Sri Lanka’s Recovery at Risk: Why the Economy Must Stay in Focus Amid Anti-Corruption Drive

Sri Lanka is at a critical crossroads. While the government’s anti-corruption campaign has dominated headlines, experts warn that the country’s fragile economy risks slipping into stagnation if genuine reforms and large-scale projects are sidelined.

A Record-Breaking Adjustment

According to a new World Bank review, Sri Lanka has carried out one of the sharpest fiscal adjustments in the world—equal to nearly 8% of GDP over just three years. This rapid stabilization has restored some financial order, but at a cost: households are paying higher indirect taxes, real wages in the public sector have declined, and growth has slowed.

The World Bank stresses that the next phase must focus on fairer revenue generation, more growth-friendly measures, and improved public spending.

Growth Concerns: Stability Is Not Enough

Former Central Bank Deputy Governor Dr. W. A. Wijewardena warns that Sri Lanka cannot settle for the current 4–5% growth rate. For true prosperity, he argues, the country needs a sustained growth rate of 8% or more. Anything less risks leaving Sri Lanka stuck in “zero growth” territory, failing to create enough jobs or raise living standards.

Politics Overshadowing Economics

Instead of addressing these challenges, much of the public conversation has shifted toward arrests of former leaders and debates over denying privileges to ex-presidents. While accountability is vital, the highly politicized way these cases are pursued raises concerns. Analysts suggest this focus may be distracting from the real issue: economic recovery.

Despite promises, no major investment projects have taken off. The $3.7 billion Sinopec project, for instance, remains stalled nine months after an MoU was signed. Experts say bureaucratic delays, policy uncertainty, and lack of coordination are holding Sri Lanka back—weaknesses that discourage investors at a time when investment is desperately needed.

Beyond Corruption: The Road to Prosperity

Corruption must be tackled, but eliminating graft alone will not deliver growth. Sri Lanka also needs:

Consistent policies

Transparent regulations

Improved investment climate

Long-term reforms to boost exports and productivity

Without these, stability will not translate into prosperity.

The Missed Foreign Policy Opportunity

Sri Lanka’s absence at the recent Shanghai Cooperation Organization (SCO) summit also raised eyebrows. The forum could have helped deepen ties with India, China, and Russia—key partners for trade and investment. Given its strategic location, Sri Lanka has the chance to balance relations with both the Global North and South, but underperformance in foreign policy risks missing vital opportunities.

A Warning from Nepal

Nepal recently faced youth-led protests over corruption, weak growth, and restrictions on social media. The unrest forced its Prime Minister to resign. Sri Lanka, which faced mass protests in 2022, must learn from this lesson.

If young people’s aspirations for growth, jobs, and opportunity are not met, frustration could resurface, posing serious risks for the current administration.

The message is clear: Fighting corruption is important, but it cannot replace a clear, result-oriented economic strategy. Sri Lanka’s future depends on it.