When will Sri Lanka eradicate extreme poverty?

President Anura Kumara Dissanayake's (AKD) second budget speech, delivered on 8 November 2025, painted a clear picture of 'stabilisation' in the neoclassical economic sense:

- BY SHIRAN ILLANPERUMA

President Dissanayake sharing a light moment with the Opposition during his budget speech on Friday (07).

“... from the moment we received our mandate, we initiated very broad reformative changes to stabilise the macro economy, ensure fiscal discipline, strengthen state institutions, prevent corruption and increase transparency, and ensure accountability to the people. I am pleased to announce to this House today that these reforms have restored fiscal, macroeconomic and social stability within a short period of one year.”

This was followed up with a rattle of the usual indicators - growth, inflation, interest rates, exchange rates, external trade, gross reserves, and that holy grail, the primary budget surplus.

Missing from this victory lap was a clearer outline of the indicators which tell us of the challenges that remain, including extreme poverty.

According to World Bank estimates, a quarter of Sri Lanka's population live in extreme poverty. But poverty lines are always crude and arbitrary.

By the World Bank's definition, the extreme poor are those who make less than $3 a day, which amounts to less than 30,000 rupees per month.

This is a ridiculously low threshold when the Asia Floor Wage Alliance estimates a living wage for Sri Lanka to be 154,353.45 rupees a month in 2023.

The World Bank report entitled 'Sri Lanka Public Finance Review: Towards a Balanced Fiscal Adjustment' has revealed that real wages in Sri Lanka are 14-24% lower than what they were before the crisis.

The multidimensional poverty index - which looks not just at incomes but access to essential services like healthcare, fuel, drinking water-find that 16% of Sri Lankans (one out of every six people) are multidimensionally poor.

That rate is much higher for children - 42.2%, or four out of every ten children, are multidimensionally poor and a third are underweight or stunted.