Fashion
Sri Lanka targets lower debt ratio with new budget: Fitch
The recently presented budget projected a fiscal deficit of 5.1 per cent of GDP in 2026—higher than the 4.5 per cent expected in 2025 but well below the originally budgeted 6.7 per cent for 2025. The IMF later revised the 2025 deficit projection to 5.4 per cent. The primary surplus is estimated at 2.5 per cent of GDP in 2026, down from 3.8 per cent expected in 2025 but still above the 2.3 per cent target under Sri Lanka’s IMF programme. The government aims to narrow the deficit to 3.8 per cent of GDP by 2030.
Fitch noted that while the 2026 deficit estimate is wider than its own forecast of 4.6 per cent, the effect on debt dynamics could be mitigated by the stronger-than-expected 2025 performance, when the agency anticipated a 5.4 per cent deficit and a 2.4 per cent primary surplus. Staying aligned with IMF fiscal benchmarks would strengthen policymaking credibility and reinforce macroeconomic stability.
Sri Lanka’s new budget reinforces its focus on fiscal consolidation, targeting a 5.1 per cent deficit in 2026 and maintaining a primary surplus above IMF requirement.
Fitch said stronger-than-expected 2025 results may offset a wider 2026 gap.
Revenue/GDP is set to ease slightly.
Growth-supportive measures continue, but high debt and post-2027 obligations remain key concerns.
Government revenue/GDP is expected to ease to 15.4 per cent in 2026 from 15.9 per cent in 2025, still slightly above Fitch’s 2026 projection. A failure to keep tax revenue growth broadly in line with GDP growth could add pressure to Sri Lanka’s credit profile.
The budget assumes a 1.2 per cent fall in trade taxes after this year’s surge in vehicle imports, while goods and services taxes are projected to rise 3.5 per cent and income taxes 8 per cent. Fitch described the goods and services tax estimate as conservative, given expected nominal GDP growth of over 7 per cent and new tax-enhancing measures such as a lower VAT registration threshold and strengthened auditing.
Unexpectedly strong import growth could further boost revenue but also strain external balances. The 2025 fiscal overperformance was partly driven by underspending, with public investment reaching only 3.2 per cent of GDP compared with the planned 4 per cent. Persistent shortfalls in capital spending could hinder long-term growth and complicate fiscal consolidation.
Even so, the budget outlines several growth-supportive initiatives, including the revival of Colombo airport’s expansion, a LKR 342 billion (~$1.13 billion) allocation for road development, tax incentives for digital infrastructure, and planned legislation to expand public-private partnerships in infrastructure.
Fitch expects gross general government debt/GDP to decline from 100.5 per cent in 2024 to around 96 per cent in 2027—still well above the median 74 per cent for ‘CCC’ rated sovereigns. The end of the IMF programme in 2027 and higher debt-servicing obligations from 2028 pose additional medium-term risks.
Fibre2Fashion News Desk (SG)
The programme is jointly implemented by UN Trade and Development (UNCTAD), the World Customs Organization and UK Customs.
The UK has committed around $1.25 million in funding for the ‘Accelerate Trade Facilitation’ programme for the 2026-2029 period.
The programme is jointly implemented by UNCTAD, the World Customs Organization and UK Customs.
The latest phase will expand the programme’s capacity-building activities and introduce the Reform Tracker tool to up to three additional countries.
For more than a decade, the programme has supported over 30 economies to speed up the movement of goods and strengthen cooperation between the public and private sectors.
“We will build on the strong and sustained impact achieved by partner countries over the last 11 years of the programme, strengthening national trade facilitation committees and driving practical, lasting reforms that make trade simpler, faster and more inclusive while supporting economic growth,” said Megan Shaw, deputy director of international customs and border engagement at UK Customs in an UNCTAD release.
The programme will continue to place national trade facilitation committees (NTFCs) at the core of its work. NTFCs serve as coordination platforms where government agencies and businesses identify bottlenecks, agree on priorities and advance trade facilitation reforms.
UNCTAD has supported them through specialised training, including via its trade facilitation e-learning platform, and practical tools such as the Reform Tracker. The tool helps countries monitor progress on trade facilitation reforms and keep society-wide collaborators aligned.
