By Sarath Dissanayake –
Sarath Dissanayake
America at 250 and Sri Lanka at 2500: Navigating Post-Independence Sri Lanka: Part II
The 26-year-old Government – LTTE conflict came to a decisive end on 18th May 2009, a victory largely attributed to the leadership of then-President Mahinda Rajapaksa. By providing unwavering political backing to the armed forces, successfully managing international pressure, amidst an overwhelming peoples’ blessings, Rajapaksa enabled a military defeat of the LTTE and ensured full control over the entire country. Due to the protracted war, Sri Lanka had previously lagged behind its fast-growing South and East Asian neighbors, despite being one of the region’s most promising countries in the 1980s. Emerging from the shadows of war, the country quickly transitioned into one of the fastest-growing economies during the immediate post-conflict years.
Lost Opportunity, High Visibility Non-Viable Projects & Financial Crunch (2009)
The end of the LTTE conflict brought a profound sense of relief, and an unprecedented opportunity to unify the country, bring fractured communities together, and re-energize sustainable growth, economic recovery and financial stability. However, instead of prioritizing ethnic harmony, national reconciliation, power devolution and electoral reforms, the post-war regime pursued high-visibility, infrastructure-led growth models, albeit unsustainable financial obligations through non-liquid projects.
In doing so, the authorities borrowed heavily from international lenders at exorbitant rates for mega-scale commercially non-viable projects, such as massive international ports, airports, and cricket stadiums built in economically marginalized and backward regions. These excessive borrowings rapidly inflated the country’s external debt burdens without generating adequate foreign currency inflows / revenues to sustain repayment of loans and debt servicing obligations. Compounded by systemic corruption, institutionalized waste and lack of transparency, the country’s financial foundation became dangerously fragile and unsustainable.
Easter Sunday Bombings ; Quest for Accountability and Justice (2019)
On April 21, 2019, Sri Lanka was rocked by a series of deadly suicide blasts targeting three prominent churches and several luxury hotels in Colombo and suburbs. The devastating attacks claimed at least 269 lives, including 45 foreign nationals, and left over 500 people maimed, fracturing the country’s decade-long post-war peace. Although ISIS initially claimed responsibility, the subsequent investigations revealed that a homegrown Islamist extremist group was responsible. Beyond the tragic loss of lives and reigniting communal tensions, the bombings dealt a severe blow to the vital tourism sector, which was just rebounding after years of stagnation. The bombings triggered a sharp decline in visitor arrivals and investor confidence, which severely hindered Sri Lanka’s forex inflows while weakening its economic and financial standing, just months before the unprecedented COVID-19 pandemic outbreak.
After years of political deadlock, the incumbent government fast-tracked investigations into Easter Sunday carnage, under pressure from the Catholic Church and victims’ families. Most notably, authorities have instituted legal proceedings against certain military and police officials, citing their alleged failure to act on prior intelligence warnings. The Catholic Church, alongside survivors and families of victims, continue to maintain pressure on the powers that be, demanding that authorities bring the perpetrators to book and mete out justice to all victims.
COVID Pandemic and Its Crippling Impact on Sri Lanka (2020 – 2021)
The COVID pandemic accelerated Sri Lanka’s structural vulnerabilities, crippling its key foreign exchange earners, and plunging the country into its worst economic crisis since independence. Though the pandemic was initially managed through military-enforced lockdowns, the domestic and international economic fallout shattered the country’s fragile financial stability and economic recovery. Coming on the heels of the devastating Easter Sunday bombings, the pandemic sparked an avalanche of crises, completely choking off the country’s primary channels of foreign currency inflows.
The global freeze on international travel completely paralyzed the local tourism industry, which generated over four billion dollars annually. At the same time, mass layoffs across global markets – particularly in the ME, dealt a severe blow to the vital inflow of foreign remittances from migrant workers. This double blow to foreign exchange reserves was further compounded by supply chain gridlocks that temporarily crippled the domestic apparel export sector. With foreign currency inflows literally dried up, the government was forced to dip into its remaining central bank reserves to service its heavy international sovereign debts, drawing national savings down to critically low levels.
Economic Strangulation, Debt Burden & Policy failures (2021 – 2022)
Domestically, the pandemic severely eroded the government’s fiscal space and exposed the consequences of short-sighted policy failures. Following ill-advised tax cuts in late 2020 that had already decimated state revenue, the government lacked the financial cushion to provide meaningful relief during prolonged curfews. This fiscal vulnerability contributed to an unprecedented economic contraction of 3.6 percent in 2021. Furthermore, prolonged lockdowns disproportionately impacted the informal sector, leaving daily income earners and small businesses highly vulnerable without alternative lifelines or robust social safety nets.
