Colombo, Sept 30 – The US Department of State has raised concerns over Sri Lanka’s investment environment, describing it as inconsistent, overly regulated, and burdened by legal uncertainty and bureaucratic inefficiency.
In its 2025 Investment Climate Statements, the department pointed to the Adani Group’s withdrawal from a USD 400 million renewable energy project as a high-profile example of investor unease.
While Sri Lanka recorded a 5% GDP growth in 2024, surpassing expectations and showing recovery signs from its 2022 financial crisis, Washington noted that “the investment climate remains challenging.”
The report acknowledged improved political stability under President Anura Kumara Dissanayake and his National People’s Power (NPP) coalition, which secured a sweeping victory in the 2024 elections. The administration’s endorsement of the USD 3 billion IMF programme reassured some foreign investors.
However, concerns persist due to the NPP’s Marxist roots and anti-Western history, which continue to cast a shadow over Sri Lanka’s openness to foreign capital.
Key Takeaways
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Growth: GDP up 5% in 2024, signaling recovery.
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Adani Exit: Withdrawal of USD 400 million project highlights risk.
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Challenges: Policy inconsistency, heavy regulation, and slow bureaucracy.
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Political Context: IMF backing welcomed, but NPP’s ideological baggage raises questions.