Sri Lanka Development Update, October 2025 : Better Spending for All

The Sri Lanka Development Update (SLDU) has two main aims. First, it reports on key developments over the past 12 months in Sri Lanka's economy, places these in longer term and global contexts, and updates the outlook for Sri Lanka's economy. Second, the SLDU provides a more in-depth examination of selected economic and policy issues. It is intended for a wide audience, including policymakers, business leaders, financial market participants, think tanks, non-governmental organizations and the community of analysts and professionals interested in Sri Lanka's evolving economy. Looking ahead, Sri Lanka does not have room to significantly increase public expenditure and therefore, can focus on maximizing the development outcomes from its existing levels of public spending. Comprehensive reforms are required to enhance the efficiency and effectiveness of every rupee spent. The public wage bill and capital expenditures are good places to start. Other aspects of spending, including subsidies and transfers, are discussed in more detail in World Bank. Reforms to public capital expenditure can ensure better return on investment, alleviate critical bottlenecks in the economy, and boost long-run economic growth