In a desperate attempt to halt foreign exchange outflows, authorities abruptly banned the import of chemical fertilizers. This short-sighted policy backfired almost instantaneously, triggering widespread crop failures, skyrocketing commodity prices, high inflation, and severe food insecurity. Ultimately, the pandemic accelerated catastrophic economic consequences, leaving the country in dire straits under the weight of insurmountable external debt. In essence, Sri Lanka was exposed to an avalanche of crises, culminating in piled-up debts, depleted foreign reserves, total exclusion from international capital markets, and dried-up national coffers.
Worst Ever Financial Crisis, Bankruptcy, Chaos & Transition (2022)
Sri Lanka’s looming economic nightmares reached a tipping point in 2022, stemming from its worst-ever burgeoning economic fallout since 1948, inter-alia due to Pandemic, fiscal mismanagement, dwindling state coffers, depletion of foreign exchange reserves, excessive loans, debt-servicing burdens, spiraling budget deficits, in the wake of ad-hoc tax cuts, government-imposed mandatory organic farming, ban on chemical fertilizer imports, so-on and so-forth. In May 2022, the government officially announced the financial crisis to be the worst economic meltdown in 73 years, and declared itself bankrupt. In June 2022, the authorities declared sovereign debt default to the tune of $51 billion for the first time in history, compounded by acute shortage of food and basic commodities, life-saving medicines, double-digit inflation, crippling energy crisis that led to 15-hour power cuts and severe fuel shortages. As a result, wide-spread protests erupted across the country, sparking public outrage and anxiety, culminating with the ousting of the then President on 09th July 2022. The severe economic strangulation culminated in a historic sovereign default, acute shortages of essential goods, and the eventual Aragalaya public uprising.
As Sri Lanka navigates its fragile post-crisis recovery, the nation stands starkly in transition; from once self-sufficient economy in 1948 into debt-ridden and crisis-stricken deeply challenged country in 2022; leaving its populace high and dry, hight vulnerable and skeptical of the country’s economic recovery vis-a-vis domestic and international compulsions. So much so, the public protests led by the youth with a clarion call for course correction – demanding a system change and structural overhaul, prompted the authorities to chart a new path amidst strategic policy shifts in ernest, characterized by broad-based policy shifts, governance initiatives and pragmatism, after decades of political expediency, economic mismanagement and regime failures.
Post–Aragalaya Progress, IMF Reforms & Recovery (2022–Present)
When President Anura Kumara Dissanayake and the NPP government assumed power in September 2024, the country’s economy and financial standing stabilized, on the back of the IMF-led comprehensive economic reforms and debt restructuring program initiated during Ranil Wickremesinghe presidency from 2022-2024. The ongoing $3 billion Extended Fund Facility mandates sweeping structural reforms including fiscal tightening & austerity measures, restructuring of loss-making and debt-ridden state bodies. After years of stagnation, the fragile economy demonstrated significant signs of fiscal consolidation for the first time in 2024. Meanwhile, the IMF forecasts a positive outlook and an economic rebound, with its overall growth forecast for 2025 and 2026 being predicted at 4.6 and 3.6 respectively. This momentum continued for over four consecutive quarters, largely driven by the industrial, agricultural and tourism sectors; supported by structural and policy reforms. Additionally, inflation remains at 6.8% as of June 2026, slightly higher than the corresponding figure for 2025.
Status-quo : On the Road to Recovery Amidst External Shocks
Meanwhile, the country suffered badly due to Ditwah cyclone in December 2025 with catastrophic damages to infrastructure, livelihood, agriculture, roads, railway, and other vital sectors of the economy. And to add insult to injury, the ME crisis has taken a heavy toll on the country’s fragile economy, amidst the rising oil and gas prices having a debilitating effect on the peoples’ lives and well-being.
The IMF Executive Board also acknowledged Sri Lanka’s progress and stability, and approved on 27th May 2026, its combined fifth and sixth loan tranche of approximately US$ 695 million, bringing the total cumulative disbursement to US$ 2.4 billion as of June 2026. The IMF also praised SL’s economic reforms and its strong performance despite global economic challenges, noting that Sri Lanka met all quantitative performance criteria by the end of December 2025. Besides citing that the country is showing early signs of recovery, the IMF nevertheless cautioned that the economy remains vulnerable, with an emphasis on the need for the government’s continued commitment for economic and fiscal reforms and debt restructuring.
