Reform first - growth will follow

IN my July 2025 article, "The IMF is a bandage, not a cure: Moving towards lasting solutions" (https://www.ft.lk/columns/IMF-is-a-bandage-not-a-cure-Moving-towards-lasting solutions/4-779057), I concluded that President Anura Kumara Disanayake's bold decision not to seek another IMF bailout marks a turning point in Sri Lanka's economic history. It signals the end of a dependency cycle and the beginning of a national test whether we can sustain growth without external lifelines. The message is clear: Sri Lanka must now stand on its own feet.

- By Prof. Asoka S. Seneviratne

Reducing tariffs is not merely a fiscal decision -- it is a strategic reform essential to re-integrate Sri Lanka into the global economy

Yet, almost a year later, one truth remains inescapable the problem is not merely financial; it is structural. The IMF can stabilise a collapsing economy, but it cannot reform a dysfunctional one. The real battle for prosperity must be fought within our borders by removing the domestic barriers that have suffocated enterprise, discouraged innovation, and driven investors elsewhere.

For decades, Sri Lanka has looked outward for solutions blaming shifting global conditions, rising US tariffs, or foreign currency shortages while ignoring the chronic inefficiencies within. The reality is uncomfortable: the world is not keeping investors away from Sri Lanka; we are.

Foreign Direct Investment (FDI) is not just a flow of capital; it is a vote of confidence in a nation's governance, stability, and direction. Countries such as Vietnam and Malaysia have transformed their economies by creating an investor-friendly environment while Sri Lanka, with all its potential, remains trapped in a web of bureaucratic red tape, policy inconsistency, and political interference.

Suppose we are serious about achieving sustainable economic growth and long-term independence from external bailouts. In that case, we must confront six persistent structural barriers that have kept Sri Lanka unattractive to global investors:

1.High tariffs

2.Non-tariff barriers

3.Customs inefficiency

4.Unpredictable taxation

5.Rigid labour regulations, and

6.An over-politicised bureaucracy