The World This Quarter

CWA # 2245
The World This Quarter
Sri Lanka (April-June 2026):
Resilience, Recovery, and Rising Global Standing

Arafaath Rahby
16 August 2026
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The second quarter of 2026 gave Sri Lanka an unplanned but revealing test of how far its recovery has come. As President Anura Kumara Dissanayake's National People's Power (NPP) government  passed the eighteen-month mark in office, the widening US-Iran war and the effective closure of the Strait of Hormuz presented Colombo with its most serious external shock since 2022. What stood out through April, May and June was not the shock itself but the country's capacity to absorb it; disciplined crisis management at home, continued international confidence in the reform  programme, a widely praised humanitarian response at sea, and steady progress on reconciliation  and debt recovery. Sri Lanka closed the quarter with its global peace ranking climbing sharply, its  IMF programme intact and even eased in the country's favour, and its diplomatic standing with both  India and China reinforced - signs, taken together, that the country is consolidating rather than  losing the ground recovered since the 2022 crisis. 

1. Crisis Management: A tested government holds the line
The quarter's central story was how effectively the government managed an external energy shock  that could easily have unravelled years of hard-won stability. With global oil prices spiking past USD  100 a barrel and the Strait of Hormuz effectively closed, the Dissanayake administration moved  early and decisively: a QR-code fuel rationing system, a temporary four-day working week for state  institutions, and a coordinated public communication campaign kept the country's fuel reserves  from running out and avoided the disorderly queues and social unrest that had marked the 2022  crisis. Unlike four years ago, this time the state had the institutional capacity, the public trust and  the fiscal space to respond in an organised, planned manner - a marked contrast that many Sri  Lankans and outside observers noted. The IMF itself commended the authorities for prompt action  that "helped preserve macroeconomic and social stability" during the shock, and for having built,  through the reform programme, the fiscal space to fund a relief package covering fuel, electricity  and fertiliser subsidies as well as cash transfers to vulnerable households without derailing the  country's finances. 

2. Global reputation enhanced: Humanitarian rescue at Sea 
Sri Lanka's response to the human cost of the distant war produced one of the quarter's proudest  moments. When the Iranian naval vessel IRINS Dena came under attack just outside Sri Lankan  waters after seeking safe harbour, the Sri Lankan Navy moved swiftly to rescue more than thirty  survivors, later taking custody of the bodies of those who had perished, and subsequently extended  protection to a second Iranian vessel, IRINS Bushehr, carrying over two hundred sailors. Foreign  Minister Vijitha Herath explained that the response was grounded in humanitarian principle,  international law and Sri Lanka's UNCLOS obligations to assist those in peril at sea. The episode  drew rare, near-unanimous praise across the political spectrum and reinforced Sri Lanka's  decades-long tradition - dating back to its 1971 initiative at the UN General Assembly to have the  Indian Ocean declared a Zone of Peace - of principled, rules-based engagement even amid great power rivalry. For a small island nation navigating a dangerous neighbourhood, the episode was a  quiet but significant demonstration of moral leadership and diplomatic maturity.

This standing was reflected in harder numbers by the end of the quarter: Sri Lanka climbed fourteen  places to rank 67th out of 163 countries in the 2026 Global Peace Index, one of the most significant  improvements recorded worldwide at a time when global peacefulness overall was reported to be  declining. The rise reflects the country's continuing recovery from nearly three decades of war, its  strengthened political stability, and its improved public security - concrete, independently verified  evidence that Sri Lanka is on the right trajectory. 

3. Economic recovery: The IMF Programme stays on track
Sri Lanka's economic managers used the quarter to demonstrate that the country's four-year, USD  3 billion IMF Extended Fund Facility remains firmly on course despite the external shock. Staff-level  agreement on the combined Fifth and Sixth Reviews, reached in early April, was followed by the IMF  Executive Board's approval on 27 May of a further disbursement of roughly USD 695 million, taking  total support since 2023 to about USD 2.4 billion - a vote of confidence from the Fund in the  government's stewardship. Notably, rather than insisting on rigid austerity, the IMF itself endorsed  fiscal easing in 2026 as the appropriate response to the shock, explicitly crediting the space  created by years of disciplined reform for allowing the government to protect vulnerable  households while still committing to return to its 2.3 per cent of GDP primary balance target in  2027. A further IMF staff visit in late June reaffirmed that the recovery remained intact, praising the  authorities' demonstrated institutional capacity to respond quickly to emerging challenges and  their targeted support for the most vulnerable, while noting that recent global commodity price  declines could ease pressures further in the months ahead. 

