ODI and CEPA-led study urges bold reforms for inclusive development

From left: Central Bank of Sri Lanka former Senior Deputy Governor Yvette Fernando, ODI Global Visiting Senior Fellow and Study Group Convenor Dr. Ganeshan Wignaraja, CEPA Executive Director and Co-Author Prof. Sirimal Abeyratne, and ODI Global International Economic Development Group Prof. Dirk Willem te Velde

• New Growth Report charts path for Sri Lanka’s economic revival

By Amira Cader

A new report released recently by the Independent Growth Study Group presents a comprehensive roadmap for Sri Lanka’s economic recovery and long-term development, as the country looks to emerge from its deepest economic crisis in decades.

Titled ‘Sustaining Transformative Growth in Sri Lanka 2025-2030,’ the study was produced by a team of nine leading economists and development experts under the guidance of ODI Global and the Centre for Poverty Analysis (CEPA). The report lays out six key policy areas needed to support inclusive and sustainable growth: macroeconomic stability, global trade integration, labour and capital market reforms, targeted sectoral strategies, poverty reduction, and political consensus.

The study commends Sri Lanka’s recent progress in stabilising its economy and reducing inflation but warns that these gains remain fragile unless accompanied by deeper structural reforms. It emphasises the urgency of tackling persistent poverty and low productivity through a shift towards high-value sectors and modernised governance.

ODI Global Visiting Senior Fellow and Study Group Convenor Dr. Ganeshan Wignaraja said: “Sri Lanka has shown remarkable resilience in overcoming recent economic hardship, but the journey towards prosperity requires more than resilience – it demands bold action. This report offers a framework for truly transformative growth that uplifts all Sri Lankans.”

Key growth sectors identified in the report include tourism, the digital economy, agriculture, and niche manufacturing. These are seen as strategic areas to boost exports, attract investment, and create jobs—particularly for youth and women.

“The 44% tariff imposed by the US, set to take effect on 1 August, is expected to result in the loss of 50,000 jobs. This decision will deliver a serious blow to Sri Lanka’s export sector and the thousands of families who depend on it,” Dr. Wignaraja said.

CEPA Executive Director and co-author Prof. Sirimal Abeyratne noted that Sri Lanka’s longstanding trade underperformance is a major obstacle to growth. 

“Our findings show that the country’s export weakness stems from an anti-export bias and complex regulations,” he said. “Reforms that encourage trade openness and reduce business barriers are essential to stimulate investment and make Sri Lanka globally competitive.”

The report also positions Sri Lanka’s experience as a potential model for other emerging economies grappling with crisis recovery. ODI Global International Economic Development Group Prof. Dirk Willem te Velde emphasised the global relevance of the findings.

“Successful outcomes will require pragmatic leadership, bold policy decisions, a clear vision for Sri Lanka’s future prosperity, and support from development partners. Now is the time for such leadership to grasp the opportunities for transformative growth and avoid sliding back into another macroeconomic crisis,” he added.

The final chapter of ‘Sustaining Transformative Growth in Sri Lanka 2025-2030’ highlights that Sri Lanka has made a promising start in stabilising its economy, with successful debt restructuring, tighter fiscal rules, and greater independence for the Central Bank. However, it warns that major structural reforms are urgently needed to achieve inclusive and transformative growth. The report calls for bold, immediate action to raise economic growth to at least 5% annually over the next five years to avoid further debt crises and reduce poverty. It stresses the importance of implementing the Economic Transformation Act effectively and building State capacity. The chapter concludes by urging strong leadership, clear vision, and international support to secure Sri Lanka’s economic future.

To broaden access, the report will soon be published in Sinhala and Tamil and will be available in bookstores across Sri Lanka. A digital version is already available for download via the ODI Global website.

Access the full report here: www.odi.org/publications/sustaining-transformative-growth-in-sri-lanka-odi-cepa-growth-study-report.