Sri Lanka’s digital future: Framework for reaching digital economy by 2030

The digital economy is not only an economic goal; it is the pathway to a more resilient, inclusive, and globally integrated Sri Lankan future

As Sri Lanka recovers from one of its most difficult economic periods since independence, the national discussion is shifting from stabilisation to long-term transformation. The 2026 Budget, introduced under the Public Financial Management Act (PFMA), signals the start of a new era of economic governance rooted in predictability, fiscal responsibility, and structural reform. Central to this shift is the country’s growing drive towards a modern, innovation-led digital economy — one that makes digital infrastructure, e-government, and technology-enabled services key pillars of future growth.

This vision requires more than sectoral growth; it necessitates rethinking how the State, the private sector, and society engage in the digital age. It calls for new investments in public digital infrastructure, modernised regulation, widespread digital skills, and a coherent national strategy that aligns ambition with action. To facilitate this transformation, this article introduces a comprehensive National Digital Economy Framework—a structured roadmap outlining the pillars, enablers, and outcomes vital to creating a competitive and inclusive digital nation.

As policymakers consider the way forward, and industry leaders assess Sri Lanka’s role in the global digital landscape, this analysis offers a grounded, future-oriented view of what must change—and what is achievable—between now and 2030.

Digital public infrastructure: The backbone of a modern digital economy

Budget 2026 lays an unprecedented foundation for digital public infrastructure (DPI), which is essential for accelerating digital participation across society and the economy. The introduction of the Sri Lanka Unique Digital Identity (SL-UDI), scheduled for rollout in late 2026, will serve as a single, secure digital identifier linking citizens to Government services, banking systems, taxation platforms, and welfare programs. This is expected to reduce fraud, improve service targeting, streamline public service delivery, and formalise large segments of the informal economy. Complementing SL-UDI is the proposed national e-invoicing system, which will modernise tax administration, expand the tax base, and promote transparent transactions. Digital payments and QR-based transactions are also gaining momentum, supported by the national payment switch and fintech innovations. The Government’s work on a national cybersecurity framework and data protection standards further signals its intention to create a safe, reliable digital environment. These foundations mirror successful examples such as India’s Aadhaar and Singapore’s SingPass, which have unlocked rapid digital expansion. For Sri Lanka, DPI is not optional; it is the infrastructure that will determine whether the digital economy can scale quickly and inclusively.

The proposed National Digital Economy Framework provides a structured roadmap for these reforms. Its eight pillars—Digital Public Infrastructure, Connectivity, Digital Government, Digital Business and Innovation, Skills Development, Digital Trade, Digital Finance, and Cybersecurity—identify the essential building blocks of a competitive digital nation. These pillars are supported by four enabling conditions: a modern regulatory environment, fiscal stability through the PFMA, innovation-focused investment and FDI, and strong public–private partnerships. Together, they aim to deliver three national outcomes: Digital Growth, Digital Inclusion, and Digital Governance

Private sector momentum and structural challenges

The private sector remains central to driving Sri Lanka’s digital future, and several trends indicate positive momentum. Demand for ICT/BPM talent continues to grow, with companies increasingly seeking software developers, data scientists, AI specialists, and cybersecurity analysts. The startup ecosystem is expanding, with entrepreneurs developing solutions in digital health, fintech, logistics technology, agritech, and e-commerce. At the same time, corporate digital transformation is accelerating, as banks, manufacturers, retailers, logistics firms, and service companies invest in cloud computing, enterprise resource systems, robotic process automation, and AI-driven analytics. These developments show that digital adoption is taking place across multiple layers of the economy. Yet progress is uneven. Talent shortages caused by migration have strained the ICT workforce. Digital infrastructure gaps exist outside major urban areas, limiting business growth and digital inclusion. The adoption of e-government remains slow, with many administrative functions still operating manually. Micro-SMEs—which make up a larger part of the business ecosystem—struggle with digital literacy, limited access to finance, and low exposure to digital markets. These challenges must be addressed if the private sector is to operate at the scale required to achieve the set targets.