Beneath the headline figures, the underlying strength of the economy's external buffers was clear.  Workers' remittances surged 23.2 per cent in the first half of the year to USD 4.60 billion, a powerful  vote of confidence from the Sri Lankan diaspora and a testament to improved formal banking  channels since the crisis years. Gross official reserves, supported by the People's Bank of China  currency swap facility, stood at a healthy USD 6.45 billion at the end of June. Tourism, while softer  in June amid the regional disruption caused by the Middle East war, still delivered over 1.15 million  arrivals in the first half of the year, with India remaining the largest and most loyal source market.  Garment exporters, meanwhile, found new momentum from the liberalised UK rules of origin under  its Developing Countries Trading Scheme, in force since January, opening fresh opportunities for  one of the country's most important export sectors. 

4. External relations: Deepening trust with India, Steady ties with China 
Sri Lanka's foreign policy through the quarter reflected the growing confidence of a government that  has built productive relationships with both of its major partners. India once again demonstrated its  role as Sri Lanka's most reliable neighbour, extending energy assistance to Colombo and Dhaka in  April as the regional fuel crisis deepened, while President Dissanayake used the occasion in June to  reaffirm his commitment to deepening the bilateral partnership further - continuity in a relationship  that has anchored Sri Lanka's recovery since 2022. China, for its part, continued to provide  important financial ballast through its currency swap arrangement, underpinning reserve stability at  a critical moment. That Colombo could draw support from both Delhi and Beijing simultaneously,  without friction between the two relationships, speaks to the sophistication of Sri Lanka's  independent, non-aligned foreign policy under the current administration.

5. Reconciliation and governance: Building an inclusive Sri Lanka 
The quarter also saw the government press ahead with its reconciliation agenda. President  Dissanayake continued his sustained personal outreach to the North and East, including a Thai Pongal visit to Jaffna where he launched a national housing project and announced plans to  upgrade Palaly Airport and expedite operations at Kankesanthurai Port - concrete investments in a  region long neglected by previous administrations. Around the May 18-19 anniversary of the war's  end and again at Vesak, the President and Prime Minister Harini Amarasuriya used their public  messages to emphasise reconciliation, coexistence and justice for all communities, language that  a National Peace Council symposium the same month - attended by both a government minister  and Opposition Leader Sajith Premadasa - suggested was resonating across the political divide.  The government also continued to advance its signature anti-corruption agenda, with courts and  investigative agencies making renewed progress on long-stalled cases, including the 2019 Easter Sunday bombings and historic procurement scandals, underscoring a genuine commitment to the  accountability that voters demanded in 2024. On 11 June, the Election Commission committed to  moving ahead with long-delayed local and provincial council elections, a step welcomed as further  evidence of the country's deepening democratic consolidation. 

Recovery from Cyclone Ditwah, which struck in late November 2025, also continued through the  quarter, with the government's Presidential Task Force - led by the Prime Minister and drawing on  cabinet ministers, provincial officials and civil society representatives - coordinating rebuilding  efforts, cleanup grants and rental support for displaced families, alongside significant international  solidarity from India, the Maldives and other South Asian neighbours that underscored the strength  of the country's regional relationships in a time of need. 

To Conclude: Sri Lanka in the Second Quarter (Apr-Jun 2026)
Taken together, the second quarter of 2026 offered strong evidence that Sri Lanka's recovery is not  only holding but deepening under the NPP government. A serious external energy shock was met  with organised, disciplined crisis management rather than the disorder of 2022. The IMF continued  to back the country's reform trajectory with fresh disbursements and flexibility. A humanitarian  rescue at sea burnished Sri Lanka's international reputation, and the country's leap up the Global  Peace Index offered independent confirmation of its growing stability. Relationships with both India  and China remained productive, remittances hit new highs, and the government kept faith with its  reconciliation and anti-corruption commitments even under pressure. With the Seventh IMF  Review due in the autumn and local and provincial elections now moving forward, Sri Lanka enters  the second half of 2026 with real grounds for confidence that the country, under President  Dissanayake's leadership, is on a durable path from crisis to recovery to renewed strength.

