Sri Lanka’s first left-leaning president has surprised many observers by embracing pro-market reforms during his first year in office. President Anura Kumara Dissanayake, who had campaigned on renegotiating the IMF bailout, is now implementing a series of bold steps to stabilise the economy. These pro-market reforms include raising energy tariffs, breaking up state monopolies and courting foreign investment.
Government officials admit the pro-market reforms will be painful in the short term but argue they are essential to rebuild the nation after its 2022 economic collapse. More than 70% of Sri Lankans still struggle to afford basic food, but the finance ministry says reversing the IMF framework would have been catastrophic. Instead, the administration is doubling down on pro-market reforms to sustain the recovery.
Energy policy is at the heart of the pro-market reforms. The government plans to split the Ceylon Electricity Board into six companies to improve efficiency. Ministers also aim to raise power tariffs gradually while allowing producers to invest in new generation and transmission lines. Such steps reflect the president’s conviction that pro-market reforms can balance public interest with investor returns.
The Board of Investment has approved nearly $100 million across six projects to grow cannabis for medical oil exports to the U.S. and Europe. This signals that pro-market reforms are opening new sectors. With a strong parliamentary majority, Dissanayake can push these pro-market reforms further than previous leaders.
Whether the public will support deeper pro-market reforms remains an open question. Analysts say that political will must be matched by social consensus. Still, Sri Lanka’s leadership is betting that continued pro-market reforms will draw more investment, strengthen energy security and restore confidence in the economy.