An independent study group has issued a stark warning: while Sri Lanka’s economy is stabilizing after its worst crisis, a significant risk of another downturn persists. The report, titled “Sustaining Transformative Economic Growth in Sri Lanka 2025-2030,” highlights that the nation stands at a critical juncture.
Poverty Doubles: Quarter of Population at Risk
One of the most alarming findings of the report is the projected poverty rate for 2024, estimated at a staggering 25% of the population. This figure represents a doubling of poverty compared to 2021, reversing gains made in poverty reduction during the economic crisis. The report indicates that Sri Lanka has regressed to the high poverty levels last seen in the early 2000s.
Urgent Reforms Needed to Avert Further Crisis
To avoid another painful debt restructuring and a further increase in poverty, the report strongly recommends the urgent implementation of structural reforms. Without these reforms, especially amidst rising risks of a global trade war and a darkening global economic outlook, economic growth could plummet below 3%. This would further exacerbate already elevated poverty levels.
The report emphasizes the critical need to maintain macroeconomic stability and implement a series of economic growth policies, with a particular focus on enhancing state capacity.
Expert Panel Behind the Report
The study was compiled under the auspices of ODI Global and the Centre for Poverty Analysis, with contributions from an independent group of expert economists. This group includes former Central Bank Governor Dr. Indrajit Coomaraswamy, current Assistant Governor of the Central Bank Dr. Chandranath Amarasekara, and Emeritus Professor Sirimal Abeyratne of the University of Colombo.
The report also commends the current government for its continued engagement with the International Monetary Fund program and for the progress made in the debt restructuring negotiation process.