About the author

Arafaath Rahby is a Senior Project Officer at the National Peace Council of Sri Lanka.


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December 2025 | CWA # 1912

Lekshmi MK

State of Global Politics 2025
December 2025 | CWA # 1911

Swati Sood

State of Global Politics 2025
December 2025 | CWA # 1905

Femy Francis

State of Peace and Conflict 2025
December 2025 | CWA # 1902

Brighty Ann Sarah

State of Peace and Conflict 2025
December 2025 | CWA # 1893

Lekshmi MK

State of Peace and Conflict 2025
December 2025 | CWA # 1889

Femy Francis

State of Peace and Conflict 2025
December 2025 | CWA # 1881

Sunidhi Sampige

China Reader
December 2025 | CWA # 1864

Femy Francis

Ten Takeaways of a SCMP Interview with a former PLA Colonel
TWTW Note
December 2025 | CWA # 1861

Femy Francis

China Reader
CW Column: The Conflicts in The Middle East
November 2025 | CWA # 1859

Brighty Ann Sarah

CW Column: The War in Ukraine
November 2025 | CWA # 1858

Padmashree Anandhan

This Week in History
August 2025 | CWA # 1801

R Preetha

28 August 1963
Martin Luther King's "I Have a Dream" speech and the Civil Rights Movement in the US
The World This Week
August 2025 | CWA # 1790

GP Team

The World This Week#323-324
The Trump-Putin meeting & the US-China tariff extension
TWTW note
August 2025 | CWA # 1780

Abhiruchi Chowdhury

Trump tariffs:
Weaponization of access to the US economy
The World This Week
August 2025 | CWA # 1779

GP Team

The World This Week#322
US tariffs on India, Brazil and Canada & the EU-US trade deal
This Week in History
August 2025 | CWA # 1778

Lekshmi MK

28 July 1914
Austria-Hungary declares war on Serbia, starting the First World War
Global Politics Explainer
July 2025 | CWA # 1770

Abhiruchi Chowdhury

Pakistan-Afghanistan relations:
Why the focus on terrorism, refugees, and Uzbekistan as the third partner?
The World This Week
July 2025 | CWA # 1769

GP Team

The World This Week#321
Indian PM Modi's visit to the Maldives I Elections to the Upper House in Japan
Global Politics Explainer
July 2025 | CWA # 1762

Lekshmi MK

Ocean Darkening: 
What is the phenomenon? What are its effects? And who are more vulnerable?
Global Politics Explainer
July 2025 | CWA # 1749

R Preetha

Africa as the Hunger Epicenter
Of the 13 Global Hunger Hotspots, 8 are in Africa: Five reasons why
The World This Week
July 2025 | CWA # 1748

GP Team

The World This Week #318
PM Modi’s Visit to Trinidad and Tobago & Ghana, One big beautiful bill, and Quad Foreign Ministers Meeting
Global Politics Explainer
July 2025 | CWA # 1744

Chittrothu Vaihali

EU-Canada Summit 2025
What is security and defence partnership all about?
Conflict Weekly
July 2025 | CWA # 1742

IPRI Team

Conflict Weekly # 287-88
The 12 Day War and the Congo-Rwanda Peace Deal
Global Politics Explainer
July 2025 | CWA # 1738

Fleur Elizabeth Philip

Thailand and Cambodia
What was the phone call between PM Shinawatra and President of Senate Hun Sen? What is the border dispute between the two? Why has this become an issue?
TWTW Note
June 2025 | CWA # 1735

Padmashree Anandhan

NATO Summit 2025:
Trump making Europe great again
The World This Week
June 2025 | CWA # 1734

GP Team

The World This Week #317
NATO Summit 2025 and Russia-Mali bilateral agreements
Global Politics Explainer
June 2025 | CWA # 1733