SL-US Relations: Deep Historic Roots
The diplomatic relations and friendship between Sri Lanka and the United States date back to the 1940s. This multifaceted and mutually rewarding partnership has grown from strength to strength, encompassing every conceivable sphere of interest—be it political, economic, trade, investment, tourism, culture, education, and people-to-people ties. Both countries continue to enjoy their multi-faceted and time-tested mutually beneficial relations with respect and understanding.
Sri Lanka–U.S. historical relations are anchored in deep-rooted trust and partnership, characterized by a shared vision and goodwill. The peoples of both nations have nurtured and cherished their friendship and close relations with warmth, visibility, and transparency at all times, in a spirit of reciprocity. This people-to-people friendship has been the cornerstone and bedrock of U.S.–Sri Lanka relations ever since Sir Henry Steel Olcott set foot in Sri Lanka in May 1880. Sir Olcott was a prime mover in opening Buddhist schools in the country, who left a lasting footprint in Sri Lanka. Sir Henry Steel Olcott remains a household name among people of Sri Lanka for his revolutionary work in school education, promoting Buddhism and Buddhist teachings.
In recent times, the US – SL partnership has expanded into diverse areas of opportunity and vitality. We owe a special word of thanks to our forefathers for laying a strong foundation of friendship, with a sincere hope that it will grow in leaps and bounds for the mutual benefit of the peoples of both nations in the years to come.
78 Years of SL – US Diplomatic Relations
The year 2026 marks the 78th anniversary of diplomatic relations between the United States and Sri Lanka. Over the decades, the partnership has evolved into a robust economic and developmental alliance, with the US acting as Sri Lanka’s largest export market and providing millions in aid through the United States Agency for International Development (USAID). Key milestones include:
* Economic Assistance: The US provided over $270 million in new assistance, Supporting SME loans, school feeding initiatives, and essential fertilizer imports for farmers. Additionally, the US Development Finance Corporation (DFC) announced nearly half a billion dollars in financing for the development of the West Container Terminal in the Port of Colombo.
* Development and Aid: Since 1956, USAID has invested over $2 billion into Sri Lanka’s health, education, agriculture, governance, and environmental protection programs, fostering sustainable growth across rural and urban sectors.
* Cultural Exchange: The Fulbright Program and Peace Corps have facilitated deep people-to-people ties, enabling US and SL scholars, professionals, and volunteers to participate in meaningful cross-cultural & academic exchanges.
* US Military Assistance: Focuses on disaster response, maritime security, and capability building. Key initiatives include the State Partnership Program with the Montana National Guard, donations of aircraft and patrol vessels, and significant logistical support during humanitarian crises
Bilateral Visits, Diplomatic Engagements and Milestones
In 2015, the US and SL initiated the annual US – SL Partnership Dialogue of which the maiden bilateral meeting was held in Colombo in the same year. This structured framework was designed to enhance cooperation across core areas: Governance, Development Cooperation and People-to-People Ties; Economic Cooperation; Security Cooperation and International and Regional Affairs.
Of the recent bilateral visits, the US Secretary of State, Mike Pompeo was the highest ranking US dignitary to visit Sri Lanka in October 2020; coincidently during my tenure as Charge d’affaires at the Sri Lankan Embassy in Washington D.C,. Among other visits, Foreign Minister Vijitha Herath’s official visit to the US in September 2025 was the highest ranking official visit of a Sri Lankan dignitary in recent times.
Bilateral Trade and Investments Between SL and US
The US remains Sri Lanka’s largest single export market, anchoring a trade partnership that has shown renewed momentum. In 2025, bilateral merchandise trade between the two nations reached an estimated $3.7 billion. This trade relationship is characterized by a significant surplus in Sri Lanka’s favor, with Sri Lankan exports to the US hovering near $3 billion, while US goods exports to Sri Lanka totaled $732 million.
Bilateral trade between the two nations is facilitated through long-standing institutional frameworks. A key cornerstone is the TIFA signed in 2002, which serves as the primary intergovernmental platform to address market barriers and early-stage trade issues. Bilateral negotiations achieved a significant milestone when a US presidential order reduced reciprocal tariff rates on key Sri Lankan goods from 30% to 20%.
Future Trajectory of SL – US Relations
The future trajectory of US – SL relations is evolving into a pragmatic, multifaceted partnership that balances deeper economic integration with strategic, non-aligned military diplomacy. As Sri Lanka navigates its post-crisis economic recovery and a new political landscape under the new NPP administration, both nations ought to collectively pursue their rules of engagement, and navigate the future together, in a spirit of optimism, shared interest and partnership for mutual benefit.
