By: Staff Writer
October 06, Colombo (LNW): Sri Lanka’s Treasury Secretary Dr. Harshana Suriyapperuma yesterday sought to reassure the public that the nation’s economic recovery is “on track,” crediting fiscal discipline and reform progress. Yet behind the confident rhetoric lies a familiar pattern a policy framework still tightly bound to IMF prescriptions and former President Ranil Wickremesinghe’s austerity-driven economic model, which continues to dictate fiscal priorities.
Addressing the Annual Conference on Public Sector Reforms for Economic Revival, Dr. Suriyapperuma argued that Sri Lanka is “in a better place” due to financial discipline. However, analysts point out that this optimism glosses over a deeper truth: much of the “discipline” stems from externally mandated constraints under the Extended Fund Facility (EFF), leaving limited space for homegrown reform or growth-oriented fiscal strategy.
Central Bank data show the budget deficit dropped by 54.9% year-on-year in the first eight months of 2025, to Rs. 411 billion, largely reflecting reduced capital expenditure and import restrictions rather than improved productivity or fiscal innovation. Meanwhile, total public debt climbed to Rs. 29.6 trillion, underscoring that austerity alone has not contained the debt burden.
The Treasury chief’s portrayal of renewed investor confidence and expanding business sentiment appears overstated. Despite modest gains, foreign direct investment remains below pre-crisis levels, while domestic enterprises face high borrowing costs and tax burdens. Many economists view the upbeat narrative as an attempt to put a brave face on what remains a fragile and externally steered recovery.
The IMF’s own assessments underscore those vulnerabilities. Under the recent debt restructuring deal, macro-linked Bonds could add between $150–270 million annually to debt servicing from 2028–2038, even if GDP slows effectively locking the country into higher payments once performance thresholds are triggered. Far from freeing Sri Lanka, this structure may deepen long-term dependency.
Dr. Suriyapperuma’s emphasis on digitalisation, legislative reform, and independent board appointments reprises long-standing reform themes promoted since Wickremesinghe’s 2023 stabilization roadmap. Yet implementation gaps persist, with governance reforms largely cosmetic and key structural issues such as loss-making state enterprises, tax evasion, and low export competitiveness still unaddressed.
While the Treasury talks of a “modern Sri Lanka,” the underlying fiscal approach remains narrowly technocratic, prioritising IMF compliance over developmental vision. The real test lies not in deficit reduction, but in whether Sri Lanka can escape policy dependence and design a self-sustaining growth model.
For now, the Treasury’s optimism rings hollow — more a continuation of IMF orthodoxy than a roadmap for national renewal.
