Despite some economic progress in Sri Lanka over the years, the fact that the country was declared bankrupt in 2022 negates such achievements in terms of the sustainability of the economy and highlights structural weaknesses in its fundamentals. Excessive borrowing for projects without proper return-on-investment assessments, inflated expenditure on infrastructure projects, recurrent expenditure in excess of income, the accumulation of large foreign debts and the use of some borrowings, particularly International Sovereign Bonds, for consumption rather than for specific projects that yield a return exceeding the cost of borrowing, are some of these shortcomings. Thanks to the often-criticised intervention of the IMF, Sri Lanka has been able to instil some financial discipline in economic management and virtually compel governments since 2022 to adhere to an economic framework in return for the USD 2.9 billion bailout package negotiated with them. Those who were and still are critical of the IMF should remember that their entry was the result of successive governments’ financial indiscipline and politically influenced monetary policies. Had the country’s fundamentals been strategic and sustainable, there would not have been a necessity to seek IMF assistance to rescue the country from bankruptcy.
Trading Economics states that foreign exchange reserves in Sri Lanka were USD 6.107 billion in August 2025, while Singapore’s foreign exchange reserves were SGD 502.02 billion (approximately USD 390 billion) in August 2025. The total reserves of Singapore, based on publicly available data from the Government of Singapore Investment Corporation (GIC), the government-owned multinational investment firm Temasek Holdings (Private) Limited, the Monetary Authority of Singapore (MAS), and the Central Provident Fund (CPF), are conservatively estimated at SGD 2.5 trillion (USD 1.87 trillion) in 2024. Many analysts believe that the reserves are substantially larger than publicly acknowledged. The Ministry of Finance keeps the full details of the reserves private to prevent speculative attacks on the Singapore dollar. Individually, besides the government’s foreign reserves of USD 390 billion, GIC’s portfolio was estimated at approximately USD 800 billion as of May 2025, Temasek’s portfolio was SGD 434 billion (USD 287 billion) as of 31 March 2025, and CPF managed a portfolio of USD 463 billion (SGD 594 billion) for 4.2 million account holders.
Sri Lanka’s foreign reserves are woefully inadequate as they can only fund about two months of imports. This period is reduced further when debt capital and interest payments are taken into account. Singapore too has a substantial gross external debt, reportedly over SGD 2.4 trillion, but possesses zero net debt because its financial assets far exceed its liabilities. Unlike in Sri Lanka, Singapore’s high gross external debt reflects its role as a major global financial hub, attracting large amounts of international deposits and investments, primarily held by private corporations rather than the government.
If Sri Lanka is to move to a different and higher economic platform, the thinking and attitudes of its people, politicians and officials must change, and none should harbour the view that doing the same thing while expecting different results will succeed. While economic data is not easy to find for 1948 when Sri Lanka became independent, Wikipedia reports that in 1960 Sri Lanka’s (then Ceylon) per capita GDP was USD 152, Korea’s was 153, Malaysia’s 280, Thailand’s 95, Indonesia’s 62, the Philippines’ 254, Taiwan’s 149. Singapore’s GDP per capita in 1960 was approximately USD 395 to 428. The Monetary Authority of Singapore states that in 1965, when Singapore became an independent nation, its nominal GDP per capita was around USD 500.
In the 77 years since independence, Sri Lanka has progressed to reach a per capita of USD 4,515.57 by 2024. However, since its independence in 1965, Singapore has moved from USD 500 to USD 90,674.07 in 60 years. The history, culture, politics, demographics, geography, land size, agriculture and crop diversification, and many other factors are vastly different in Sri Lanka and Singapore, and it may not be a fair comparison when it comes to the economic status of the two countries. Nonetheless, some fundamental comparisons can and should be made about basic, logical economic management policies and outcomes, irrespective of these differences. Indeed, some of the differences are advantages enjoyed by Sri Lanka over Singapore, although the outcomes and returns from these advantages have been far from optimal. Population density and land area illustrate a distinct advantage that Sri Lanka has failed to capitalise upon, whereas Singapore has made more out of less within these realities.
Singapore’s population density is approximately 8,387 people per square kilometre (21,722 per square mile) as of mid-2025, making it one of the most densely populated countries in the world. This high density is the result of careful long-term planning to manage land scarcity in the city-state of 700 square kilometres. Sri Lanka’s population density is approximately 370 people per square kilometre (959 per square mile) as of 2025, based on a total land area of 62,710 square kilometres.
