By Shanthi Mendis –

Dr. Shanthi Mendis

The deplorable state of Sri Lanka 18 months ago

In November 2024, when the National People’s Power (NPP) led by President Anura Kumara Dissanayake (AKD), came to power, Sri Lanka was bankrupt and in the grips of a corrupt and authoritarian government. Poor economic discipline and reckless borrowing, coupled with the pilfering of public funds, had crippled the national economy. The Supreme Court had ruled that former President Gotabaya Rajapaksa, former Prime Minister Mahinda Rajapaksa, former Finance Minister Basil Rajapaksa and senior officials of the Central Bank and the Treasury had breached their constitutional duties, contributing to the economic crisis. Decades of political interference had eroded the independence of the police force and the judiciary. Bribery and system-wide corruption were rampant. The free flow of information to the public and freedom of speech were severely curtailed to cover up State irregularities and crimes. In addition, Sri Lanka was facing a rapidly growing drug trafficking crisis. Political decay had also enabled the growth of a clandestine network of armed criminal gangs with links to the military, the State intelligence and law enforcement agencies. Investigations have uncovered evidence of financial links between these networks and powerful politicians. The fledgling NPP government had to first dismantle this so-called “deep state” that threatened democratic integrity. A high-risk venture.

Is the economy recovering?

According to the World Bank’s Development Update 2026, Sri Lanka’s economy is recovering. In 2025 the economy expanded by 5%, supported by a set of tough reforms, rising exports and fiscal stability. It was driven by a 9.1% increase in private consumption and 20% increase in workers’ remittances.

According to critics, the 2026 national budget is not transformational. The Ministry of Finance has limited fiscal flexibility because interest payments remain one of the largest expenditure items. According to recent budget estimates, interest payments will absorb 49 per cent of total revenues in 2026. Despite this brutal reality, could future budgets invest in improving public sector inefficiencies, export diversification, and local food production to ease the rising cost of living?

In April 2026, the International Monetary Fund (IMF) concluded the Fifth and Sixth Reviews of Sri Lanka’s reform program supported by the IMF’s Extended Fund Facility, which will provide access to about US$4700 million in financing. According to the IMF, the economic reforms implemented by the Government have continued to support the recovery, with reserves accumulating, real GDP growth and revenue mobilisation outperforming expectations. IMF has also stressed the critical need to advance reforms to further safeguard macroeconomic stability and maintain the economic recovery and inclusive growth. A difficult uphill task.

Has the administration of justice and law enforcement improved?

Strengthening Sri Lanka’s police force and the judiciary is mainly about improving professionalism, accountability, and resources so that both systems can function fairly and efficiently. Independence and freedom from political influence are equally central to both. Across both institutions, anti-corruption enforcement needs to be credible and consistent, supported by strong whistleblower protections and independent investigative capacity.

Sri Lanka has a legacy of political interference in the judiciary. In 2013, the 43^rd Chief Justice of Sri Lanka was impeached by Parliament and removed from office by President Mahinda Rajapaksa. In 2015, the impeachment was declared unlawful, and the Chief Justice was reinstated by President Maithripala Sirisena. In the past, such political interference of the judiciary and the police force has undermined democracy, entrenched impunity and eroded public trust. Politically influenced police and courts failed to hold perpetrators accountable. Justice was often denied to victims and the vulnerable. What has happened since the Easter Sunday attack of 21 April 2019, which killed 260 people and injured at least 500 is just one such example. After the Presidential Election in 2019, immediate steps were taken to demote and transfer the then Director of the Criminal Investigation Department (CID), Shani Abeysekera, who had led the most productive phase of the investigation. For six years, repeated calls for an independent inquiry went unanswered. Those in power took cover behind a series of reports: the Malalgoda Committee (April 2019), the Parliamentary Select Committee (May 2019), the Janak de Silva Presidential Commission of Inquiry (Sept 2019), the Imam Committee (Sept 2023) and the Jayaki de Alwis Committee (2024). Finally, in 2025, the NPP government launched a full and impartial investigation, which is making commendable progress. Hopefully, it will bring to justice the real masterminds of this national tragedy. One also hopes that the current government will reinvestigate many other murders committed before 2024 by those in power, including those of Wasim Thajudeen, Keith Noyahr, Lasantha Wickrematunge and others.

Is there progress in the fight against bribery and corruption?

As the IMF has stated, Sri Lanka faces systemic and severe corruption vulnerabilities and governance weaknesses, which are causing economic inefficiencies tax collection, public investment and credit allocation. Since independence, many political leaders consolidated their power by bailing out those who are obviously guilty of grave corruption. This tactic helped them to build a network of supporters who were compelled to remain loyal to them.

