{"id":248950,"date":"2026-09-17T08:52:52","date_gmt":"2026-09-17T03:22:52","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=248950"},"modified":"2026-09-17T08:52:52","modified_gmt":"2026-09-17T03:22:52","slug":"rethinking-sri-lankas-defence-expenditure-security-fiscal-responsibility-national-development","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/rethinking-sri-lankas-defence-expenditure-security-fiscal-responsibility-national-development\/","title":{"rendered":"Rethinking Sri Lanka\u2019s Defence Expenditure: Security, Fiscal Responsibility & National Development"},"content":{"rendered":"

By Piyadasa Edirisuriya<\/a> –<\/b><\/span><\/p>\n

\"\"

Dr Piyadasa Edirisuriya<\/p><\/div>\n

Sri Lankan President Anura Kumara Dissanayake<\/a><\/span> has recently outlined a major structural shift in government spending, focusing heavily on reducing recurrent expenditure (day-to-day costs, salaries, administration) and pivoting toward development and capital investment. It is noticeable that one of the biggest spending of the budget goes to defence sector. Sri Lanka’s post-war defence structure presents a complex policy challenge: how can the country maintain an effective national security capability while ensuring that scarce public resources are allocated efficiently to support long-term economic and social development?<\/p>\n

Sri Lanka’s approach to defence expenditure is entering an important period of discussion. More than 15 years after the end of the civil war, the country continues to maintain a substantial military establishment, while simultaneously facing significant fiscal constraints and competing demands for investment in education, healthcare, infrastructure and economic development. The issue is not whether Sri Lanka requires a strong national defence capability. It clearly does. The more fundamental question is whether the existing structure and composition of defence expenditure remain appropriate for the country’s current and future security requirements.<\/p>\n

This question has become particularly relevant following the economic crisis of 2022 and the subsequent fiscal consolidation programme. The government’s efforts to reduce recurrent expenditure and increase the proportion of resources available for development provide an opportunity to consider the longer-term structure of defence spending.<\/p>\n

A substantial post-war military establishment<\/b><\/span><\/p>\n

It is estimated that Sri Lanka maintains an active military establishment of approximately 262,500 personnel. The size of the force has important fiscal implications because personnel expenditure generates continuing commitments through salaries, allowances, pensions and other benefits. The government has indicated a phased reduction in Army personnel, with an objective of reducing the active force to approximately 135,000 and ultimately 100,000 by 2030. At the same time, the stated policy emphasis is on developing a more professional and technically capable military, with greater attention to training and technological integration.<\/p>\n

From a public-finance perspective, the significance of such a policy is that reducing the size of a permanent establishment can potentially moderate future recurrent expenditure and create greater room for capital investment. However, the success of such a transition would depend on whether reductions are based on a comprehensive assessment of Sri Lanka’s security requirements rather than simply on fiscal considerations.<\/p>\n

The evolution of defence expenditure<\/b><\/span><\/p>\n

Sri Lanka’s defence expenditure has undergone substantial changes over the past decade.<\/p>\n

It has been reported that expenditure reached approximately US$2.06 billion in 2015, before falling to around US$1.54 billion in 2021. Following the economic crisis and sovereign default in 2022, expenditure declined to approximately US$1 billion in US-dollar terms. It subsequently increased to approximately US$1.17 billion in 2023, US$1.33 billion in 2024 and US$1.39 billion in 2025. These figures need to be interpreted with caution because exchange-rate movements and inflation significantly affect comparisons expressed in US dollars.<\/p>\n

The 2022 decline, for example, occurred during an extraordinary economic contraction and currency depreciation. It therefore cannot necessarily be interpreted as a proportional reduction in Sri Lanka’s underlying defence commitment. For meaningful policy analysis, greater attention should consequently be given to expenditure as a proportion of GDP, the government’s overall budget, and\u2014particularly\u2014the division between recurrent and capital expenditure.<\/p>\n

Recurrent expenditure versus modernisation<\/b><\/span><\/p>\n

One of the most important issues in Sri Lank\u2019s budget is the composition of defence expenditure. A large standing military naturally requires significant recurrent expenditure. Salaries, pensions, accommodation, food, uniforms and other personnel-related costs must be maintained irrespective of whether new equipment is acquired. The 2025 Army allocation illustrates this challenge. According to budget document, approximately LKR 225.5 billion was allocated to the Army, while only around LKR 5.4 billion was allocated to capital expenditure.<\/p>\n

