A year after Anura Kumara Dissanayake (AKD) won the presidential election and his party, the National People’s Power (NPP), won a super-majority in the parliamentary elections, the country has made important strides in anti-corruption, building a foundation for future progress. Research has praised the economy’s recovery since the economic crisis of 2022, but poverty levels remain high and the government has failed to make gains on the promise of economic relief to the people.
This is an ominous sign, because if the economy is hit by external shocks and mass unrest occurs, then the instruments of repression that governments used in the past could come into play again.
Anti-Corruption Laws
Sri Lanka’s anti-corruption drive has four components: a legal and policy framework, institutional mechanisms, the government’s political commitment to the cause, and the country’s culture of corruption.
Former president, Ranil Wickremesinghe, in power from 2022-2024, set the stage for the NPP’s anti-corruption drive. His administration introduced the Anti-Corruption Act 2023 and amended the National Audit Act 2018.
The Anti-Corruption Act 2023 is a combination of three previous laws. The revised law expanded the scope and mandate of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) to detect and prosecute corruption, mandate asset and liability declarations for public officials, investigate private sector corruption, facilitate inter-agency and international cooperation, and incorporate input from civil society.
Wickremesinghe’s administration also made considerable strides on a number of other laws, which the NPP has continued. The Regulation of Election Expenditure Act No.3 of 2023 regulates the expenditure of political parties and candidates in all major elections. The Proceeds of Crime Act No.5 of 2025, in development for some time, received momentum by being included in the country’s agreement with the International Monetary Fund (IMF). The latter Act helps recover the proceeds of crime through measures such as investigation, restraint (freezing), forfeiture and disposal. The Companies (Amendment) Act No. 12 of 2025 introduces a requirement where companies must disclose their beneficial owners (i.e. who owns or controls them). A yet-to-be released bill on procurements tries to formalize the country’s procurement system in law.
“A part of the work was done during Wickremesinghe’s time, but credit needs to be given to the NPP for continuing the work that was already started and seeing it through. They did not jettison any of these essential reforms, and they continued with it,” said researcher Balachandran Gowthaman.
Anti-Corruption Institutions
Under Wickremesinghe, the CIABOC commenced work on the National Action Plan for Anti-Corruption 2025, a detailed road-map for tackling corruption in the country. It was finalized in the early days of the NPP government.
When the former director-general of the CIABOC, High Court Judge W. Wijeratne, resigned from his post in November 2024, President Dissanayake – on the recommendation of the Constitutional Council – replaced him with High Court Judge Ranga Dissanayake. Researchers like Gowthaman described the current director-general’s approach to pursuing anti-corruption measures as a “crusade,” which is a win for the country’s anti-corruption drive.
Funding for the Anti-Corruption Act has also increased significantly under the NPP. The revised act provides a vast mandate for the CIABOC, which needed two to three times the money it received to deliver on its updated mandate.
This has helped. CIABOC reports revealed that under the Anti Corruption Act, 86 arrests were made in 2024, and 31 arrests were made in the first half of 2025.
“Whilst these are positive trends, the challenge as a country would be to keep the momentum on the sustainable enforcement of the law,” said Maheshi Herath, the deputy executive director of Transparency International Sri Lanka (TISL). “It is important that the arrests result in accountability of those who are responsible for corrupt behavior.”
“To this end, it is crucial that anti corruption efforts of CIABOC are adequately funded and the commission is restructured per the Anti Corruption Act, with adequate human resources. It is also crucial that there is a strong mechanism for prioritization of cases which will enable the commission to ensure limited resources are utilized in the cases which require prioritized attention,” she added.
It is vital that an independent public prosecutor’s office is set up, because the Attorney General’s Department is the government’s legal adviser and certain arrests could be interpreted as politically motivated. While steps to set up an independent Office of the Public Prosecutor have been initiated and a Technical Expert Committee has been appointed by the government to provide recommendations, this is only a start.
Even after investigations of corruption have been completed, the Attorney General’s Department has to take major responsibility for both non-prosecution and long delays. The setting up of this office should be expedited as the most important measure.
