Sri Lanka vows economic sovereignty by 2028

Sri Lankan President Anura Kumara Dissanayake declared that by 2028, Sri Lanka will have laid the foundation for a stable and self-reliant economy, one capable of independently meeting its external debt obligations.

President Dissanayake made this statement while delivering the keynote address at the international conference “Sri Lanka’s Road to Recovery: Debt and Governance” held in Colombo yesterday (June 16).

Emphasizing that true sovereignty cannot exist amidst economic collapse, he asserted: “Our ultimate goal is to restore national sovereignty through economic stability and self-reliance.” He urged both public officials and citizens to contribute to this national endeavour, stressing that the ongoing reform process demands a collective and sustained effort.

The conference, a landmark event jointly hosted by the Ministry of Finance, the Central Bank of Sri Lanka, and the International Monetary Fund (IMF), drew global attention as it examined the country’s recovery from economic crisis, progress in debt restructuring, and future challenges under the IMF’s Extended Fund Facility (EFF) programme.

The President acknowledged that while a degree of macroeconomic stability has been restored, Sri Lanka must not be lulled into complacency. “Surface-level stability is not enough,” he stated. “We must deepen this stability through structural reforms that reshape the foundations of our economy.” He also highlighted several achievements of the current administration within a relatively short timeframe, expressing confidence in continuing the trajectory towards lasting political, economic, and social stability.

The conference was held to reflect on Sri Lanka’s experiences, lessons learned, and progress made during the debt restructuring process, as well as to discuss future challenges related to the IMF’s Extended Fund Facility programme.

Central Bank Governor Dr. Nandalal Weerasinghe echoed these sentiments, crediting the IMF and international partners for their support in Sri Lanka’s turnaround from a historic crisis that culminated in a sovereign default in 2022. Recalling the severity of the crisis—marked by hyperinflation, shortages, and institutional erosion, Dr. Weerasinghe attributed the collapse to years of fiscal mismanagement and unchecked vulnerabilities.

“Stabilization was just the first step,” he noted. “The real test lies in sustaining growth through structural change.”

He highlighted progress made under the EFF programme, including:

• Taming inflation – now back to single digits
• Rebuilding external balances – including rare current account surpluses and reserve growth
• Improving fiscal discipline – with narrowing deficits and emerging primary surpluses

Dr. Weerasinghe further underlined the importance of governance reforms, pointing to new legislation such as the Central Bank Act, the Public Financial Management Act, and the Anti-Corruption Act as pillars of long-term institutional credibility.

Urging stakeholders to maintain policy consistency, empower the private sector, and protect the vulnerable, he emphasized: “Sri Lanka’s transformation must be domestically driven, with strong institutions and united public commitment.”

Delivering a pivotal message, IMF First Deputy Managing Director Dr. Gita Gopinath commended Sri Lanka’s hard-won gains but reminded attendees of the cost borne by the people—particularly the most vulnerable.

“The key lesson from this crisis is that it must never happen again,” she said, stressing the need for continued reforms targeting structural weaknesses such as unsustainable subsidies and inefficient pricing mechanisms. Though socially painful, she insisted such changes are essential for resilience.

She also cautioned against “reform fatigue,” highlighting that half of Sri Lanka’s 16 past IMF programmes faltered due to reversals. “This time must be different,” Dr. Gopinath urged. “Success should be measured not just by numbers but by whether this becomes Sri Lanka’s last IMF programme.” She called for inclusive governance, civil society engagement, and equitable policymaking that reaches beyond Colombo—reaffirming the IMF’s commitment while urging national ownership of the recovery path.

Full Speech by President Anura Kumara Dissanayake

A few years ago, our country faced the consequences of the most severe economic crisis in its history. At that juncture, we were confronted with two possible paths: either to continue along the same failed and destructive route, or to choose a new path that would enable us to rebuild and uplift our nation.

