Growth needs reform, not rhetoric

Sri Lanka, having endured a severe financial crisis that culminated in sovereign default in 2022, is now at a critical juncture. The country is under the care of the International Monetary Fund (IMF), which offers some breathing space. But this is by no means a permanent cure. The real challenge lies in whether Sri Lanka can generate sustainable growth and become a prosperous country.

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The reason for the current stalemate is not purely external. The government’s own policy orientation is also to blame. The latest U.S. Investment Climate Report on Sri Lanka lays bare the bitter truth. The country continues to struggle with the very bottlenecks that have deterred foreign investment for decades. High tariffs and non-tariff barriers, customs inefficiency, unpredictable taxation, rigid labour laws, and an over-politicised bureaucracy all feature prominently in the report. These are not minor irritants; they are systemic weaknesses that leave Sri Lanka trailing behind its regional competitors in attracting investment.

The report further notes that the government’s prevailing left-leaning ideological approach stands in the way of meaningful policy reforms. The National People’s Power (NPP) administration, guided by a socialist mindset, continues to place faith in state dominance, welfare-heavy populism, and a deep-seated suspicion of markets. In doing so, it risks pushing Sri Lanka into stagnation at the very moment when reforms are most urgent.