Despite these positive trends, there are still some strides to make in various institutional bodies that collectively contribute to combating corruption in the country. The Procurement Commission and the Right to Information (RTI) Commission are underfunded. Dissanayake took nearly a year to appoint the RTI Commission chair, and chose a first-time member with no legal background over other qualified members, who had a record of service in the commission.
“In response to a Right to Information request seeking data on the staffing of the Presidential Secretariat, it refused to comply, which is without precedent or justification. Why would the Presidential Secretariat refuse to provide this basic information unless it had something serious to hide? These are, after all, core public funds being spent,” said Arjuna Parakrama, emeritus professor at the University of Peradeniya in central Sri Lanka.
Parakrama authored the civil society governance diagnostic report in 2023, which provided an independent perspective on the broad governance landscape in Sri Lanka, recommending changes needed to combat kleptocracy and corruption.
The oversight functions of the Parliament, apart from the Committee on Public Enterprises and Committee for Public Finance, are yet to become active. These need to be strengthened and co-ordination among them improved as soon as possible.
Political Will and the Culture of Corruption
Gowthaman believes the NPP government has greater political will to combat corruption in Sri Lanka, when compared with other political parties or formations, which is a positive. “They have at times even expended their political capital to fight corruption. Irrespective of the motives, they arrested Wickremesinghe for the alleged abuse of public funds, despite the backlash that it could incur, but proceeded with it, and took a hit for that,” Gowthaman said.
The final component in the anti-corruption drive involves culture: both the pervasive culture of impunity of those in power or linked to positions of power, and the broader culture of permissiveness and tolerance for myriad forms of corruption in society.
The people’s protests in 2022 demanded an end to the theft of public funds, the need to trace and track “stolen money” and return it for investment in the country. It is in response to this demand that the NPP government’s progress in the anti-corruption drive has been made.
This has included the removal of benefits for former presidents and investigations and prosecutions of former members of Parliament, bureaucrats (such as those in the Customs Department and Immigration-Emigration Department), members of the police, members of the judiciary, and business people in the private sector.
Activists like Chaminda Dias applaud the extensive reach of the anti-corruption drive. “The lower to middle level has been cracked down upon. We wanted to see the day-to-day corruption wiped out,” Dias said. “The permissiveness of the middle and lower rungs were because people at the top were corrupt. But the arrests of people in the lower rungs means that something has been done. Law enforcement officers, who acted in good faith, are emboldened and feel they can do their job.”
But there are limitations even here. Major political players connected to allegedly corrupt operations have not been investigated or arrested.
The success of tackling the culture of impunity rests on the activation of all other elements in the country’s anti-corruption drive such as laws and policies, institutional functions, and the political commitment to the cause.
“These arrests short-circuit that culture of impunity. That is a very visible manifestation of fighting corruption, which is what the people are going for and that is what the NPP is going overboard in providing.” Gowthaman said. “If you don’t address the other aspects, such as the implementation of the legal provisions, addressing underfunding and limited capacity of anti-corruption institutions and if the political will wavers, then addressing the culture of impunity through arrests alone will ring hollow and be merely playing to the gallery. Attention to all the other elements are also needed to sustain this momentum.”
There is a second aspect to the culture of corruption, and that is the attitude and behavior of people to corruption. Researchers believe that changes here are likely to take time and will require considerable efforts.
Assessment of the Anti-Corruption Drive
“I think the NPP in its first year has done what people – many of its voters – expected it to do and has exceeded what some of its detractors thought it would do,” Gowthaman concluded. “They have unearthed the excesses and corruption of individuals in the previous regimes. The real test is this: what will the government do when corruption happens under their administration? This is to be seen.”
The former speaker of Parliament, Asoka Ranawala, was asked to produce evidence of his Ph.D. from the University of Waseda in Japan. In response to public outrage, he resigned from his position as speaker, but continues to be a member of Parliament, raising questions about the standards of honesty in the government. Almost a year later, he has yet to provide evidence of his Ph.D.
Already, some members of the NPP are being investigated for corruption. Minister of Energy Kumara Jayakody is under investigation for his tenure as chair of a Tender Committee at the Fertilizer Corporation. His involvement led to the misappropriation of funds and a financial loss of 8 million Sri Lankan rupees (around $26,000). Investigations into the tender began after concerns emerged over payment procedures and the placement of the bond. According to local reports, this investigation is on track, and Jayakody’s case is 49th on a list of 69 cases being probed by the CIABOC.