Ananya Dinesh

China and the Pacific Islands 
What was the recent China-PIC joint statement about? What it says, and what it means?
TWTW Note
June 2025 | CWA # 1728

M Kejia

G7 Summit 2025:
The Focus on the Middle East and Trade negotiations
The World This Week
June 2025 | CWA # 1726

GP Team

The World This Week #316
China-Central Asia Summit in Kazakhstan, and the G7 Summit in Canada
Global Politics Explainer
June 2025 | CWA # 1725

Brighty Ann Sarah, R Preetha, Santhiya M, Aparna A Nair & M Kejia

Operation Midnight Hammer: US bombs three nuclear sites in Iran
What were the three Iranian nuclear sites that were targeted? What are the B2 Bombers and Bunker Buster Bombs? What do these attacks mean? What Next?
Conflict Weekly
June 2025 | CWA # 1724

IPRI Team

Conflict Weekly #286
The Spiralling Israel-Iran Crisis, and the Dangerous Hunger Hotspots
Global Politics Explainer
June 2025 | CWA # 1721

Rizwana Banu S and Santhiya M

Who are the Afrikaners?
Why is Trump interested in the Afrikaner question in South Africa?
Global Politics Explainer
June 2025 | CWA # 1720

Lekshmi MK

New WMO Report on Arctic Warming
What are the social, economic and environmental implications of Arctic warming
Global Politics Explainer
June 2025 | CWA # 1719

J Yamini  

China’s EV Surge
What contributes to the rise of BYD
Global Politics Explainer
June 2025 | CWA # 1717

J Yamini

Gender Violence in Pakistan:
What are the larger issues in the Noor Mukadam case?
TWTW Note
June 2025 | CWA # 1715

Femy Francis

The US-China:
On Tariffs, Rare Earths and Visas
The World This Week
June 2025 | CWA # 1713

GP Team

The World This Week #315
The UN Ocean Conference in France and the US-China Meeting in London
CW Note
June 2025 | CWA # 1712

R Preetha

The World This Week
June 2025 | CWA # 1705

GP Team

The World This Week #314
Elections in South Korea and Poland I China and the Pacific Island Countries I Bangladesh Election Announcement 2026
Global Politics Explainer
June 2025 | CWA # 1703

M Kejia 

Sagarmatha Sambaad in Nepal
Kathmandu’s Global Agenda for the Himalayas
Global Politics Explainer
June 2025 | CWA # 1700

R Preetha

Ethiopia bans the TPLF
What does the TPLF ban mean for the Pretoria agreement? What next for Ethiopia?
TWTW Note
June 2025 | CWA # 1694

Aashish Ganeshan

The US:
Harvard vs Trump Administration
The World This Week
June 2025 | CWA # 1691

GP Team

The World This Week #313
China-ASEAN-GCC Summit I President Macron's visit to South East Asia I Trump Vs Harvard
The World This Week
May 2025 | CWA # 1690

GP Team

The World This Week #312
Elections in Romania, Portugal & Poland I UK-EU Summit
CW Note
May 2025 | CWA # 1689

Padmashree Anandhan

Ukraine
Continuing Russia’s Aerial Attacks, despite exchange of prisoners
CW Note
May 2025 | CWA # 1688

Ayan Datta

Gaza
The Humanitarian Crisis and Israel’s Renewed Offensive
TWTW Note
May 2025 | CWA # 1685

Aparna A Nair

UK-EU Summit:
First step towards a reset
TWTW Note
May 2025 | CWA # 1683

Aashish Ganeshan

Elections in Portugal:
The Rise of Chega Party and the Search for Political Stability
TWTW Note
May 2025 | CWA # 1679

Aashish Ganeshan

US in the Middle Easr
Trump’s visit to Saudi Arabia, Qatar and UAE
TWTW Note
May 2025 | CWA # 1678

Gauri Gupta

China in Latin America
China-CELAC forum: Strengthening ties with Latin America and Caribbean
The World This Week
May 2025 | CWA # 1677

GP Team

The World This Week #310-311
China in Latin America and the Carribbean I Trump's Middle East Visit I Denmark as the new Arctic Chair
CW Note
May 2025 | CWA # 1675

