Sri Lanka’s hidden crisis: The cost of outdated systems in a new reality

SRI Lanka today is not suffering only from an economic crisis. It is suffering from a system crisis.

Across the country, we see delayed projects, stalled investments, struggling businesses, rising unemployment, declining public services, and increasing dissatisfaction among citizens. While much attention is given to financial indicators such as debt, inflation, and reserves, far less attention is given to a deeper issue that silently drains national value every day: our systems are outdated, fragmented, and unable to adapt to reality.

Most of Sri Lanka’s public sector rules, procurement frameworks, regulatory structures, and administrative procedures were designed for a world that assumed stability. Stable currency. Predictable markets. Normal supply chains. Moderate inflation. Functioning credit systems. These assumptions may have held true twenty or thirty years ago. They do not hold today.

Yet we continue to manage a post-crisis economy using pre-crisis logic.

The result is massive hidden economic loss. Projects that should take two years take five. Investments that could generate jobs are stuck in approvals. Contractors and suppliers collapse under cash flow stress. Banks accumulate non-performing loans. Public assets remain incomplete or underutilised. Each delay, each rigidity, each outdated rule quietly destroys national wealth.

What Sri Lanka needs now is not more controls, more approvals, or more paperwork. It needs innovative governance. Adaptive regulation. Entrepreneurial public administration

The human cost

But beyond the economic cost lies a deeper human cost.

When systems fail to adapt, people pay the price. Workers lose jobs when projects stall. Families fall into poverty when businesses collapse. Young professionals lose faith and migrate. Entrepreneurs give up because navigating the system becomes harder than building the business. Citizens experience declining services and growing frustration, not because of lack of effort, but because the system itself is misaligned with reality.

This creates a dangerous cycle: economic stress leads to social dissatisfaction, social dissatisfaction leads to mistrust in institutions, and mistrust weakens the very systems needed for recovery.

The real problem is not lack of laws. Sri Lanka has no shortage of rules, regulations, circulars, and procedures. The problem is that we treat rules as sacred even when reality has changed completely.

Systems should serve people. People should not suffer to protect systems.

In times of stability, rigid systems create order. In times of crisis, rigid systems create paralysis.

What Sri Lanka needs now is not more controls, more approvals, or more paperwork. It needs innovative governance. Adaptive regulation. Entrepreneurial public administration. Decision-making that recognises real-world conditions instead of forcing everyone to operate inside theoretical frameworks.

This does not mean abandoning accountability. It means upgrading it. It means designing systems that are flexible, transparent, responsive, and human-centered. Systems that allow institutions to solve problems, not merely enforce procedures. Systems that enable solutions instead of blocking them.

Adaptive systems for faster recovery

Countries that recover fastest from crises are not those with the most rules. They are those with the most adaptive systems. Systems that learn. Systems that evolve. Systems that empower professionals to make responsible decisions within clear but flexible boundaries.

Sri Lanka stands at a crossroads. We can continue to manage today’s challenges using yesterday’s structures and slowly bleed economic and social value. Or we can reimagine how governance, regulation, procurement, and public administration function in a volatile, complex, post-crisis world.

The future of job creation, poverty reduction, service delivery, and national confidence will not be decided only by budgets or loans. It will be decided by something far more fundamental: whether our systems are brave enough to change.

Because in the end, the greatest cost of outdated systems is not financial. It is the silent loss of opportunity, dignity, and hope.

In this context, it is also important to recognise the political mandate that now exists in Sri Lanka. The people of Sri Lanka have elected a new Government with a historic two-thirds majority, reflecting a clear public understanding that meaningful change requires not only good intentions, but also a strong and stable governance structure capable of implementing reform without paralysis. This mandate represents more than an electoral outcome; it represents a collective national expectation that governance systems must be reformed, modernised, and aligned with the realities faced by citizens and businesses.

A strong Government is not an end in itself. Its real value lies in its ability to enable system-level transformation across all layers of administration, regulation, and public service delivery. The same decisiveness that exists at the national political level must now translate into lower levels of governance, including ministries, departments, regulatory bodies, procurement agencies, and state institutions. Without such trickle-down reform, political strength remains symbolic rather than transformative.

The future of job creation, poverty reduction, service delivery, and national confidence will not be decided only by budgets or loans. It will be decided by something far more fundamental: whether our systems are brave enough to change

Institutional reforms 

Sri Lanka today has a rare opportunity. With a powerful leadership, a dynamic governance team, and a stable parliamentary horizon, the country has both the authority and the time required to implement deep institutional reforms. This includes rethinking how decisions are made, how risks are managed, how accountability is enforced, and how innovation is encouraged within the public sector. If these structural changes are pursued with courage and consistency, Sri Lanka can move beyond crisis management towards genuine system renewal.

The real aspiration should not merely be economic recovery, but institutional reinvention. A future where governance systems are adaptive, responsive, and citizen-centred. A future where rules enable progress rather than block it. A future where public institutions are designed to solve problems, not simply administer procedures. If this opportunity is seized, Sri Lanka has the potential to become a reference point for other nations, not as a country that survived a crisis, but as a country that transformed itself through bold and intelligent reform.

In such a scenario, the national ambition should be clear: not simply to rebuild what was lost, but to build a system so resilient, innovative, and humane that one day other countries will say, “We want to build our country the way Sri Lanka did.”

In this broader national journey, it is also important to acknowledge the leadership role being played by the President and the dynamic national governance team, who have received a clear mandate from the people to steer the country towards the vision of a “happy life and a rich country”.

This journey is neither simple nor linear, and it is being pursued amid significant economic, social, and institutional challenges. Yet the direction is clear: to move beyond crisis response towards long-term national renewal, where economic growth is matched with social wellbeing, institutional reform, and inclusive development. The success of this vision will ultimately depend not only on political leadership, but on the ability of the entire governance system to align with this national aspiration and translate it into practical, adaptive, and citizen-centred outcomes across all sectors of society.

(The author is a senior leader in Sri Lanka’s chamber and industry ecosystem, engaged in national and international dialogue on entrepreneurship development, regulatory reform, and youth innovation)