Minister of Trade, Commerce, Food Security, and Cooperative Development Wasantha Samarasinghe is also under investigation for the use of a fraudulent deed to lease a building linked to the National Worker’s Institute for 3.6 million rupees. The allegation is that Samarasinghe and two other suspects, Mahinda Jayasinghe and Ranjan Jayalal (also members of the NPP), pretended to be representatives of a trade union to lease the property.
In July 2025, the Mount Lavinia Magistrate ordered the Fraud Investigation Bureau (FIB) to record statements from the suspects linked to the case and called for extracts of the case file and other relevant documentation. In August 2025, the Magistrate rebuked the police and the Colombo Fraud Bureau for sending parts of the case to the Attorney General’s office before completion of the investigation because this could delay the process.
In September 2025, the court rejected a request to arrest the suspects because the investigation file had already been sent to the Attorney General for advice in February 2025, and initial inquiries by the Fraud Bureau had not revealed enough evidence to establish a criminal offense. Another court hearing is scheduled for February 27, 2026.
There is another aspect to the country’s eradication of corruption, which the co-editor of Polity, Balasingham Skanthakumar, pointed out in a recent article: “Without overturning the rule of the commercial, political, and bureaucratic elite that produces and profits from corruption, by redistributing economic and political power to the excluded majority; and without the mobilization of that majority for the democratization of state, market, and society, the Hydra will sprout new heads. Some of them bear faces from within the National People’s Power.”
An Economic Recovery But Continued Poverty
There have been a number of positive indicators for Sri Lanka’s economy over the past year that point to an economic recovery, such as a growth rate exceeding expectations, a boost in the industrial and services sectors, and an increase in reserves. But the intensity of poverty in Sri Lanka reveals another side to this story.
The NPP promised to introduce economic relief to the people, hit by the sequence of the COVID-19 pandemic, the economic crisis, and austerity. Unfortunately, there has been limited progress on this end. All of Wickremesinghe’s austerity policies have continued under the NPP. This includes tax hikes such as a value-added tax (VAT) and the removal of subsidies for fuel, electricity, and fertilizer.
Acts that prioritize the stipulations of creditors and IMF are still in place. This includes the Central Bank Act 2023, which removed the Central Bank of Sri Lanka (CBSL) from government oversight and limited its role to managing inflation. As a result, the government has lost a policy lever that it had used to source finance locally for development purposes.
“[The change] insulated the Central Bank from addressing local demands,” said Amali Wedagedera, a feminist political economist and senior researcher at the Bandaranaike Center for International Studies. “In the past, CBSL used to provide credit for rural development. They also produced reports such as the CBSL Annual Report, used by policymakers, researchers and students to understand the direction of the economy. The independent Central Bank has discarded these functions and focuses only on macro-economic stability to control the money supply, exchange rate, interest rate and inflation. This provides a very limited scope for an economic institution like the Central Bank.”
“It also deviates from sensing the needs of people, workers, and small-to-medium enterprises. For example, what kind of inflation management policy would be the least harmful to the interests of working people?” she said.
The Economic Transformation Act in 2024 , which stipulates very specific targets such as a primary budget surplus of 2 percent of GDP by 2032 and a government revenue goal exceeding 15 percent of GDP beyond 2027, is also still in place.
There has been no renegotiation of the IMF deal nor another Debt Sustainability Analysis, both measures promised by the NPP in the lead up to the election last year.
In the meantime, the material conditions of the masses have continued to decline. The poverty rate stands at 24.5 percent. The household debt level is 38.5 percent, with most of the debt incurred for economic activities, housing, and basic needs like food and fuel. Debt exists across the island, but in urban areas the majority of the people are taking on loans for basic consumption needs. Food inflation is high at 2.9 percent.
Seventeen percent of babies aged 6-59 months experience chronic malnutrition. 20,000 children continue to drop out of school every year, impacting the country’s education outcomes. Add to this, the poverty benefits system uses a social registry and a proxy-means-test, which has excluded many of its intended beneficiaries.
