As household debt in Sri Lanka reaches alarming levels, the United Nations Development Programme (UNDP) is stepping up efforts to tackle financial vulnerability across the country. Partnering with the Central Bank of Sri Lanka, the UNDP has launched a nationwide financial literacy campaign aimed at empowering citizens, especially women and small business owners, through digital tools, education, and private sector collaboration.
Worsening Since 2023
Sri Lanka’s household debt crisis has likely worsened since it was last assessed in 2023, according to the United Nations Development Programme (UNDP), which is now backing a major financial literacy initiative in partnership with the Central Bank of Sri Lanka.
Speaking at the launch of the Central Bank’s new financial education efforts, UNDP Resident Representative Azusa Kubota highlighted concerning data from the 2023 Multidimensional Vulnerability Index. The index revealed that debt was the single most significant factor contributing to household vulnerability, with 33.4% of the population already burdened by unsustainable borrowing to cover essentials such as food, medicine, and education.
“In view of the continued challenges around the rising costs of living, it is highly probable that individuals’ debt situations have deteriorated since the data was collected in 2023,” Kubota said during her address, warning of deepening economic strain on Sri Lankan families.
UNDP and Central Bank Launch Multi-Faceted Literacy Drive
The escalating crisis has spurred the UNDP and the Central Bank into a robust, multi-pronged response. Their joint initiative includes a suite of trilingual financial literacy tools, a dedicated teaching guidebook, and a high-impact video advocacy campaign. These resources have already been successfully piloted among youth and small business owners in the Colombo and Matara districts.
“It became very clear that we need multi-pronged solutions to address debt sustainability at the household level,” Kubota said. She noted that poor financial decision-making, particularly among women, who are often excluded from formal financial education can lead to precarious and unsustainable living conditions.
Focus Shifts to Women and Private Sector Engagement
In a significant move to scale up the impact, the UNDP announced the second phase of its Private Sector Giving Facility, which will target women-led businesses and promote broader financial education initiatives. The first phase of the program, launched during Sri Lanka’s economic peak crisis, successfully mobilized over USD 6 million in support for vulnerable communities.
“The more we join hands, the stronger we become,” Kubota emphasized, urging public and private stakeholders to collaborate in expanding the initiative’s reach and impact.
Digital Finance Seen as the Next Frontier
Looking ahead, the UNDP has identified digital finance and fintech solutions as essential tools for the future of financial literacy. Kubota underscored the importance of integrating marginalized communities into the digital economy through education and innovation.
“We believe the next frontier of financial literacy must have fintech and the digital economy,” she stated, pointing to the transformative potential of technology in closing financial gaps and enabling more inclusive economic participation.
As Sri Lanka continues to grapple with rising living costs and unsustainable personal debt, the UNDP-Central Bank partnership offers a proactive and strategic approach to empower individuals, promote resilience, and build long-term financial stability starting at the grassroots.
