Sri Lanka recorded a stronger-than-expected 5 percent GDP growth in 2024, but its investment climate continues to face serious challenges, according to the latest US State Department Investment Climate Statement.
The report acknowledged that the sweeping electoral victories of President Anura Kumara Dissanayake and the National People’s Power (NPP) coalition in late 2024 have created political stability. It also noted that the NPP’s commitment to the US$3 billion, four-year (2023–2027) IMF Extended Fund Facility program reassured some investors. However, many remain cautious due to the NPP leadership’s historically anti-Western, Marxist-influenced background.
Foreign direct investment (FDI) flows remain modest, typically in the US$3–5 million range, far below the government’s US$5 billion FDI target for 2025. The report highlighted that investors stress the need for policy consistency, regulatory reforms, and greater transparency before large-scale investments can materialize.
The State Department added that despite encouraging rhetoric, the new government’s institutional capacity to create an open and reliable investment environment is still limited.
Overall, investors continue to report difficulties in doing business in Sri Lanka, citing project reversals, regulatory uncertainty, bureaucratic delays, and inadequate support for established businesses as key concerns.
