United States Department of State

Sri Lanka United States Department of State

Sri Lanka is a constitutional, multiparty republic. In 1978, it shifted away from a socialist orientation and opened up to foreign investment, although changes in government have often been accompanied by reversals in economic policy. Former President Rajapaksa followed a statist economic policy advocating government control of strategic enterprises and expanding the role of the state. The Rajapaksa administration also followed a substantial government infrastructure development program, largely financed with Chinese loans. Most of these projects bypassed the government tender process, and Sri Lanka's corporate sector or non-Chinese foreign investors played little to no role in the projects. The projects, valued at approximately USD 3-6 billion, range from construction of major ports, international airports, and power stations, to expressways, reclaimed land, highways, railways, and telecommunication towers. President Sirisena's administration has suspended work on many of these projects pending review, and some contracts are being renegotiated.