Bloomberg analysts predict Sri Lanka’s recent tax increases and austerity measures will substantially reduce the national deficit to 3.8% of GDP by 2027, down from 8.7% in 2023. Excluding interest payments, the government is expected to achieve an average budget surplus of 2.3% of GDP from 2024 to 2027, contrasting with a projected deficit of 0.6% of GDP this year. Additionally, a pending agreement with holders of USD-denominated bonds is anticipated by June, which should decrease foreign debt obligations and lower coupon rates.