Sri Lanka’s Board of Investment (BOI) has claimed that the country secured USD 787 million in foreign direct investment (FDI) during the first nine months of 2025 a figure that, on close examination, appears inflated and methodologically inconsistent with the Central Bank’s balance-of-payments (BoP) data and the nation’s economic realities.
An independent review of Central Bank BoP tables and CEIC quarterly data shows that net FDI inflows for January-September 2024 measured under internationally accepted IMF-BPM6 accounting standards were only around USD 300 to 320 million.
Given the country’s unchanged investment climate, policy uncertainty, and limited project pipeline since late 2024, a 2.5-fold increase within one year is implausible without corresponding evidence of large-scale project disbursements or foreign-funded industrial ventures. No such evidence has been publicly documented.
Discrepancies in BOI Accounting
The BOI’s headline figure lumps together foreign equity, reinvested earnings, intra-company loans, and foreign commercial borrowings of BOI-registered firms. By treating internal financing and retained profits of existing investors as “new FDI,” the BOI effectively pads its total with domestic reinvestment and inter-company debt, rather than recording fresh cross-border capital inflows.
Such inclusion distorts the real FDI picture, since these funds neither add foreign exchange reserves nor represent new foreign ownership in local enterprises. In contrast, the Central Bank’s BoP methodology isolates only genuine cross-border capital contributions and profit reinvestments consistent with global standards.
Under that framework, Sri Lanka’s net inflows have rarely exceeded USD 1 billion annually in recent years and typically average below 1 percent of GDP one of the lowest ratios in Asia.
Lack of Transparency and Verification
The BOI’s refusal to publish a category-wise breakdown for its USD 787 million claim further undermines confidence. Without specifying how much was equity, reinvested earnings, or loans, it is impossible for analysts or Parliament to verify the claim’s validity.
Moreover, no matching rise in project approvals, construction starts, or foreign remittances has been reflected in parallel economic indicators such as imports of investment goods or employment data.
Independent Assessment
Given the CBSL’s BoP-based net inflow estimate of only USD 300–320 million for the comparable period in 2024, a realistic projection for 2025 factoring in modest improvement in investor sentiment but persistent structural barriers would be in the USD 400–500 million range at best. That still marks incremental progress, but falls far short of the BOI’s USD 787 million claim.
Conclusion: Numbers in Search of Credibility
On balance, available macroeconomic evidence strongly suggests that the BOI’s reported USD 787 million FDI inflow is overstated. The figure appears to reflect accounting aggregation rather than a true surge in foreign capital. Until the BOI releases audited, disaggregated data distinguishing new cross-border equity from internal re investments and loans, its FDI announcements should be treated with caution.
For policymakers and investors alike, transparency not political optics must define Sri Lanka’s investment reporting if the country is serious about restoring credibility in global capital markets.
