Sri Lanka recorded an improvement in the 2025 Corruption Perceptions Index (CPI), moving up 14 places in the global rankings from 121st in 2024 to 107th in 2025. The country’s score also increased from 32 to 35, indicating a change in how experts and business leaders perceive corruption in its public sector.
While Sri Lanka’s score remains below the global average of 43, the latest ranking has brought to light discussions on the relationship between governance reforms, corruption reduction, and economic performance, especially in areas such as revenue collection, investor confidence, and public financial management.
The Government has also placed anti-corruption reforms among its policy priorities, with several measures introduced in recent years.
Sri Lanka’s regulatory framework includes mechanisms such as the Anti-Corruption Act No.9 of 2023, which expanded the mandate of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), the Proceeds of Crime Act No.5 of 2025, the National Anti-Corruption Action Plan 2025–2029, the CIABOC Strategic Action Plan, and the electronic asset declaration system.
Meanwhile, the Public Financial Management Act No.44 of 2024 was introduced to strengthen the management and control of public funds through improved transparency, accountability, and fiscal reporting.
Recent efforts have also focused on improving anti-corruption mechanisms within key revenue generating institutions. Corruption has always been an important economic issue for Sri Lanka. Research has estimated that the country loses approximately 1% of its Gross Domestic Product (GDP) annually due to irregularities in Government procurement processes, including issues relating to transparency and due process.
Thus, questions remain regarding how anti-corruption efforts can be viewed in terms of economic outcomes.
Ongoing efforts
Speaking to The Sunday Morning Business, Deputy Minister of Economic Development U.D. Nishantha Jayaweera stated that the economic effects of corruption reduction were already being reflected in Government revenue performance, while increased taxpayer confidence had also played an important role.
He explained that improvements in revenue collection could not be attributed to a single factor, noting that the reduction of corruption and the strengthening of taxpayer confidence had collectively contributed to the outcome. He added that these outcomes were reflected in the form of revenue.
Pointing to recent fiscal performance, Jayaweera highlighted the Government’s financial statements for the first five months of the year, which showed a budget surplus. He added that the positive outcomes seen in revenue collection were linked to multiple factors, where corruption reduction also played a role, with increased taxpayer confidence making a meaningful contribution alongside governance-related improvements.
TISL stance
Speaking to The Sunday Morning, Transparency International Sri Lanka (TISL) (TISL) Executive Director Maheshi Herat noted that Sri Lanka’s jump of 14 places in the CPI was a classic ranking illusion. The index is a relative game where a country’s rank is a secondary, dependent variable that relies entirely on how other nations perform.
According to TISL, in reality, Sri Lanka’s raw score (which is the primary, independent measure of public sector corruption on a scale of 0 to 100) only improved by a modest three points, rising from a historic decade-low figure of 32 in 2024 to 35 in 2025. Because a vast cluster of countries were tightly packed around the low-30s mark, this nominal three-point increase allowed Sri Lanka to leapfrog several stagnant nations. Therefore, the rank movement was not because other countries in the region collapsed to push us up, nor was it because Sri Lanka made a massive breakthrough; rather, Sri Lanka made a very small, fragile recovery from its lowest-ever baseline, which naturally accelerated its climb past stagnant peers.
“This localised, fragile recovery exists within a deeply troubling international landscape. As highlighted in the 2025 CPI report, the global average score has dropped to a record low of 42 out of 100, marking a sobering downward slide that reflects a widespread, systemic erosion of political commitment to tackling public sector corruption worldwide. Transparency International warns of a severe ‘anti-corruption leadership gap,’ noting that more than two-thirds of the 182 assessed countries and territories (68%) now score below 50, indicating serious, entrenched corruption issues that affect over 80% of the world’s population.”
TISL further noted that, shockingly, this decline was not exclusive to developing nations; even historically high-scoring, established democracies are experiencing long-term drops in performance. Globally, the number of top-performing countries scoring above 80 has shrunk from 12 a decade ago to just five, proving that even countries with traditionally strong regulatory frameworks are seeing their institutional integrity slip. This persistent stagnation is directly linked to the systemic erosion of democratic checks and balances, the politicisation of justice systems, and a coordinated global crackdown on civic space.
“By systematically restricting the freedoms of expression, assembly, and association, governments have weakened the vital watchdog roles played by independent journalists and civil society organisations, allowing public sector corruption to fester with fewer consequences. Transparency International’s analysis reveals a stark correlation: 36 of the 50 countries with the most significant long-term declines in their CPI scores have actively restricted civic space. Furthermore, the physical danger to watchdogs remains severe, with over 90% of journalists murdered for investigating corruption since 2012 losing their lives in low-scoring countries, proving that without protected civil liberties and bold leadership, paper-thin legal reforms remain fundamentally toothless.”
On perception of businesses/industries on corruption, TISL noted that when examining economic development and direct business perceptions, the World Economic Forum (WEF) Executive Opinion Survey (EOS) stood out as the primary source registering a positive correction, with its score for Sri Lanka climbing from 23 in 2024 to 25 in 2025. It is crucial to recognise what this specific index measures. The survey gathers executive opinions on a massive range of issues, including basic infrastructure, financial environments, innovation, and overall economic health. Because of this broad scope, when the macroeconomic environment stabilises such as during post-crisis debt restructuring or the easing of severe fuel and electricity shortages, the overall mood of business executives naturally improves. This general ‘economic feel-good factor’ heavily bleeds into how respondents answer questions on corruption, meaning the minor uptick is more a reflection of stabilised business survival conditions than an actual dismantling of systemic corruption.
