When Sri Lanka’s civil war ended in 2009, reconstruction quickly became both an economic strategy and a political statement. Large-scale infrastructure projects were framed as the visible “peace dividend,” signalling stability, national unity, and economic revival. Expressways expanded across the country, the Hambantota Port was completed, the Mattala Rajapaksa International Airport opened, and major road networks reshaped Sri Lanka’s transport system. These projects symbolised the state’s commitment to rebuilding the nation and repositioning Sri Lanka economically after decades of conflict.

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Between 2010 and 2019, infrastructure development became a central pillar of Sri Lanka’s post-war growth strategy. Public investment in highways, ports, airports, and urban development increased significantly during this period. Infrastructure expansion was viewed as a way to accelerate economic growth, improve connectivity, and attract international investment. Sri Lanka also aimed to position itself as a strategic logistics and maritime hub in the Indian Ocean, capitalising on its location along major global shipping routes (Central Bank of Sri Lanka, 2023).

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Economic growth during the early post-war years appeared to support this strategy. Sri Lanka recorded strong GDP growth between 2010 and 2014, averaging around 6–8% annually. Construction, tourism, and infrastructure development became key drivers of the economy during this period. The expansion of expressways significantly reduced travel time between major urban centres and improved transportation efficiency across several regions of the country.

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However, while infrastructure expansion improved national connectivity, its economic benefits did not translate evenly into improved living conditions for all citizens.

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Economic Growth and Rising Vulnerability

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Structural vulnerabilities in Sri Lanka’s economy became increasingly visible by late 2010. In 2022, the country experienced its most severe economic crisis since independence. Shortages of fuel, medicine, and essential goods exposed deep macroeconomic imbalances, including high public debt, declining foreign exchange reserves, and fiscal constraints.

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Sri Lanka’s public debt increased rapidly over the past decade, eventually exceeding the size of the national economy. By 2022, public debt had reached unsustainable levels, contributing to the country’s sovereign default and the need for international financial assistance (International Monetary Fund, 2023).

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The economic crisis had profound consequences at the household level. According to the World Bank, approximately 25.9% of Sri Lanka’s population was living below the national poverty line in 2023, a significant increase compared with pre-crisis levels (World Bank, 2024). Rising inflation, declining real incomes, and employment instability placed considerable pressure on households across the country.

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Public opinion surveys also reveal growing economic insecurity among citizens. For example, findings from the Sri Lanka Barometer survey indicate that concerns related to the cost of living, employment, and income stability have become dominant issues shaping citizens’ perceptions of security and well-being (Sri Lanka Barometer, 2024).

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Spatial Growth Without Redistribution

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Infrastructure development is often expected to stimulate broad-based economic growth by improving connectivity and market access. However, research suggests that the economic benefits of Sri Lanka’s infrastructure expansion have been unevenly distributed geographically.

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The Western Province continues to dominate economic activity, accounting for over 40% of Sri Lanka’s GDP, while many rural and peripheral regions remain economically marginalised (Central Bank of Sri Lanka, 2023). Although expressways improved travel efficiency, they did not automatically generate new industries or sustainable employment opportunities in less developed regions.

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Large infrastructure projects also created primarily short-term employment during construction phases. Once projects were completed, long-term economic opportunities depended on broader industrial development strategies and regional investment policies that remained limited.

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In previously conflict-affected areas such as the Northern and Eastern Provinces, improvements in road infrastructure have enhanced mobility and connectivity. However, these regions continue to face structural challenges including higher unemployment rates, limited private sector investment, and weaker economic diversification compared to the Western Province (World Bank, 2024).

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Governance and the Political Economy of Infrastructure

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Another important aspect of Sri Lanka’s infrastructure expansion concerns the governance and political dynamics surrounding large-scale development projects. Infrastructure investments often serve not only economic objectives but also political ones. High-visibility projects such as ports, airports, and expressways can reinforce political narratives of development and state capacity.

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However, when infrastructure planning is driven primarily by political considerations rather than long-term economic viability, the outcomes may be less sustainable. Several large infrastructure projects in Sri Lanka have faced criticism regarding their economic returns, utilisation rates, and long-term financial viability. These debates highlight the importance of transparent planning processes, rigorous cost-benefit analysis, and public accountability in large-scale infrastructure development.

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Debt and the Cost of the Peace Dividend

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The financing model used to support Sri Lanka’s infrastructure expansion is equally significant. Many large projects were funded through external borrowing, including bilateral loans and commercial debt instruments. While such financing enabled rapid infrastructure construction, it also increased the country’s long-term debt obligations.

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Rising debt servicing costs placed increasing pressure on Sri Lanka’s public finances throughout the late 2010s. When the economic crisis escalated in 2022, limited fiscal space made it difficult for the government to sustain social protection programmes or effectively respond to shortages of essential goods (International Monetary Fund, 2023).

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In this context, infrastructure projects that were originally framed as symbols of post-war recovery also became associated with broader fiscal vulnerabilities.

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Peace as Stability vs Peace as Well-Being

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Post-war infrastructure projects reflected a particular understanding of peace centered on stability, investment, and macroeconomic growth. However, for many citizens, peace is experienced through everyday economic security stable employment, affordable living costs, and access to reliable public services.

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When households face rising costs of living and declining income stability, infrastructure alone cannot deliver a meaningful peace dividend.

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Infrastructure remains essential for national development. Roads, ports, and airports facilitate mobility and economic activity. Yet infrastructure must be complemented by policies that address inequality, strengthen regional economies, and expand social protection systems.

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A more inclusive development strategy would prioritise investments that directly improve citizens’ well-being, including public transport systems, healthcare facilities, education infrastructure, and rural economic development. Aligning infrastructure development with regional industrial strategies could also help ensure that economic gains are distributed more evenly across the country.

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Ultimately, the success of post-war reconstruction should not be measured solely by the number of expressways built or ports constructed. The true measure of peace lies in whether economic development improves everyday life for citizens across all regions of Sri Lanka.

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References

Central Bank of Sri Lanka (2023) Annual Report 2022. Colombo: Central Bank of Sri Lanka.

International Monetary Fund (2023) Sri Lanka: Request for an Extended Arrangement under the Extended Fund Facility. Washington, DC: International Monetary Fund.

Sri Lanka Barometer (2024) 2023 Public Opinion Survey on Reconciliation. Colombo: GIZ:SCOPE.

World Bank (2024) Sri Lanka Development Update. Washington, DC: World Bank.

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Lughadarini Yogaraja is an economic researcher and a volunteer with the S.L. Reconciliation Movement, focusing on peacebuilding, reconciliation, and inclusive community initiatives. She is an international fellow at the U.S. Department of State Community Engagement Exchange (CEE) alum and a Young Southeast Asian Leaders Initiative (YSALI alum), passionate about using research and outreach to create positive social impact.

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