The past week has perhaps been the clearest reminder yet that one year on, the National People’s Power (NPP) Government is still groping in the dark, stumbling from one misstep to another, hoping that divine intervention might miraculously set things right. For a regime that rode into office on the crest of massive popular support and revolutionary rhetoric, the NPP today finds itself bogged down by self-inflicted wounds, internal controversies, and an alarming erosion of credibility. The NPP that promised to cleanse politics of corruption, deception, and incompetence has been forced to fight fires on multiple fronts, not because of a super-efficient Opposition, but due to its own doing.
Having campaigned on a populist platform that promised to rewrite the International Monetary Fund (IMF) agreement, reject austerity, and chart a sovereign course to recovery, the NPP abandoned its own policy manifesto almost immediately after securing power, consequently losing over two million votes at the subsequent Local Government Elections six months later. The party that routinely accused its predecessors of ‘selling out to the IMF’ has today become its most compliant disciple.
It is a given that investors, both foreign and domestic, value consistency and credibility above all else. But the NPP, by reversing its own ideological compass to a point beyond recognition in its first year, has effectively announced to the world that its word means nothing. The party’s credibility deficit has been worsened by the steady stream of scandals that have engulfed its senior leadership in recent times.
Last week’s Cabinet reshuffle appears to be a thinly-veiled attempt at damage control over the controversial release of 323 shipping containers with the Minister who handled the subject being unceremoniously relieved of the portfolio. Adding to the recent controversies, the Trade Minister, who is already under scrutiny for unexplained wealth, was accused of nominating a lowly public relations officer to accompany him to high-level World Trade Organization meetings in Switzerland as part of a nine-member delegation.
The controversies do not end there. Allegations continue to swirl around powerful ministers resorting to deception by concealing their true identities and officials are being accused of using the Criminal Investigation Department (CID) to silence dissent on social media, along with the notable politicisation of institutions meant to ensure accountability, such as the Bribery Commission and Police. These episodes seem to form a pattern all too familiar to most Sri Lankans, reminding them that political decay does not vanish with a change of government but merely changes costume.
Despite all this, the NPP Government continues to assure the public that industrial peace prevails, political stability is intact, and that corruption is being uprooted. Ministers appear on television talk shows claiming that foreign investment is “pouring in” and that the international community is “praising Sri Lanka’s recovery”. But beneath this façade lies the stark economic reality that foreign investors are not so forthcoming.
The World Bank’s latest assessment on Sri Lanka is a brutal reality check that confirms the fact. It reveals that Sri Lanka’s Foreign Direct Investment (FDI) stands at a meagre 0.5% of GDP, far below the regional benchmark of 1.5% and a fraction of the levels seen in Malaysia and Vietnam, where FDI accounts for around 3% of GDP. If the NPP’s goal of attracting $ 36 billion in FDI by 2030 is to be achieved, the current inflows would need to triple – a near impossibility under the present conditions.
At a media briefing held in Colombo last week, the World Bank’s Senior Economist for Sri Lanka and the Maldives identified transparency and efficiency issues, bureaucratic red tape, and outdated labour laws as the primary barriers to foreign investment while pointing out the main hurdle faced by investors of having to deal with multiple ministries exercising overlapping control and a maze of administrative hurdles. Moreover, labour regulations that have remained largely unchanged for decades continue to deter both employers and employees from operating efficiently, even restricting employment opportunities for women in key sectors.
While the NPP leadership continues to insist that Sri Lanka is on the path to recovery, foreign investors appear to be seeing a very different picture. Even more damaging is the perception that the NPP regime is more concerned with policing dissent than with implementing reform. The growing use of the CID to intimidate social media activists and journalists has created a chilling effect on free speech, while the continued lack of transparency surrounding major Government decisions continues to undermine confidence in governance.
When a government displays insecurity towards criticism and hostility towards scrutiny, investors tend to interpret it as a sign of weakness. No amount of public relations spin can mask that reality. The NPP must learn quickly that investor sentiment does not turn on slogans or speeches but rather on the integrity of systems, the predictability of policy, and the credibility of those in charge. And on all three counts, the NPP has faltered.
In today’s world, where Artificial Intelligence and real-time analytics monitor political risk in minute detail, such patterns are instantly flagged. Modern-day investment flows respond not merely to economic incentives but increasingly to political integrity. Algorithms scan data on governance, corruption, and public accountability before recommending where capital should move. It is no surprise, then, that global capital continues to bypass Sri Lanka. Creating an environment of trust takes years while destroying it takes only a few weeks of scandal and silence. The NPP appears to have managed to do the latter with alarming efficiency.
Adding to the confusion, President Anura Kumara Dissanayake continues to reaffirm that the IMF remains a “vital partner” in Sri Lanka’s journey from crisis to recovery. He describes the IMF’s support not as external assistance but as an “integral element” of the Government’s strategy for sustainable progress. The regime appears to be unaware that the IMF is not a ‘strategic partner’ by any means. Its role is that of a firefighter, not a builder: it lends to countries in crisis to prevent collapse, not to underwrite development. It is a lender of last resort. Therefore, for the NPP to hinge its entire economic narrative on IMF support is to misunderstand both the nature and purpose of the institution. More dangerously, it signals to investors that Sri Lanka’s recovery is externally dependent and not internally driven – not the message any government would want to send.
Interestingly, even as the IMF approved its latest tranche of $ 347 million last week, bringing total disbursements to $ 2.04 billion, the World Bank issued a sobering warning that Sri Lanka’s recovery remains “incomplete and uneven”. Economic output, it noted, is still below 2018 levels, while food prices remain elevated and foreign reserve accumulation has slowed.
The World Bank’s Country Director emphasised that Sri Lanka’s real challenge now was to shift from “crisis management to competitiveness”. Growth, he said, must be anchored on private investment, trade, and technology adoption, not mere fiscal discipline. His message was echoed by other officials who stressed the need for consistent, transparent policies that allow businesses to expand, innovate, and create jobs.
For all its talk of reform and renewal, the NPP regime appears to have run out of ideas. Its governance style has become reactive rather than proactive, fixated on extinguishing political fires rather than charting an economic vision. Even though the regime claims to have restored confidence, business sentiment remains subdued. It claims to have reduced corruption but allegations continue to multiply, while claims of having improved investor relations have been met with the reality of FDI being nowhere near its target.
What Sri Lanka needs most today is not another economic reform package or Cabinet reshuffle. It needs credibility that is earned and not declared. Credibility is built not through slogans or speeches, but through consistent policy, transparent governance, and moral integrity. It is the cumulative result of every small act of honesty and every large act of accountability.
For the NPP, regaining credibility will require confronting uncomfortable truths: that its internal divisions have weakened governance, that its attempts to suppress dissent have alienated the public, that its betrayal of promises has shattered trust, and that its obsession with managing optics has blinded it to managing the economy. It must realise that credibility is the only currency that matters.