The Tax Factor
The disproportionate burden of austerity on the poor continues in the NPP government’s refusal to create a more equal playing field.
The number of people who pay income taxes in Sri Lanka is very small. Only those that earn 150,000 rupees or above are taxed. Those that earn 350,000 rupees or more are taxed at 36 percent. There is no data about the number of people that pay taxes, but an estimate can be made based on available data. According to Department of Census and Statistics data, 8 million people had jobs in the formal sector in the final quarter of 2024 and the Department of Inland Revenue issued Taxpayer Identification Numbers (TINs) to 4.7 million people by the end of 2024. Based on these numbers, 3.2 million or 41 percent of people employed in the formal sector do not pay taxes.
Corporate taxes exist at 30 percent, while betting, gaming, and liquor are taxed at 45 percent. The IMF proposed a property tax, gift tax, and an inheritance tax, but these are yet to be set up and there has been no reports about progress. Nevertheless, regressive taxes like the VAT continue to disproportionately burden the poor.
“VAT has driven 2.2 percent of new people into poverty. The World Bank is criticizing VAT. Why are [these taxes] prescribed?” Wedagedera said. “There is a massive gap in the data produced by these institutions and the policies they actually promote. They force the government to ascribe to these very standard policies.”
SOE Reforms
Since J.R. Jayawardene opened up the economy in 1977, Sri Lanka’s state-owned enterprises (SOEs) have been criticized as inefficient and unproductive. Successive governments have pushed for privatization arguing that SOEs were unprofitable and needed to be sold.
This would have made sense in the case of Sri Lanka Airlines. However, initiatives to accept private investment to uplift the debt-ridden airline in 2023 did not succeed because of a lack of interest. At the moment, the NPP government is using public funds to improve the national carrier, in the hope that it becomes more attractive to private investors.
SOEs have other purposes, rooted in equity and redistribution. This is particularly important for essential services like the provision of electricity and fuel.
Privatization “compromises the equity, redistributive and developmental principles of SOEs. Who then is development for?” Wedagedera said.
Successive governments have also made policy missteps where they have increased the number of employees, appointed substandard managers, and politicized institutions.
One of the most important so-called “reforms” at the moment is the transformation of the Ceylon Electricity Board (CEB). In June 2024, the Sri Lanka Electricity Act, No. 36 of 2024 aimed to reform the electricity sector by unbundling the CEB into four separate bodies for different functions. The government has said that there is no privatization for the moment, and described these actions as part of a push to reform the public sector.
“It is not very clear [what these reforms are doing]. The preamble [of the act] remains the same,” Wedagedera said. “It calls for stock-market investors, private investors and emphasizes the urgency of raising private finance, on the pre-text, of ensuring the financial stability of the CEB. The main amendments that the government has brought does not address it, because the preamble sets the tone and the direction.”
She added, “That is their reason to say that they have stopped the privatization of the CEB. They had significantly reduced capital investments for the CEB. Who will top up? If they are interested in keeping it as a SOE, they need to invest in it, own the infrastructure and the decisions and directions should be taken and set by the government.”
While explicit privatization of the CEB has stopped, certain measures such as the IMF’s stipulation of market-pricing for electricity has hit people. In 2023, the CEB disconnected more than 1 million households in Sri Lanka. The government also plans to introduce digital meters.
“Who will bear the cost of digital meters? This will expedite the process of disconnection. The digital meters mean there is remote control over people’s access to electricity,” Wedagedera said. “Electricity is an essential service. Is the government ready to deny those essential services to people, with such short notice?”
A Missing Development Plan
The NPP promised to increase foreign direct investment (FDI) into the country. In fact, FDI reached $783 million in September 2025, thanks to investments in ports, solid tire manufacturing, and telecom projects. The Board of Investment has received 79 proposals amounting to $4.7 billion in sectors such as manufacturing, real estate, tourism, and agriculture, but these have not been translated into tangible projects.
FDI for bigger projects is limited. The first big investment is Sinopec’s $3.7 billion investment in the Hambantota Oil Refinery and the second big investment is the India-UAE’s Energy Hub in Trincomalee, which includes a multiproduct pipelines, bunkering facilities and potentially a refinery.