Why fiscal stability and the PFMA matter for digital transformation

A thriving digital economy requires more than technology; it demands macroeconomic predictability and confidence. Budget 2026, underpinned by the Public Financial Management Act (PFMA), establishes fiscal rules that foster long-term investment stability. With commitments to maintain a primary surplus of 2.3% of GDP, limit primary expenditure to 13% of GDP, preserve public investment at 4% of GDP, and reduce the fiscal deficit to 5.1% in 2026, Sri Lanka is moving toward a rules-based fiscal framework that enhances credibility. For digital investors—startup founders, technology multinationals, outsourcing companies, and fintech platforms—fiscal stability reduces the risks associated with currency volatility, inflation spikes, and inconsistent policy environments. As confidence returns, foreign direct investment into digital infrastructure, AI development, cloud architecture, and innovation hubs becomes more likely. The PFMA’s commitment to predictability and accountability aligns Sri Lanka with international standards, making the country a more attractive destination for technology-driven investment. In essence, fiscal discipline is not separate from digital ambition; it is the foundation for scaling it.

This vision requires more than sectoral growth; it necessitates rethinking how the State, the private sector, and society engage in the digital age. It calls for new investments in public digital infrastructure, modernised regulation, widespread digital skills, and a coherent national strategy that aligns ambition with action

Global shifts create a unique window of opportunity

The global economy is undergoing rapid digitalisation, and Sri Lanka must position itself strategically to capitalise on shifting trends. As companies diversify their outsourcing portfolios beyond India and the Philippines, Sri Lanka has the opportunity to attract high-value shared service centres, fintech development units, AI engineering hubs, and 

cybersecurity operations. Demand for AI and automation continues to rise globally, opening opportunities for Sri Lankan talent in data annotation, model training, algorithm audits, and AI engineering. Digital trade is expanding as businesses adopt cross-border e-commerce and digital services, creating revenue opportunities for online retailers, logistics platforms, and service exporters in Sri Lanka. Rising global demand for cybersecurity offers another high-value niche in which Sri Lankan professionals excel. The key is to act quickly. Competing countries are aggressively improving their digital readiness, and Sri Lanka must accelerate reforms to secure a competitive position. The global window for digital expansion will not stay open indefinitely, and Sri Lanka’s ability to capture opportunities depends on how fast it can modernise its workforce, infrastructure, and regulatory frameworks.

Barriers that could slow the journey to the digital economy 

Several barriers could hinder Sri Lanka’s progress toward meeting its digital economy target by 2030. Talent migration remains a critical challenge, undermining the availability of skilled ICT workers just as global demand intensifies. Without retention incentives, expansion will slow. Infrastructure shortcomings in rural and semi-urban areas restrict digital participation and investment, limiting the nationwide spread of e-commerce, digital payments, and service delivery. Government digitisation has not progressed at the required pace, leaving many public systems fragmented and heavily manual, slowing regulatory processes and increasing the cost of doing business. Regulatory frameworks for AI, data governance, fintech innovation, and cross-border digital trade remain incomplete, creating uncertainty for investors. Meanwhile, SME digital adoption remains low due to limited awareness, skill gaps, and poor access to affordable finance. Without targeted interventions, these barriers could significantly delay Sri Lanka’s digital transformation. Overcoming them will require coordinated reforms, targeted investment, institutional strengthening, and strong public–private collaboration.

Budget 2026, underpinned by the Public Financial Management Act (PFMA), establishes fiscal rules that foster long-term investment stability. With commitments to maintain a primary surplus of 2.3% of GDP, limit primary expenditure to 13% of GDP, preserve public investment at 4% of GDP, and reduce the fiscal deficit to 5.1% in 2026, Sri Lanka is moving toward a rules-based fiscal framework that enhances credibility

Assessing the realistic path to a $ 15 billion digital economy by 2030

Reaching the $ 15 billion target is achievable but will require sustained effort and precise execution. With the digital economy ambition in mind, Sri Lanka’s ICT/BPM and digital services exports—currently around $ 2 billion—would need to expand to perhaps $ 7–8 billion by 2030. Achieving this scale will require significant investment in skills, infrastructure and industry capabilities. Domestic digital services must grow substantially through e-commerce, fintech, digital financial inclusion, digital logistics, and AI-enabled business processes. The rollout of SL-UDI, e-invoicing, and digital payment architecture must be timely and complete. Industry analysts suggest that Sri Lanka may need to train or reskill around 300,000 digitally capable workers nationally to meet the demands of a scaled-up digital economy. Foreign direct investment must increase significantly, particularly in cloud infrastructure, AI research, and cybersecurity. Government digitisation must become mandatory and systematic, with reforms in land administration, public procurement, financial management, and service delivery. The overall feasibility of the target depends on Sri Lanka’s ability to accelerate reforms over the next five years. If implemented with discipline, Sri Lanka can emerge as a competitive digital hub in South Asia.