This raises an important strategic question. A defence establishment that allocates a very high proportion of its resources to maintaining personnel may have limited fiscal capacity for modernisation, training and advanced technology. For this reason, defence reform should not necessarily be equated with a reduction in military capability. A restructuring that reduces unnecessary recurrent expenditure while increasing the resources available for modern capabilities could potentially improve overall defence effectiveness.<\/p>\n

Changing security requirements<\/b><\/span><\/p>\n

Sri Lanka’s security environment has also evolved since the end of the civil war. The military’s traditional role in counterinsurgency has become less dominant, while other requirements have assumed greater importance. These include maritime security, protection of territorial waters, disaster response, intelligence, cyber security, counter-terrorism and other forms of non-traditional security. The new development therefore identifies professionalisation and technological development as important components of the emerging approach to defence. In other words, this suggests that the relevant policy question is not simply how large the armed forces should be, but what capabilities the country requires and what combination of personnel, technology and infrastructure can provide those capabilities most efficiently.<\/p>\n

The fiscal opportunity cost<\/b><\/span><\/p>\n

Defence expenditure must also be considered in the context of Sri Lanka’s broader fiscal position. It is noticeable that defence has generally represented around 8\u201311 per cent of the central government budget and approximately 2 per cent of GDP, compared with approximately 4\u20136 per cent of the central budget for healthcare and 5\u20138 per cent for education. These comparisons do not by themselves establish that defence expenditure is excessive. Defence and social-sector expenditures serve fundamentally different purposes, and international comparisons must take account of differences in national circumstances. Nevertheless, they demonstrate the scale of the resources committed to national security relative to other major areas of public policy. For a country operating under fiscal constraints, the opportunity cost of expenditure becomes particularly important. Resources committed to recurrent defence expenditure cannot simultaneously be used for schools, hospitals, research, infrastructure or other development priorities.<\/p>\n

Education and human capital<\/b><\/span><\/p>\n

The question of opportunity cost is especially relevant to education. It is estimated that Sri Lanka’s public education expenditure at approximately 1.5\u20131.8 per cent of GDP, compared with roughly 4.1\u20134.5 per cent in India and around 2 per cent in Bangladesh. Sri Lanka’s relatively strong literacy record reflects decades of investment in free education. However, maintaining that advantage requires continued investment. Modern economies increasingly depend on skills, technology, research and innovation. Consequently, investment in education should be considered not merely a social expenditure but also an important component of economic policy. Greater investment in human capital could contribute to productivity growth, employment creation and the development of higher-value economic activities.<\/p>\n

Healthcare and public services<\/b><\/span><\/p>\n

Healthcare presents a similar consideration. The budgetary data show that the government has sought to revive 26 large-scale healthcare construction projects that had previously been suspended. It also identifies the development of higher-technology ambulance services as part of efforts to improve healthcare infrastructure and efficiency. These initiatives illustrate the broader challenge facing government: fiscal consolidation cannot simply mean reducing expenditure across the board. Some forms of expenditure are necessary to maintain government operations, while others represent investment that can increase future economic and social capacity. The policy objective should therefore be to distinguish between productive investment and inefficient recurrent expenditure, irrespective of the ministry or sector involved.<\/p>\n

A regional perspective<\/b><\/span><\/p>\n

The comparison with other South Asian countries provides another perspective. Published data show that defence expenditure at approximately 1.9\u20132.0 per cent of GDP in India, compared with approximately 1.0\u20131.2 per cent in Bangladesh and roughly 1.5\u20132.0 per cent in Sri Lanka. Education expenditure is estimated at approximately 4.1\u20134.6 per cent of GDP in India, 1.8\u20132.0 per cent in Bangladesh, and 1.5\u20132.0 per cent in Sri Lanka.<\/p>\n

These comparisons should not be interpreted as evidence that Sri Lanka should simply copy another country’s spending model. India, Bangladesh and Sri Lanka have different populations, economies, geographical circumstances and security environments. Nevertheless, the figures highlight a structural characteristic of Sri Lanka’s public finances: defence expenditure and education expenditure have historically been of broadly similar magnitude when measured against GDP. That raises legitimate questions about whether the balance is appropriate for a country seeking to increase productivity and achieve sustainable economic growth.<\/p>\n

The case for gradual reform<\/b><\/span><\/p>\n

There is a reasonable economic case for gradually restructuring Sri Lanka’s defence establishment.<\/p>\n

