By:Staff Writer
February 17, Colombo (LNW): Sri Lanka’s economic managers are betting that structural reform—not short-term stimulus will determine whether the country can move beyond stabilization and into sustained expansion.
At the center of this strategy are three forthcoming laws covering investment security, public-private partnerships and State-Owned Enterprise reform, announced by Presidential Economic Adviser Duminda Hulangamuwa during the Lanka Impact Investment Summit.
The proposed SOE legislation is particularly significant. For decades, loss-making State entities have weighed heavily on public finances, contributing to debt accumulation and operational inefficiencies. The new framework envisions a holding company structure designed to insulate SOEs from political interference while enforcing stricter governance and financial transparency standards. Over time, select entities may be partially listed to deepen capital market participation.
The PPP bill, meanwhile, is intended to formalize collaboration between the State and private investors in large infrastructure projects. By defining procurement processes and risk allocation upfront, policymakers hope to reduce disputes, delays and investor hesitation.
Complementing these reforms is a strengthened investment protection regime aimed at limiting abrupt regulatory shifts a recurring concern among foreign investors.
Hulangamuwa emphasized that macroeconomic stabilization alone cannot deliver transformative growth. While favorable conditions could generate 4–5% expansion, he argued that surpassing that threshold requires structural clarity and policy continuity.
He cautioned against quick-fix solutions such as aggressive monetary expansion or unsustainable tax relief, which could undermine hard-won fiscal gains. Sri Lanka’s recent 3.9% primary surplus, exceeding IMF targets, is being presented as evidence of restored budget discipline.
External debt repayments, projected at roughly $3 billion annually from 2028 onward, are considered manageable under current projections. Officials also highlight rising reserves and resumed import activity as signs of regained stability.
Beyond fiscal metrics, the Government has identified tourism and logistics as strategic growth drivers. Plans include airport expansion, expressway connectivity and enhanced port infrastructure, including a dry port near Colombo to speed cargo movement and improve customs efficiency.
Capital markets have shown signs of renewed confidence, but Hulangamuwa stressed that consistency not rapid policy swings will be crucial in sustaining investor engagement.
The overarching message from policymakers is one of measured reform: fewer abrupt shifts, more transparency and long-term predictability.