While GDP and GDP per capita are arguably not the best measures of a country’s economic health, they are the measures used globally at present. Some argue that these reflect the perspective of international institutions such as the World Bank and IMF and represent the worldview of Western economies led by the USA. Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, former chief economist of the World Bank (1997–2000), former chair of the US President’s Council of Economic Advisers, former co-chair of the High-Level Commission on Carbon Prices, lead author of the 1995 IPCC Climate Assessment, co-chair of the Independent Commission for the Reform of International Corporate Taxation, and author most recently of The Road to Freedom: Economics and the Good Society (W. W. Norton & Company, Allen Lane, 2024), says in an article published in Scientific American: “GDP measures everything,” as Senator Robert Kennedy once said, “except that which makes life worthwhile.” It does not measure health, education, equality of opportunity, the environment or other indicators of quality of life. It does not even measure crucial aspects of the economy such as sustainability: whether it is headed for a crash. Readers are referred to an article written by this writer titled GDP and GDP growth: Are they measures that really matter? to gain an idea of the underlying disparities, inequalities and inequities among people despite the visible “developments” around them.
Nevertheless, some fundamentals must be considered irrespective of arguments for or against GDP as the sole measure of economic health. Among them are the affordability of quality, modern universal healthcare, a good education system that deepens knowledge and prepares the younger generation to be more self-reliant, technological advancement including artificial intelligence and access to it, efficient and affordable transport, quality housing for all, food security, the elimination of poverty and malnutrition, and the ability for all to live in a free, non-violent, equal and equitable society. Clearly, achieving such ideals requires substantial investment and therefore strategic, innovative economic thinking, effective policies and efficient management.
Sri Lanka has achieved high standards in areas such as education and health, but overall economic management has been unsatisfactory. If the country and its people are to achieve a higher, sustainable quality of life, the entire nation, not just politicians, must embrace a paradigm shift in economic thinking. Rising to a higher economic platform in effect means increasing GDP, and over the next ten years this will depend on the growth rate between 2025 and 2035. The forecast for 2025 is 3–4%, and for 2026 around 5%. With a starting point of USD 99 billion in 2024, and assuming sustained growth of around 4%, Sri Lanka’s GDP would be approximately USD 147 billion in 2035, with a per capita income of USD 6,300.
The question must be asked whether this is sufficient for people to enjoy a better quality of life and for current and future generations to retain confidence in the country. If one considers Singapore’s current per capita GDP of USD 97,604, and if Sri Lanka is to reach even half of it (USD 45,000), the country’s GDP would need to be approximately USD 990 billion. This would require a tenfold increase from the 2024 level of USD 99 billion, which seems impossible given the present trajectory. However, policymakers and the public should at least aim to reach the World Bank’s high-income threshold of USD 13,846 per capita, a tripling of Sri Lanka’s current figure of USD 4,515. This would require GDP to rise to around USD 300 billion from the present USD 99 billion.
The current trajectory of 4–5% predicted growth is insufficient to provide the economic and social improvements needed. While government plans to increase exports, tourism earnings and foreign investments are commendable, a more dramatic paradigm shift in economic thinking, strategy and management is required if Sri Lanka is to become a high-income country. Areas such as industrialisation focused on value addition and food security, modernisation of traditional agriculture including tea, coconut and rubber with research-based higher yields and diversification, intercropping to maximise land use, fisheries development, innovative measures to strengthen foreign reserves, a national investment framework, and a larger role for the private sector must be prioritised. Diplomatic services must also be transformed to attract investment and promote exports through the appointment of commercially astute envoys to key postings, capable of engaging both potential investors abroad and Sri Lankan expatriates.
Sri Lanka has to develop its economy in order to provide a fair, equitable, healthy, knowledgeable and dignified lifestyle for its citizens and future generations. It must create opportunities for them and foster confidence in the country. While Sri Lanka’s long history and rich culture are important in shaping its identity, the focus must be on the future, providing a safe, secure and healthy environment in a sustainable manner. The country does not need to emulate others, as its uniqueness in natural beauty, history and culture provides an enviable environment for growth. But it requires both financial and human resources to secure a better future. The country must earn more, save more and equip itself better to deliver the outcomes desired. Its thinking must be futuristic and strategic, not confined to past glories. Economic policies must look to the future rather than being fixated on the past.
