Sri Lanka’s economy is growing but the recovery isn’t helping everyone, with poverty still twice as high as before the 2019 crisis, the World Bank announced. The country’s GDP is expected to grow 4.6% in 2025 before slowing to 3.5% in 2026. Economic output remains below 2018 levels despite recent progress. Food prices stay high and many families haven’t gotten back jobs they lost during the collapse. The World Bank’s new “Better Spending for All” report says Sri Lanka needs private investment and smarter government spending.
Sri Lanka went through its worst economic crisis in decades starting in 2019. Fuel, medicine, and food shortages hit the country hard. The government couldn’t pay its debts and inflation shot up. Mass protests forced President Gotabaya Rajapaksa to quit in 2022. The country has been working with the IMF on a bailout while trying to fix its debt problems.
World Bank official David Sislen said “the recovery is uneven and incomplete” and Sri Lanka needs “the private sector to invest and create jobs.” The bank wants the country to remove trade barriers, improve business rules, and update tax systems. More than 80% of government money goes to public salaries, welfare programs, and debt payments. This leaves little cash for roads, schools, and hospitals. About 10% of people live just above the poverty line.
The World Bank wants Sri Lanka to get more value from current government spending rather than trying to spend more or cut budgets dramatically. Key ideas include better public pay systems, smarter project planning, and finishing nearly completed infrastructure projects. The report also stresses better maintenance of existing roads and buildings. Climate change and global economic uncertainty could slow down the recovery even more.
