Sri Lanka is preparing to table three significant new laws in the first quarter of 2026 aimed at de-risking private capital inflows and creating a more predictable environment for investors. Senior Economic Adviser to the President, Duminda Hulangamuwa, announced these initiatives during his address at the inaugural Lanka Impact Investment Summit 2026. The proposed legislation focuses on investment protection, public-private partnerships, and State-owned enterprise reforms, signaling the government’s commitment to policy-led growth beyond the natural economic expansion of 4-5%.
These reforms come at a time when Sri Lanka has demonstrated strong fiscal discipline, achieving a primary surplus of 3.9% of GDP in the previous year well above the International Monetary Fund benchmark of 2.3%. With foreign reserves rising from approximately $6 billion to $6.8 billion and successful management of debt obligations, including $3.2 billion in foreign debt payments last year, the country is positioning itself as open and ready for substantial private investment.
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The Three Proposed Laws: Building Investor Confidence
The forthcoming legislation addresses core barriers that have historically deterred large-scale private capital, such as policy unpredictability and regulatory risks.
- Investment Protection Law
This law aims to strengthen safeguards for investors by enhancing predictability and reducing policy-related risks. It will provide a robust framework to protect investments, encouraging commitments in high-value sectors. By offering clearer legal assurances, the law is expected to appeal to both domestic and international players seeking long-term stability. - Public-Private Partnership (PPP) Framework
A dedicated PPP law will formalize processes for collaborations between the government and private sector. This structured approach is designed to attract capital into infrastructure and development projects, ensuring transparency and mutual benefits. It addresses past inconsistencies in project execution, providing a reliable mechanism for risk-sharing and efficient implementation. - State-Owned Enterprise (SOE) Reform Law
Focused on improving governance, this legislation will enhance transparency, accountability, and operational independence in SOEs. Key provisions include establishing a holding company structure, with potential for partial listings over time. These changes are intended to make SOEs more efficient and attractive for private involvement, reducing fiscal burdens while unlocking value.
All three bills are slated for tabling by March or April 2026, reflecting a coordinated effort to create an enabling environment for private-sector-led growth.
Economic Context and Fiscal Achievements
Hulangamuwa emphasized that while Sri Lanka can achieve 4-5% growth naturally supported by favorable conditions like weather for agriculture sustained higher expansion requires deliberate policy interventions. “To go beyond that, growth has to be policy-based, sustainable and inclusive,” he stated.
The country’s fiscal performance underscores this readiness. Last year’s primary surplus marked the highest on record, demonstrating effective management amid ongoing debt obligations. Annual debt servicing is projected at around $3 billion through 2036, with Hulangamuwa rejecting concerns over post-2028 sustainability risks as unfounded.
Additional positive steps include issuing close to $2 billion in letters of credit and reopening vehicle imports after nearly five years, easing pressures on businesses and consumers. These measures, combined with macroeconomic stabilization, have contributed to gains in capital markets and restored trust.
The government has also shifted away from unsolicited proposals and frequent policy changes, prioritizing long-term confidence, a critical factor for investors evaluating emerging markets.
Implications for Private Capital and Investment
For investors, these laws represent a pivotal shift toward de-risking opportunities in Sri Lanka. By addressing policy risks and formalizing partnerships, the reforms could unlock funding for priority sectors such as tourism through product diversification, airport expansions, and expressways and shipping/logistics, including port capacity enhancements and transshipment growth.
The SOE reforms, in particular, open avenues for strategic investments, potentially through equity participation in restructured entities. PPP frameworks will facilitate large infrastructure projects, allowing private capital to bridge funding gaps while sharing rewards.
Globally, as investors seek diversified portfolios in recovering economies, Sri Lanka’s emphasis on transparency and governance aligns with best practices. The message from the summit “Sri Lanka is ready, Sri Lanka is open” highlights institutional changes that build lasting confidence.
Businesses in impact investing, infrastructure, and strategic sectors stand to benefit from early engagement. With reserves strengthened and debt managed effectively, the environment supports scalable projects that drive inclusive growth, job creation, and export competitiveness.
A Strategic Path Forward
The introduction of these three laws in early 2026 marks a proactive step in Sri Lanka’s economic transformation. By focusing on protection, partnerships, and reforms, the government aims to generate sustainable growth that exceeds baseline projections.
For stakeholders, this signals an opportune moment to explore collaborations in a stabilizing economy. Hulangamuwa’s assurance of built trust and confidence under the current administration reinforces the potential for meaningful private capital inflows.
As implementation approaches, monitoring progress on these bills will be essential for investors positioning in Sri Lanka’s evolving landscape. With fiscal strengths and targeted reforms in place, the country is laying the foundation for policy-driven prosperity.
(Disclaimer: This article is for informational purposes only and does not constitute investment advice. Policy and legislative developments are subject to parliamentary processes and changes.)
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