At least half a million people in Sri Lanka lost their jobs in 2022, majority of them being employed women and those in the industry and services sectors, the World Bank claimed.

According to the Vice President for the South Asia Region of the World Bank Group, those already classified as poor in Sri Lanka have seen a 65% increase in their cost of living, while the increase was 57% for the non-poor, highlighting the significant loss of welfare for all Sri Lankans.

In a piece of writing on the island’s crisis situation, Raiser attributed Sri Lanka’s economic adversity to years of economic mismanagement, weak governance, poor policy choices and the impacts of external shocks such as the Covid-19 pandemic and Russia’s invasion of Ukraine.

Raiser noted that the depth of the crisis has made it clear that Sri Lanka needs a new development model. However, the road to recovery is challenging and the necessary fiscal adjustment measures can be painful, he added.

Debt relief from Sri Lanka’s creditors and fresh financing from international financial institutions are thus urgent to ensure people don’t lose patience with reforms and the opportunity for a change is not lost.

The United States asserted that it is Sri Lanka’s partner and stands with the island nation as it navigates through this difficult time.

The US Ambassador to Sri Lanka, Julie J. Chung said that the relationship between the US and Sri Lanka is broad and deep.

She also highlighted in her opening remarks that 2023 is the 75th anniversary of diplomatic relations between the U.S, and Sri Lanka, and noted that “the relationship between our two countries is broad and deep, and at its very heart is our shared commitment to People, Progress, and Partnership.”

The Ambassador said that the core elements of the Indo-Pacific Strategy encompass a “shared vision for an Indo-Pacific that is Free and Open, Prosperous, Connected, Resilient, and Secure.”

She emphasized that “we can all agree that working together to build a prosperous Indo-Pacific is more critical now than ever when we consider the economic challenges Sri Lanka is currently facing. So let me be clear: the United States is Sri Lanka’s partner and stands with Sri Lanka as it navigates through this difficult time.”

She expressed these views at an event hosted by the General Sir John Kotelawala Defense University, in partnership with the U.S. Embassy, to launch a publication entitled “A Shared Vision for the Indo-Pacific: Implications for South Asia”.

It also discusses the U.S. Indo-Pacific Strategy on its one-year anniversary, including how the Strategy supports regional visions for prosperity, democracy, and security.

The publication includes articles and remarks offering a variety of perspectives on the Strategy from regional analysts and U.S. experts.

Vice Chancellor of General Sir John Kotelawala Defense University Major General Milinda Peiris welcomed participants to the event, noting that “This year marks the 75th anniversary of the U.S.-Sri Lanka diplomatic relations. It is a great pleasure that the U.S. embassy and the KDU could launch this valuable publication on such a memorable juncture.”

In his keynote address, Peter A. Gumataotao, Rear Admiral (Rtd) U.S. Navy, Director of the Daniel K. Inouye, Asia-Pacific Center for Security Studies, said that “What is at stake is our ability to respond to activities that undermine the values and principles of a free and open Indo-Pacific.

Competition is good, but when rules are changed, the process should be transparent and agreed on. [The U.S. and our Allies and Partners should all work collectively as a group of like-minded countries to ensure the preservation of the existing framework that has provided all of us these many decades of peace, prosperity, and opportunities for development.”

Sri Lanka is reeling under last year’s crushing economic meltdown and consequent political turmoil, but it is still a good time to invest in the cash-strapped island nation, according to Indian business leaders in capital Colombo.

While acknowledging the many challenges facing the business community in Sri Lanka, the CEOs of Indian companies point to “enormous scope” for foreign direct investment in a host of sectors, such as information technology, tourism, and renewable energy.

Investor sentiment outside Sri Lanka was rather negative last year, “mainly due to the kind of international media coverage of the crisis here”, but there is a “welcome, positive shift” compared to June last year, when the crisis escalated, notes Ashish Chandra, CED and MD, Airtel Lanka.

“Essential supplies have been restored, there is no social unrest, the government has taken many important steps for economic recovery,” he says.

T.S. Prakash, Country Head of the Umesh Modi Group of Companies, highlights “political stability and policy stability” as the two main factors that businesses look for. “We are confident that the Sri Lankan authorities are taking the right steps to achieve both in the next few years,” he says.

On the policy front, President Ranil Wickremesinghe recently said his government has implemented 15 tasks — including a sharp hike in interest rates, and in fuel and energy pricing — set out by the International Monetary Fund (IMF), whose $2.9 billion package Sri Lanka is desperately hoping for, to expedite its economic recovery.

Politically, his government faces mounting criticism, over the rising cost of living, and more recently, on the postponement of the local government elections owing to the “lack of adequate funds”.

However the Indian businessmen’s optimism, they say, stems from their experience of doing business in Sri Lanka for decades, in sectors spanning transportation, pharmaceuticals, cosmetics and technology.

“We have seen ups and downs but where there is a problem, there is certainly an opportunity,” says Mr. Prakash, who is also the President of the Indian CEO Forum that includes leaders of nearly 70 companies.

Of those, 38 are Indian companies and the rest are multinational corporations led by Indians based in Sri Lanka. Representatives of this organised forum for Indian businesses in Sri Lanka periodically meet with the Sri Lankan authorities, at the highest levels.

In recent months, they have met the President more than once, apart from holding discussions with the Prime Minister and the Governor of the Central Bank.

“The standard of living in Sri Lanka is very good. Citizens have an admirable civic sense, it is a very safe country,” says Umesh Gautam, CEO, Lanka Ashok Leyland, one of the oldest Indian investments in Sri Lanka.

According to Kishore D. Reddy, Managing Director, Platinum Realty Investments and President, Sri Lanka India Society, the nearly 70 companies in Sri Lanka that are part of the Indian CEO Forum employ about 20,000 Sri Lankans.

It is not that business was smooth for the Indian companies during the crisis, that too with the government slapping import restrictions to save foreign exchange, and amid soaring production costs.

At the height of the crisis last year, the Life Insurance Corporation of India approved an investment of LKR 600 million (roughly ₹13.20 crore) in LIC Lanka. Further, the companies undertook many CSR initiatives at the community level, the CEOs note.