U.S. companies are still hesitant to invest in Sri Lanka, citing concerns over policy stability, regulatory reform, and transparency.
Even if FDI in the country increases, this is not linked to a long-term development or industrialization plan. The Colombo Port City has had limited FDI and one of its only investments is a Big Ben-inspired Grand Clock, which is reminiscent of older “white elephant” projects which have burdened the government and taxpayers. Another series of developments is the proposed Special Economic Zones in the North.
“What is the plan and the roadmap?” asked Anushani Alagarajah, the executive director of the Adayalam Center for Policy Research. “There has been little to no consultation. They can build these industries and not involve the community.”
In the manifesto in 2024, the NPP made the promise of “economic democracy,” meaning an “equitable opportunities in economic activities,” “participation in the economic decision-making process,” and a “fair share of economic benefits.” But this seems to be absent in their ad-hoc and unplanned development drive.
“How much of the ownership is with the locals? Who owns this process? Who is employed here? What impact does it have on our environment?” Alagarajah said.
A Possible Return to Repression
The limited measures to provide economic relief in a time of austerity and unprecedented poverty could lead to mass dissatisfaction. This is dangerous in a country notorious for the repression of its people.
The numerous mass graves, for instance in Sooriyakanda, Chemmani, Jaffna Durayappa Stadium, Matale, Kalavanchikudy, and Mannar, are evidence of the country’s history of brutal repression. The instruments of repression already exist. This includes the executive presidency, centralization of state authority, the Prevention of Terrorism Act, and the military occupation of the North-East.
There have been attempts to seize rather than return land in the Tamil homeland. A gazette issued under the Land Settlement Ordinance, tried to declare thousands of acres across Jaffna, Kilinochchi, Mannar, and Mullaitivu as state property if landlords did not claim it before the stipulated deadline. Dissanayake and his Cabinet revoked the decision because of opposition from local activists, civil society, and Tamil politicians.
Meanwhile, journalists and activists like Kumanan Kanapathipillai covering the exhumation of the Chemmani Mass Graves are facing harassment.
“The timing is odd. He has been covering it since the exhumations started. We believe it is [meant] to intimidate,” Alagarajah said. “Kumanan is a journalist and has an international profile. He has been accused of covering Tamil issues for the international community and putting the government in a bad light. So he has been accused of doing his job. Why then does he have to face intimidation and inquiries at the CTID [Counter Terrorism Investigation Division]?
“Kumanan is just one journalist that has a profile, but there are also other activists, journalists and influencers that have been accused of promoting the LTTE or terrorism, that are facing surveillance and inquiries,” she said. Earlier this month, 141 individuals and organizations signed a letter requesting the international community’s attention for human-rights abuses in the North-East.
One of the most crucial insights into the possibility of repression is the government’s response to the protests in Mannar, where locals are opposing sand mining and a proposed wind turbine project. They are dependent on the land and sea for their livelihoods and the natural landscape is a haven for migratory birds. On September 19, protesters organized in front of the presidential secretariat, but were pushed to the pavement on the other side of the road in the face of a massive police presence.
A week later, on September 26, protesters encountered police and Special Task Force personnel as they protested the forceful transfer of 14 turbines. Male officers attacked female protesters and priests too.
To date, Dissanayake and the NPP have acted in the realm of respectability and legality. They have applied the IMF’s prescribed policies to help the economy recover and return to the capital markets. But if the country’s economy is hit by a sudden economic shock, then this response of force and repression could easily become the norm.
A recent report identified a number of possible risks facing Sri Lanka, such as the stagnation of the economy, the unpredictable international trade climate (including the possibility of a trade war), internal factors (such as high public debt levels and more demand for motor vehicles which strains foreign reserves), and, finally, the exodus of the labor force in the backdrop of an aging population.
When Ranil Wickremesinghe became president, he became “Ranil Rajapaksa,” employing high-handed means to reinstate public order, stabilize the economy, and put the country back-on-track. Dissanayake could take a similar approach to control unrest, enact stipulated policies, and enforce projects. The president and the NPP could become the hand that enacts the dictates of capital, by any means necessary.