SL – US future trajectory can be defined by following core dimensions:
Recalibrated Economic and Commercial Ties: The United States remains Sri Lanka’s largest single export destination, accounting for nearly $3 billion in annual trade. However, the future trajectory shifts from traditional development aid toward reciprocal commercial integration. US diplomatic representatives have indicated that the next phase of engagement will move past historical trade asymmetries. Washington is aggressively pushing to narrow the trade gap by expanding US exports to Sri Lanka in sectors like agricultural commodities, machinery, and pharmaceuticals. With the SL economy stabilizing and foreign reserves recovering, the US DFC continues to back critical regional infrastructure, such as the Colombo West Container Terminal. Private sector optimism is rising, with American firms seeking market predictability as Sri Lanka targets high-growth sectors like tech innovation and energy.
Pragmatic Non-Alignment and Strategic Neutrality: A defining feature is Sri Lanka’s strict adherence to its traditional foreign policy doctrine of non-alignment acting as a “friend of all and enemy of none”. The US views Sri Lanka as a vital component of its Indo-Pacific Strategy, while Sri Lanka, as always, continues to honor its commitments towards promoting and protecting peace, security and stability in the Indo-Pacific.
Institutionalized Security and Disaster Cooperation: Despite boundaries regarding direct combat or operational deployments, institutional defense cooperation is expanding through non-lethal, specialized partnerships. In a major forward-looking development, the Montana National Guard signed an MOU with the Sri Lanka Armed Forces under the State Partnership Program. US – SL bilateral security dialog continues to prioritize training for regional coast guards and navies to ensure open shipping lanes and combat illicit maritime trade. The US Navy provided the Sri Lanka Air Force with 10 TH-57 Sea Ranger helicopters at no cost under the Excess Defense Articles (EDA) Program to support pilot training and humanitarian assistance. Historically, the US has provided Foreign Military Financing (FMF) and donated former U.S. Coast Guard high-endurance cutters to help Sri Lanka patrol its territorial waters, counter illicit trafficking, and conduct search and rescue operations.
Continued Dialogue on Governance and Reforms: As the bilateral relationship deepens, the US continues to anchor its long-term support to Sri Lanka’s domestic governance reforms.
Key Takeaways & Conclusion: Two Paths of Destiny
The profound contrast between America’s 250 years of independence and Sri Lanka’s 2,500-year civilization serves as a powerful testament that a nation’s true trajectory is shaped not by the length of its history, but by the maturity, vision, and stability of its modern institutions. America marked its 250th milestone as a global superpower because its founding architecture prioritized systemic continuity, robust checks and balances, and a forward-looking economic vision. Conversely, Sri Lanka stepped into its post-colonial journey in 1948 holding immense material and intellectual promise, yet it repeatedly faltered under the weight of populist short-sightedness, institutional decay, and prolonged internal conflicts.
History remains an invaluable repository of pride and cultural identity, but it cannot substitute for current domestic accountability and strategic governance. To constantly look backward or blame the shadows of colonial masters is to dodge the hard work required to build in the present. As Sri Lanka navigates its fragile, post-crisis stabilization, the ultimate lesson of this comparative reflection becomes clear: ancient legacies provide a nation with roots, but only visionary leadership, unwavering transparency, and resilient institutions can guarantee its future.
Closing Remarks: A Word of Appreciation of Sri Lankan Envoys
It would be remiss of me not to honor the distinguished personalities who actively worked to cement the enduring partnership between Sri Lanka and the United States for over seven decades. Both nations were exceptionally well-served in their respective capitals by distinguished envoys who navigated complex geopolitical challenges with dedication, continually confronting shifting realities with distinction and unwavering commitment. Among the most noteworthy SL Ambassadors of the highest calibre include Sir Claude Corea, Neville Kanakaratne, Ernest Corea, Ananda Guruge, Jayantha Dhanapala, Bernard Goonetilleke, Prasad Kariyawasam, Ravinatha Aryasinha and the incumbent Ambassador, Mahinda Samarasinghe Et-al; each leaving an indomitable spirit and strong leadership with a lasting legacy of perseverance and charisma.
“History will have to record that the greatest tragedy of this period of social transition was not the strident clamor of the bad people, but the appalling silence of the good people” – Dr. Martin Luther King Jr.
*The writer is a retired Ambassador, Foreign Ministry Spokesman and Chargé d’affaires, Sri Lankan Embassy in Washington D.C. He can be reached at schandrad@hotmail.com
References :
1. America At 250: Are The Good Times Really Over Or Just Evolving (https://www.colombotelegraph.com/index.php/america-at-250-are-the-good-times-really-over-or-just-evolving/)
2. America At 250 & Sri Lanka At 2500: Navigating Post-Independence Sri Lanka