Sri Lanka’s promises of economic revival and sustainable development are being undermined by sluggish reforms and strategic shortfalls, according to top economist Prof. Razeen Sally. Despite political shifts and reduced corruption scandals, the nation risks falling behind unless it urgently embraces structural change.
Sri Lanka is failing to deliver the economic transformation it so frequently promises, despite a political shift and ongoing discussions about revival and sustainable growth. This was the stark warning issued by internationally acclaimed economist Prof. Razeen Sally at the Capital Market Conference 2025 held in Colombo.
Prof. Sally, a former Associate Professor at the Lee Kuan Yew School of Public Policy in Singapore, past Chairman of the Institute of Policy Studies (IPS), and senior policy advisor, said that while some progress is visible, Sri Lanka lacks the reform momentum needed to climb onto a sustainable higher growth path.
When asked whether the country is doing anything substantially different to escape its stagnation, Sally’s verdict was unequivocal: “The answer is clearly, not enough.”
He acknowledged that the political change seen in the final quarter of last year brought a few hopeful signs. “In both the President and the Prime Minister, we now have leaders who appear to carry the right intentions. They are not weighed down by the legacy of corruption and mismanagement that characterized previous governments. They seem pragmatic,” Sally said.
He further noted that a few qualified professionals have been appointed to strategic positions and that the current administration appears more committed to tackling corruption. “Things are moving forward, slowly. And, importantly, we’re no longer plagued by the daily corruption scandals that used to dominate Sri Lankan politics for nearly two decades. That’s the good news,” he added.
However, Sally was quick to stress that these improvements are limited and superficial. “It is nowhere near enough,” he emphasized. Despite a cleaner political climate and some competent appointments, the deeper, structural challenges that have long held Sri Lanka back remain largely unaddressed.
“There is no significant shift in approach. The public still doesn’t feel real change. And the government itself lacks clarity on what structural reforms are truly needed or how to position the country strategically in an increasingly competitive and unstable global economy.”
One critical threat Sally highlighted is the potential imposition of punitive U.S. tariffs on Sri Lankan exports, which could average over 44%, dealing a major blow to the nation’s fragile trade sector. He described this looming trade danger as a wake-up call for Colombo.
“A strategic government would treat this like a turning point. Right now, there’s a giant truck barreling down the U.S. highway, and Sri Lanka is the deer frozen in the headlights,” Sally warned, urging policymakers to act boldly.
Instead of seizing the moment to initiate far-reaching economic and governance reforms especially in trade liberalization and foreign direct investment Sally criticized the government for falling back on outdated methods.
“Their solution is to cobble together a delegation and fly to Washington for bilateral talks. That’s not strategy. That’s tactics,” he asserted.
For Sri Lanka to rise above its economic crisis and realize long-term prosperity, Prof. Sally insists it must shift from short-term fixes to deep-rooted, strategic reforms. Without this, the country’s ambitions of higher growth, global competitiveness, and investor confidence will remain unfulfilled promises.