“These reforms contribute to a trading environment that is faster, cheaper, more transparent and more predictable—conditions that help businesses compete and grow,” said Angel Gonzalez Sanz, officer-in-charge of UNCTAD’s division on technology and logistics.
The 2026-2029 phase will expand the programme’s capacity-building activities and introduce the Reform Tracker to up to three additional countries.
These efforts will help deepen digitalisation and improve coordination between border agencies—measures crucial to reducing costs and processing times for traders.
Fibre2Fashion News Desk (DS)
The gross profit reached SEK 25,138 million (~$2.39 billion), with the gross margin improving to 50.7 per cent from 49.1 per cent a year earlier, supported by lower markdown costs and more efficient sourcing.
H&M has reported net sales of SEK 49,607 million (~$4.72 billion) in Q1 FY26, with sales down 1 per cent in local currencies.
Improved cost control lifted gross margin to 50.7 per cent and operating profit rose 26 per cent.
The net profit increased to SEK 704 million (~$75.05 million), while inventory fell 16 per cent.
Currency effects weighed on revenue despite stronger margins and improving sales.
The operating profit rose by 26 per cent to SEK 1,512 million, lifting the operating margin to 3 per cent from 2.2 per cent. Selling and administrative expenses declined by 1 per cent in local currencies and by 9 per cent in SEK terms, reflecting continued cost discipline, H&M said in a press release.
The net profit after tax (PAT) increased to SEK 704 million (~$75.05 million), with earnings per share (EPS) improving to SEK 0.45 from SEK 0.37. Inventory management also showed progress, with stock-in-trade falling 16 per cent to SEK 34,608 million, indicating improved inventory productivity.
However, sales in SEK terms were impacted by a currency translation effect of just over 9 percentage points due to the strengthened Swedish krona. The quarter began with weaker demand following strong Black Friday trading, though sales trends improved towards the end, supported by spring collections.
“Good cost control and improved gross margin contributed to strengthened profitability in a quarter marked by cautious consumption and large currency translation effects,” said Daniel Erver, CEO at H&M.
Looking ahead, H&M expects March 2026 sales to rise by 1 per cent in local currencies. The company also highlighted its sustainability progress, noting that 32 per cent of materials used in 2025 were recycled, while 91 per cent were either recycled or sustainably sourced.
Fibre2Fashion News Desk (SG)
A total of 25 pilot investments led by small and medium enterprises (SMEs) have progressed from the lab to near-market stage under RegioGreenTex, a three-year European Union (EU)-funded project that recently concluded. Most of these are expected to be commercialised within one to three years.
Twenty five pilot investments led by SMEs moved from lab to near‑market under RegioGreenTex, an EU-funded project that ended recently.
Most of these are expected to commercialise in one to three years.
Five regional hubs mapped SME needs and developed services and value chains as well as tools to help SMEs.
These are now open for collaboration and the pilot portfolio is primed for investors and adopters.
At least 70 per cent of the EU grant was allocated to SMEs. A total of 43 partners from 11 regions across eight countries participated in the project, leveraging their expertise towards a common goal of advancing industry and research.
RegioGreenTex was one of the first projects funded under the Interregional Innovation Investments (I3) Instrument programme that focused on process, service and business model innovation, developing advanced textile recycling technologies, regional recycling hubs, and a digital ecosystem for matchmaking and capacity building.
Five regional hubs mapped SME needs and developed services and value chains as well as tools that keep helping SMEs, an official release said.
The RegioGreenTex Digital Tool keeps matchmaking, sharing trainings and hosting the participants’ knowledge base.
The Waste Wizard shows how artificial intelligence-enhanced matchmaking can link leftover textiles with the right reuse or recycling routes.
From recycled-content yarn processes (Tintex) to Recycrom low-impact dyeing (Officina39), ultrasonic quilting for full recyclability (Rovitex) and hybrid recycled-fibre yarns (Hilaturas Mar), the pilots showed concrete, repeatable ways to cut impact without losing performance.
The hubs are now open for collaboration, the digital tools are live and the pilot portfolio is primed for investors and adopters.
Fibre2Fashion News Desk (DS)
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