Such reform could involve:<\/p>\n

* aligning military manpower with contemporary security requirements;<\/p>\n

* reducing unnecessary duplication and recurrent expenditure;<\/p>\n

* increasing the proportion of resources devoted to modern equipment and technology;<\/p>\n

* strengthening specialised training;<\/p>\n

* improving procurement transparency and value-for-money assessments;<\/p>\n

* developing appropriate transition and retraining arrangements for personnel leaving the armed forces; and<\/p>\n

* transparently identifying and, where appropriate, redirecting savings towards high-priority development investments.<\/p>\n

The objective should be efficiency rather than indiscriminate cuts. A reduction in personnel that weakens essential capabilities would not constitute successful reform. Conversely, maintaining personnel numbers simply because they have historically existed would also be difficult to justify in an environment of severe fiscal constraints.<\/p>\n

Protecting national security while improving fiscal efficiency<\/b><\/span><\/p>\n

There is also a need to avoid an overly simplistic “defence versus development” debate. National security is itself essential for economic development. A country must have adequate capacity to protect its territory, maritime interests, population and institutions. At the same time, economic strength contributes to national security. A stronger economy provides the government with greater fiscal capacity to respond to security threats, natural disasters and other national emergencies. The two objectives are therefore not necessarily contradictory. The challenge is to establish a defence structure that provides the required level of security at a sustainable fiscal cost.<\/p>\n

Turning fiscal savings into development<\/b><\/span><\/p>\n

If defence-sector restructuring generates genuine savings, the government should consider how those resources can contribute to long-term development. Priority areas could include education, vocational and technical training, healthcare, research and development, digital infrastructure and productivity-enhancing public investment. This would give practical meaning to the concept of a post-war “peace dividend”. Sri Lanka’s civil conflict ended in 2009, but the country has not fully transformed the associated fiscal structures. The present economic environment creates an opportunity to reassess those structures based on current national requirements rather than historical circumstances.<\/p>\n

A question of priorities, not politics<\/b><\/span><\/p>\n

The debate over defence expenditure should not be reduced to a question of whether one political party supports the military and another does not. A responsible discussion should be based on evidence.<\/p>\n

How many personnel does Sri Lanka actually require?<\/p>\n

What capabilities are necessary to meet current and emerging security threats?<\/p>\n

How much of the defence budget is required for personnel and pensions?<\/p>\n

How much is available for modernisation?<\/p>\n

What savings could realistically result from restructuring?<\/p>\n

And how should any savings be allocated to maximise economic and social returns?<\/p>\n

These are policy questions that can\u2014and should\u2014be examined independently of political affiliation.<\/p>\n

The road ahead<\/b><\/span><\/p>\n

Sri Lanka’s fiscal circumstances make efficiency in public expenditure more important than ever. The country cannot indefinitely expand recurrent commitments while simultaneously expecting to increase investment in education, healthcare, infrastructure and technology. At the same time, defence reform must be undertaken carefully so that fiscal savings do not come at the expense of legitimate national security requirements. The appropriate objective, therefore, is neither simply “less defence” nor “more defence.” It is better defence for a changing security environment, supported by a more efficient allocation of public resources. A gradual transition towards a smaller, professional and technologically capable military, if supported by sound strategic planning, could reduce long-term recurrent pressures while strengthening essential defence capabilities. The resources released through such reforms could then contribute to the country’s broader economic transformation. Ultimately, the measure of successful public expenditure reform will be whether Sri Lanka can achieve three objectives simultaneously: maintain national security, strengthen fiscal sustainability and invest sufficiently in the human and physical capital required for long-term economic growth. That is a national policy challenge that extends well beyond any single government or political party. It is a question of how Sri Lanka chooses to allocate its limited resources for the benefit of both present and future generations.<\/p>\n

Sources:<\/strong><\/span><\/p>\n

www.macrotrends.net<\/a><\/span><\/p>\n

https:\/\/english.news.cn<\/a><\/span><\/p>\n

https:\/\/militaryspend.org\/<\/a><\/span><\/p>\n

https:\/\/www.treasury.gov.lk\/<\/a><\/span><\/p>\n

Selvanathan, Saroja & Selvanathan, Eliyathamby A, 2014. “Defence expenditure and economic growth: A case study of Sri Lanka using causality analysis,” International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 4(2), pages 69-76.<\/p>\n

Dr Piyadasa Edirisuriya, Former Academic, Monash Business School, Australia, email: pedirisuriya@gmail.com<\/em><\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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