TRUST AND RECONCILIATION
THE REAL GROWTH STRATEGY
The removal of the trust deficit is critical for growth – Dr. Jehan Perera
Budget 2026 has been welcomed by the business community and international aid agencies alike, and much of this approval stems from the wider context rather than the document alone. Sri Lanka has struggled back from the brink of collapse and regained a measure of credibility. And the government’s adherence to the IMF programme has been more consistent than expected.
Many assumed that a leadership shaped by Marxist traditions would resist external direction, yet the opposite has happened because the discipline has reassured international partners.
But it has also exposed two problems.
Firstly, the burden on ordinary people remains heavy. The expanded Aswesuma welfare scheme offers stronger support to low income households but there is little relief for the tax paying middle strata, which keeps the economy functioning.
Secondly, the budget doesn’t yet outline how production and investment will expand in the short term.
Sri Lanka lacks the sort of catalytic initiatives that once transformed the economy such as Mahaweli Development programme and the 200 garment factories programme.
So stability has returned but direction hasn’t.
If hardship continues without a sense of forward movement, frustration is likely to grow and create political risk. Economic reforms can’t succeed in a vacuum; they require a wider social consensus – and one of the key missing ingredients is unity across communities.
To promote growth, a prerequisite is to unify the country’s multiethnic and multi-religious population behind the development effort. This is where the second track of recovery becomes indispensable.
A modern economy can’t flourish on stability alone. It needs trust.
The government has taken steps to convince all communities that they will be treated as equal citizens; and it has shown a stronger stance against corruption and inefficiency. Yet, the unresolved legacy of the war continues to cast a long shadow over national life.
Recurring sessions of the United Nations Human Rights Council (UNHRC) are reminders that the reconciliation agenda remains incomplete. Therefore, the government needs to demonstrate the same level of commitment in dealing with the UNHRC resolutions as it does in implementing the IMF’s programme.
At present, International Monetary Fund compliance is treated as essential and UNHRC abidance as optional, creating an imbalance that undermines confidence.
The stalled provincial council elections illustrate this imbalance. During his budget speech and in discussions that followed, President Anura Kumara Dissanayake spoke in a noncommittal manner about restoring those political structures through the democratic process.
Elections have been overdue since 2017, and are now part of both the UNHRC resolutions and the EU’s GSP Plus process. With its two-thirds majority, the government has the power to complete the legislative steps required to hold these elections and demonstrate seriousness about political inclusion.
Such actions would speak far louder than words.
Consent and trust aren’t abstract concepts; they have direct economic significance. Foreign investors look for predictable governance and inclusive politics. Among the potential investors is the Tamil diaspora.
As former president of the UNP branch in London Dr. Roger Srivasan observed recently, the diaspora has an economic output of about US$ 100 billion. Even if a small portion of that can be directed to Sri Lanka, it would be transformative. But it requires confidence that the country is moving towards sustainable peace rather than an extended holding pattern.
A national growth strategy that couples economic recovery with reconciliation will widen the pool of investors, strengthen public support for reform and deepen social cohesion. It will also reduce political volatility, which has been one of the largest hidden costs of the economy.
No investor wants to enter a market where unity feels fragile and rights unsettled. Macroeconomic credibility must therefore, be matched by political credibility.
Growth won’t come from balancing accounts alone. Overcoming the trust deficit and rebuilding a sense of belonging among those long excluded is also needed. The reconciliation process mustn’t be seen as a concession but rather, as a foundation of national development.
If the government follows the UNHRC resolutions with the same determination that it abides by the IMF programme, it will unlock both external confidence and internal participation. For economic growth to take root, the government must give the same priority to reconciliation as it grants the IMF programme to ensure that stability is matched by unity and inclusion.