“Moreover, when we consider the shrinking civic space in Sri Lanka, enacting a restrictive NGO act without a proper risk-based analysis severely threatens a country’s standing on the CPI by systematically dismantling democratic checks and balances. The proposed legislation concentrates immense control under a politically appointed competent authority answerable to a minister, stripping away the independent oversight vital to a transparent society. By granting authorities the subjective power to suspend organisations for engaging in ‘political activity’ or challenging existing laws, the bill effectively silences the very human rights organisations, research institutes, and anti corruption watchdogs that expose public sector malpractice.”
“Ultimately, by casting an overly broad net to police all non-governmental activity, the proposed legislation shifts the State’s focus from facilitating public integrity to enforcing absolute political control. Imposing onerous approvals, surveillance, and funding restrictions on independent organisations removes the primary societal barrier against grand corruption. Without a targeted, risk-based approach to governance, disabling these essential oversight actors signals a severe institutional regression to international experts, making a sharp decline in the CPI score an inevitable consequence.”
From an economic perspective, TISL noted that corruption was the single most restrictive bottleneck blocking the high-quality, non-debt foreign capital the island desperately needed to rebuild. Accordingly, following the 2022 economic collapse, the global financial community made it clear that Sri Lanka’s crisis was as much a governance failure as it was a balance-of-payments disaster. This structural link is why Sri Lanka became the first country in Asia to undergo the IMF’s strict Governance Diagnostic Assessment (GDA). International investors and multilateral lenders are no longer treating corruption as a secondary ‘moral’ issue; they are treating it as a core indicator of macroeconomic survival.
“In the practical world of global commerce, a low CPI score severely restricts the quality of FDI Sri Lanka can attract. Meanwhile, the high-value, private sector corporate investments in technology, advanced manufacturing, and export-driven industries remain highly hesitant. Premium global firms from Europe, North America, and Japan are heavily restricted by strict internal compliance structures and ESG mandates. To these investors, a CPI score of 35 out of 100 serves as an automatic red flag, signalling that operating on the ground will expose them to unquantifiable risks of regulatory unpredictability and contract enforcement failures.”
According to TISL, the real-world bottleneck is felt acutely in Sri Lanka’s heavily criticised public procurement systems. Opaque bidding processes and administrative loopholes particularly evident in critical areas like coal procurement for energy generation and national medical supplies directly inflate the cost of doing business. When foreign investors cannot rely on transparent, competitive bidding and instead have to compete against politically connected local actors, they simply take their capital to more predictable regional competitors.
“For Sri Lanka to truly break out of its debt cycle, it cannot rely solely on bilateral strategic investments or speculative real estate. The country must transition from passing landmark laws on paper, like the Anti-Corruption Act, to showing concrete, impartial enforcement. Until independent watchdog bodies can operate free from political interference and procurement is fully digitised, the perceived risk of corruption will continue to keep premium, job-creating global capital at arm’s length.”
Economic implications
Meanwhile, University of Peradeniya (UOP) Department of Economics and Statistics Professor in Economics Wasantha Athukorala stated that while Sri Lanka’s improved ranking in the CPI sent a positive signal economically, it was important to remember that the index measured perceptions of corruption rather than corruption itself.
He explained that the CPI was an important indicator when considering economic growth and development, as positive perceptions of a country’s corruption situation could influence both domestic and foreign investment decisions.
“On the other hand, if the corruption perception is negative and our ranking is low, that implies that the country is not a good place for investors. Foreign investors always compare countries before making decisions,” he noted.
Commenting on bottleneck corruption had posed in economic terms, especially when attracting investment, Prof. Athukorala noted that Sri Lanka’s ranking had deteriorated gradually after 2000 and linked corruption to some of the country’s economic difficulties over the years.
He further stated that corruption was one of the reasons Sri Lanka eventually became bankrupt and highlighted that reducing corruption remained necessary if the country was to move forward economically.
Reflecting on the present situation, he said that there had been a visible change at the political level following the change in government in 2024. While noting that there may be exceptions, he stated that he did not see the political layer as being significantly corrupt at present, which he described as a positive sign.
However, he pointed out that corruption was prevalent within the country’s administrative and bureaucratic systems, adding that it had become deeply embedded in certain practices and could not be addressed immediately. According to Prof. Athukorala, the Government has already indicated that it intends to take measures to reduce corruption, which he believes is necessary for economic progress.
Commenting on measures that must be prioritised to reduce corruption going forward, Prof. Athukorala stated that strict rules and regulations, while necessary, were not sufficient on their own as people could find loopholes and alternative ways to engage in corrupt practices.
He highlighted digitalisation as one of the most effective tools available, noting that many countries had reduced corruption by digitalising their systems. According to him, when records are maintained digitally and information is available online, opportunities for corruption become more limited than in manual systems.
Education, he noted, also had an important role to play, adding that anti-corruption values should be taught from an early age so that younger generations better understood consequences and issues associated with corruption.
Prof. Athukorala further noted that while increasing salaries and wages was sometimes suggested as a solution to corruption, evidence from other countries indicated that it had only a marginal effect. He explained that economic literature suggested that salary increases alone were generally insufficient to reduce corruption, as people tended to seek more regardless of how much they earned.