The 2025 Transparency International Corruption Perceptions Index (CPI) for Sri Lanka has risen to 35, with a ranking of 107 out of 182 countries; higher CPI values indicate lower corruption. Some recent positive developments to control public sector corruption might have been captured in this assessment. The new Anti-Corruption Bill, has strengthened the asset declaration system and the Commission to Investigate Allegations of Bribery or Corruption (CIABOC)’s investigative powers. Sri Lanka is now implementing a National Anti-Corruption Action Plan 2025-2029. CIABOC has opened a centralised electronic system for asset and liability declarations. This electronic platform allows declarations to be submitted online, provides verification of deceptive submissions and detects unusual accumulation of assets.

The performance of CIABOC has improved under the leadership of its new Director General. In 2025 CIABOC arrested a total of 154 suspects. It filed 115 cases in court: 75 cases for bribery, 21 cases for corruption, 14 cases for unexplained wealth and 5 cases for money laundering. The highest frequency of arrests and prosecutions were within the Sri Lanka Police, followed by Divisional Secretariats and Pradeshiya Sabhas, the transport sector, revenue institutions, and State-Owned Enterprises. In 2025, CIABOC collected more than 2 million rupees from fines, penalties and confiscated funds. Lately, CIABOC has intensified it’s focus on pursuing complex corruption investigations of high-ranking public officials and political leaders. One example is the Airbus bribery scandal involving Sri Lankan Airlines which was uncovered in 2020 by authorities in the UK, USA and France. Investigations conducted in Sri Lanka uncovered the role of Sri Lankan airline officials in this scandal. CIABOC’s recent presentation to Colombo Chief Magistrate’s courts alleges that a former President also played a role in the Airbus bribery scandal.

CIABOC must be given adequate resources to continue to function effectively as an independent institution with a specialized mandate to investigate and prosecute corruption.

Is drug trafficking under control?

The NPP government under the leadership of AKD has launched an effective multifaceted strategy to control the drug menace with technical support from the United Nations Office on Drugs and Crime (UNODC). The strategy is aligned with the United Nations Convention against Transnational Organized Crime (UNTOC). It is structured around law enforcement, policy reforms, international cooperation and community- based interventions. The Anti-Drug Campaign is a coordinated effort of Sri Lanka Police, the Police Narcotics Bureau, Armed Forces, Customs, Ministries of Health and Education, National Dangerous Drugs Control Board (NDDCB) and several other Agencies. The Campaign is successfully pursuing organized criminal groups and gradually dismantling the nefarious links between the drug underworld and the political elite. Many high- profile drug traffickers, most of them living abroad and supplying drugs to Sri Lanka have been identified, arrested and prosecuted. With the support from the Japanese International Cooperation Agency (JICA) and UNODC, the NDDCB, is strengthening community-based treatment and care approaches which will have a profound impact on drug demand reduction. The Handbook of Drug Abuse Information 2025, published by the NDDCB, provides data that demonstrate the progress of this campaign. They include drug-related arrests and convictions, drug-trafficking -related money laundering and community-based corrections. Despite national resource constraints, the government needs to further strengthen the campaign against drugs to weaken Sri Lanka’s role as both a transit and a destination country.

Has the NPP government displayed accountability?

A series of recent operational irregularities (including violation of customs clearance processes for containers, procurement of substandard coal and theft of a Treasury -linked foreign debt payment), underscores the need for comprehensive governance reforms to address entrenched inefficiencies and structural weaknesses in the State sector.

In mid 2025, it was revealed that multiple consignments of shipping containers marked ‘red’ by Customs’ Risk Management System, requiring compulsory inspection, had been cleared through the green channel, which is reserved for low-risk cargo that does not warrant physical examination. The decision to release the containers had been taken to address the backlog resulting from the large volume of containers arriving at the port. The Government has admitted that there is an urgent need to expand the port handling capacity, focusing on automation, accountability and audit-trails. According to the Sri Lanka Ports Authority, to increase the container handling capacity by the end of 2026, construction work of the East Container Terminal and the West Container Terminal 1 have been fast- tracked.

According to a report by the Public Utilities Commission of Sri Lanka (PUCSL) between December 2025 and February 2026, the coal shipments supplied to the Norochcholai power plant have reduced power generation, increased fuel consumption and resulted in an estimated financial loss of nearly Rs 8.5 billion. The Auditor General’s report also underscored procedural lapses in the coal importation process. Over this incident, the Energy Minister, and the Secretary have resigned from their positions. This is likely to facilitate the impartiality and independence of the investigation that is being conducted by the Special Commission of Inquiry appointed by the President to probe irregularities in coal imports.

