaching its highest level since 2015.
The index is now approaching its all-time record of 204, which was set in September 2015 following a General Election.
LMD notes that this remarkable rise places the index 75 points above its historical median of 123 and 79 points higher than its 12-month average of 119. For comparison, the BCI was at just 82 basis points in January of the previous year.
The report attributes this surge in business confidence to improvements in Sri Lanka’s foreign exchange reserves, a more stable currency, and increased export activity. These positive economic shifts have bolstered market sentiment, PepperCube Consultants notes in the magazine.
However, LMD cautions that the trajectory of the index will depend heavily on the upcoming Budget 2025, set to be presented in late February.
A spokesperson for the magazine points out that how the budget influences businesses will determine whether the index continues its upward momentum or stabilizes.
There is speculation that the BCI might even surpass its previous record ahead of the budget announcement, depending on how the proposals are received by corporations and whether the government fulfills its election promises.
Another crucial factor influencing economic confidence is Sri Lanka’s adherence to the IMF-backed economic framework.
The sustainability of this approach remains uncertain, raising questions about its long-term impact on businesses.
Additionally, the possibility of local government elections in the near future adds another layer of unpredictability to the economic landscape. LMD predicts that the coming months will likely bring both uncertainty and speculation, though there is potential for the BCI to reach record highs before eventually stabilizing.
At the recent Sri Lanka Economic Summit, organized by the Ceylon Chamber of Commerce (CCC), President Anura Kumara Dissanayake outlined his administration’s plans for large-scale privatization and public sector downsizing.
His government remains committed to attracting increased foreign investment and advancing the Economic Transformation Act (ETA)—a framework initially introduced under former President Ranil Wickremesinghe in alignment with IMF directives.
While some amendments will be made to facilitate smoother implementation, the government’s overall economic strategy remains focused on restructuring state-owned enterprises (SOEs).
President Dissanayake emphasized that barriers to foreign investment will soon be lifted, and approval processes will be streamlined, reducing waiting periods to approximately six months.
The government is also considering the creation of a holding company for multiple SOEs, with the intention of listing shares on the stock market.
However, privatization efforts have historically faced strong resistance from the working class, leading to protests and strikes in recent years.
Despite opposition, the current administration appears determined to push forward with its economic restructuring plans, arguing that underperforming state-owned enterprises place an excessive financial burden on the government.
As Sri Lanka navigates these economic reforms, the business community remains watchful of how these policies unfold.
The next few months will be critical in shaping investor confidence and determining whether the BCI continues its remarkable ascent or stabilizes in response to evolving economic conditions.