Proposed national digital economy framework

To guide this transformation, Sri Lanka would benefit from a cohesive, structured framework that aligns public policy, private-sector investment, and national development priorities. The proposed National Digital Economy Framework consists of three outcomes, four enablers, and eight core pillars, ensuring a holistic approach to digital transformation.

At the top sit the three national outcomes: Digital Growth, which focuses on expanding digital exports and productivity; Digital Inclusion, ensuring that every citizen and SME benefits from the digital transition; and Digital Governance, strengthening transparency and service delivery. These outcomes are supported by four key enablers: a regulatory environment that promotes innovation and safeguards rights; macro-fiscal stability under the PFMA; increased innovation investment and FDI; and strong public–private partnerships that accelerate execution. 

The heart of the framework consists of eight foundational pillars. Digital Public Infrastructure (including SL-UDI and digital payments) provides the backbone. Digital connectivity ensures equitable access nationwide. Digital Government 

modernises public services. A vibrant digital business ecosystem drives innovation. Digital skills development prepares the workforce for the future. Digital trade expands export competitiveness. Digital finance enhances financial inclusion and transaction efficiency. Finally, cybersecurity and data protection create trust—an essential prerequisite for digital participation.

Together, these components form a national roadmap that can guide Sri Lanka toward its 2030 target. This framework ensures that digital transformation is not ad hoc or fragmented but aligned with a clear, structured, and outcome-driven national strategy.

The road ahead

The years 2026 to 2030 will be the defining period for Sri Lanka’s technological and economic future. With the PFMA providing long-awaited macroeconomic stability and Budget 2026 laying the foundations for digital expansion, the country is finally positioned to pursue a coordinated, long-term digital transformation. Yet success will hinge entirely on execution. Sri Lanka must break decisively from manual, paper-based processes that continue to hinder public service delivery and business operations. The transition to fully digitised Government systems—supported by SL-UDI, e-invoicing, digital payments, and online public finance management—must become non-negotiable. This is not simply an administrative upgrade; it is the backbone for a modern digital state.

Equally important will be investment in digital talent. Without a large, skilled workforce in AI, software engineering, cybersecurity, and data analytics, the $ 15 billion digital economy target will remain aspirational. The next five years must therefore prioritise national digital literacy programs, large-scale reskilling, and incentives to retain ICT professionals. Regulatory modernisation is another critical pillar. Sri Lanka must build clear frameworks for data protection, AI governance, fintech innovation, and digital trade to ensure investor confidence and consumer trust.

The proposed National Digital Economy Framework provides a structured roadmap for these reforms. Its eight pillars—Digital Public Infrastructure, Connectivity, Digital Government, Digital Business and Innovation, Skills Development, Digital Trade, Digital Finance, and Cybersecurity—identify the essential building blocks of a competitive digital nation. These pillars are supported by four enabling conditions: a modern regulatory environment, fiscal stability through the PFMA, innovation-focused investment and FDI, and strong public–private partnerships. Together, they aim to deliver three national outcomes: Digital Growth, Digital Inclusion, and Digital Governance.

Suppose Sri Lanka aligns Government strategy, private-sector innovation, and investment priorities around this framework. In that case, the country can shift from low-value, volatility-prone industries to high-value digital sectors that generate export earnings and skilled employment. The window of opportunity is narrow, but it is real. With disciplined implementation and sustained collaboration, Sri Lanka can move from recovery to competitiveness—transforming the digital economy from an ambition into a national growth engine. In this sense, the digital economy is not only an economic goal; it is the pathway to a more resilient, inclusive, and globally integrated Sri Lankan future.

(The author is a Professor of Finance at the Sabaragamuwa University of Sri Lanka, a Director at the PMF Finance PLC, and the President of the Sri Lanka Institute of Marketing.)