Today, we can proudly state that the path we chose has brought significant victories. That success required responsibility and commitment from the political leadership. Moreover, critical responsibilities were borne by state institutions such as the Central Bank and the Ministry of Finance. However, the greatest contribution came from the public, who bore the brunt of these reforms. They made immense sacrifices and endured hardships to help rescue the nation from this crisis.

At present, our country has achieved a level of economic stability. Debt restructuring is nearing completion, and for a notable period, we have maintained stability in the value of the dollar. Furthermore, we have been able to generate expected state revenue and build foreign reserves. These indicators reflect strong macroeconomic stability. Nevertheless, the deep wounds of the crisis have not yet healed. The crisis is not yet resolved in its entirety.

Therefore, while surface-level stability has been established, it is imperative to further solidify this and elevate the economy. This requires the implementation of new reforms and structural transformations. I would like to draw attention to a few critical factors.

To ensure recovery, we need a strong public service. However, the expenditure we incur to maintain it is excessive and unsustainable. Our goal must be to provide efficient public service at minimal cost. We have already decided that certain state institutions should be closed—institutions established in response to socio-economic needs of a bygone era that are now obsolete. Some institutions performing overlapping functions must be consolidated, and others require a redefinition of their objectives.

Hence, we are committed to transforming the state apparatus. For this to succeed, inefficiency, and more importantly corruption and bribery, must be eradicated from the public sector.

Recent news reports highlight the depth of the current crisis: the Inspector General of Police is in hiding; the Commissioner General of Prisons has been imprisoned; officers from the Department of Motor Traffic and the Department of Immigration and Emigration have been arrested. These are serious concerns. Corruption is not merely about individual transactions, it results in vital projects being neglected and unnecessary ones being implemented, burdening us today.

To overcome this crisis, enhancing institutional efficiency and decisively combating corruption are essential. We are committed to this cause.

We believe the state must retain involvement in sectors sensitive to the economy. Sri Lanka’s energy and financial markets are small, and susceptible to monopolies. Therefore, the state must maintain a presence in key sectors. However, state institutions must not become burdens. Entities like the Ceylon Electricity Board and the Ceylon Petroleum Corporation, while vital, must not impose excessive costs on the public. Prices must reflect actual production costs, and we are committed to strengthening mechanisms to reduce them.

We also recognize that there are low-income groups who cannot afford even essential services. As reforms are implemented, the state must provide relief to these groups. This is the responsibility of a just government.

In every society, certain groups are disconnected from economic activity, the elderly, the disabled, or individuals with personal hardships. It is the duty of the state to protect them. Talking about development while ignoring these communities is futile. This is a matter of humanity and justice.

We support a policy of well-targeted assistance to vulnerable communities, not politicised aid, but social justice. Based on past experience, welfare programmes have often been politicised. But I assure you, we will not use social protection schemes for political gain.

While we have achieved stability in some areas, progress in others must accelerate. First, we must attract direct foreign investment (FDI). Historically, we failed to attract sufficient FDI due to both global and local challenges. This must change.

We are not attracting investment from a place of strength, but rebuilding after collapse. We must create a more attractive environment, including strategic incentives. Discussions are ongoing with the IMF in this regard.

We must also revitalise national production. Many SMEs collapsed, not due to mismanagement, but due to the broader economic collapse. We must provide them with targeted relief.

Lastly, while growth is important, economic expansion is equally vital. Rural communities have been marginalised. Urban indicators do not reflect their realities. We must integrate citizens from remote areas into the economy.

We are deeply grateful to the IMF for its support and to the people for their patience and endurance. We aim to make this our final IMF programme. By 2028, we aspire to build a stable, self-reliant economy.

A state cannot be sovereign if its economy has collapsed. Independence is not possible in economic ruin. Whether we like it or not, we have already lost a measure of sovereignty. Our mission is to restore it. That requires unwavering effort and the united commitment of leaders, public officials, and the people.