The diversion of USD 2.5 million from a Treasury-linked foreign debt repayment has raised serious concerns regarding weaknesses in the public financial management systems. This breach has occurred at a time when the public debt management functions are shifting from the Central Bank to the Treasury. The Government has accepted accountability and the need to further strengthen governance, process efficiency, cyber security and institutional capacity of the public financial management systems. A criminal investigation is underway involving the Criminal Investigation Department (CID), the Police Computer Crime Investigation Division and the Ministry of Finance. Efforts are needed to reclaim the misappropriated funds in addition to identifying the perpetrators and imposing criminal penalties and fines.

These operational irregularities, call for comprehensive governance reforms to address entrenched inefficiencies and structural weaknesses in the State sector.

What is the situation related to Human Rights and freedom of expression ?

There is no direct State censorship of the media and suppression of public debate. Journalists, social media and civil society groups continue to report on government activities, public policy and corruption. Questions have been raised regarding the NPP’s silence on constitutional reform and abolition of the executive presidency. Accountability for alleged violations during Sri Lanka’s civil war (1983–2009) remains an outstanding issue.

In October 2025, the United Nations human rights office, in its annual report on Sri Lanka stated that the government stalled on promised legal reforms, including to establish an independent prosecutor’s office, repeal the Prevention of Terrorism Act, and amend the Online Safety Act.

In December 2025 the Protection of the State from Terrorism Act (PTSA) 2026 was published by Sri Lanka’s Ministry of Justice and National Integration. Currently, the law remains open for feedback from civil society, experts, and the public, and has not yet fully replaced the PTA.

The NPP-government has appointed a committee of technical experts to examine and report on introducing new legislation to establish an independent prosecutor’s office and to recommend amendments to existing laws where necessary. The committee has not engaged with the public yet, and limited information is available regarding its progress.

In early 2025, the Cabinet granted approval to amend the Online Safety Act No 9 of 2024. A Committee representing all relevant sectors is to be appointed to submit recommendations to amend the Bill by incorporating already identified amendments and those to be identified after public consultation.

Sri Lanka’s vulnerability to external challenges

In November 2025 Cyclone Ditwah adversely impacted the fragile recovery and long-term growth prospects of Sri Lanka. It caused over 600 deaths and an estimated $ 3.3 billion in damages, equivalent to about 3% of GDP. From where can the Government find money to rebuild?

Sri Lanka remains frightfully vulnerable to external risks including rising energy costs due to the middle East conflict, dependence on imports and fluctuation in remittance inflows and tourism due to regional instability.

According to the World Bank, the economic growth is expected to slow to 3.6% in 2026 due to higher energy prices. Inflation which was at 2.3% at the beginning of 2026 is also expected to rise above the 5% target due to stronger demand and higher energy prices.

Is there tangible progress in the last 18 months?

The public trusts AKD and has confidence in his leadership. The vast majority of elected representatives in the current government appear to be free from corruption. Nevertheless, governments should never be exempted from scrutiny. Activities in State Owned Enterprises are vulnerable to corruption when transparency and oversight are weak. Continuous vigilance by the public and media are essential.

Since assuming office about 18 months ago, the NPP government has undertaken a number of reforms aimed at stabilizing the economy, strengthening the administration of justice, combating corruption, addressing drug trafficking, and improving governance. Progress is also evident in efforts to digitalize public services and enhance accountability. At the same time, several important challenges remain unresolved. The cost of living continues to place pressure on many households, while structural economic reforms require sustained commitment, resources, and political consensus. Concerns relating to constitutional reform, accountability for past human rights violations, and the pace of institutional reforms also remain subjects of legitimate public debate.

Sri Lanka’s recovery is further constrained by external vulnerabilities, including high public debt, dependence on imported energy and essential goods, climate-related disasters, and global economic uncertainty. These factors could undermine progress if not carefully managed.

Overall, the picture is neither one of unqualified success nor one of failure. The government under the leadership of AKD, has achieved measurable progress in several key areas during a relatively short period in office. However, many of the country’s longstanding structural problems have yet to be fully addressed. As of mid-2026, it would be fair to conclude that Sri Lanka is moving in a positive direction, while recognizing that the durability and inclusiveness of this progress will depend on the government’s ability to sustain reforms, strengthen democratic institutions, and deliver tangible improvements in the lives of its citizens.

*The writer is a Consultant Physician/Cardiologist, former Professor of Medicine, University of Peradeniya, and former Senior Adviser/Director a.i., World Health Organization, Geneva, Switzerland.