Lekshmi MK

Turkey:
PKK disbands after 40 years of armed insurgency
CW Note
May 2025 | CWA # 1673

Padmashree Anandhan

Ukraine:
The Discussion in Turkiye and the Elusive Ceasefire
CW Note
May 2025 | CWA # 1671

Abhiruchi Chowdhury

US, Ukraine and Russia:
Air attacks amidst a Minerals deal and Ceasefire Proposals
Global Politics Early Bird
May 2025 | CWA # 1670

Fleur Elizabeth Philip

Singapore Elections in 2025:
People’s Action Party (PAP) Wins, Again
TWTW Note
May 2025 | CWA # 1667

R Preetha and Brighty Ann Sarah

East Asia:
Tough Tariff Negotiations with the US
TWTW Note
May 2025 | CWA # 1666

Padmashree Anandhan

The US-Ukraine
The mineral deal with the US
Conflict Weekly
May 2025 | CWA # 1665
Conflict Weekly # 280-81
India-Pakistan De-escalation I Ukraine Discussion in Istanbul I The Battle over Port Sudan I Disbanding of PKK in Turkiye I France-Algeria Diplomatic Tensions
Global Politics Early Bird
May 2025 | CWA # 1663

R Preetha

Canada Elections 2025:
What do the results convey? What next for Mark Carney?
Conflict Weekly 250th Issue
October 2024 | CWA # 1480

IPRI Team

This Week in History
July 2024 | CWA # 1413

Ramya B

Global Politics Early Bird
May 2024 | CWA # 1336

Femy Francis

This Week in History
April 2024 | CWA # 1275

Ramya B

NIAS Global Politics Database
March 2024 | CWA # 1251

NIAS Africa Team

Africa This Week
This Week in History
March 2024 | CWA # 1246

Sivasubramanian K

NIAS Global Politics Database
February 2024 | CWA # 1226

NIAS Africa Team

Africa This Week
The World This Week
November 2023 | CWA # 1148

GP Team

The War in Ukraine
October 2023 | CWA # 1091

Annem Naga Bindhu Madhuri

Issues for Europe
NIAS Pakistan Weekly
October 2023 | CWA # 1087

PR Team

The World This Week
October 2023 | CWA # 1083

GP Team

Conflict Weekly
August 2023 | CWA # 1049

IPRI Team

IPRI Quarterly Forecasts I Triggers, Trends, and Trajectories
July 2023 | CWA # 1012

Bibhu Prasad Routray

Myanmar continues to burn
The World This Week
July 2023 | CWA # 1009

GP Team

2022: The World This Year
December 2022 | CWA # 879

Padmashree Anandhan

The Ukraine War
2022: The World This Year
December 2022 | CWA # 872

Sapna Elsa Abraham

Europe: Heatwaves, Wildfires, Droughts, and Ice Melt in Alps
November 2022 | CWA # 838

Rishma Banerjee

Tracing Europe's droughts
NIAS Africa Weekly
March 2022 | CWA # 705

NIAS Africa Team

In Focus: Libya
The World This Week: 150th Issue
December 2021 | CWA # 630

GP Team

Europe in 2021
Pakistan Reader
October 2021 | CWA # 588

Abigail Miriam Fernandez

TLP is back again
NIAS Fortnightly on Science, Technology & International Relations
August 2021 | CWA # 528

STIR Team

Space Tourism
GLOBAL PROTEST MOVEMENTS
September 2020 | CWA # 337

Anju Annie Mammen

The FATF Meeting, February 2020
February 2020 | CWA # 235

Lakshmi V Menon

Science, Technology and International Relations
September 2019 | CWA # 162

Lakshman Chakravarthy N

5G: A Primer
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 71

Mahesh Bhatta

Nepal
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 70

Nasima Khatoon

The Maldives
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 69

Harini Madhusudan

India
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 68

Sourina Bej

Bangladesh
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 67

Seetha Lakshmi Dinesh Iyer

Afghanistan
United States
July 2018 | CWA # 47

Rahul Arockiaraj

East Asia
June 2018 | CWA # 26

Siddhatti Mehta