ECONOMYNEXT — As the conflict in West Asia threatens the global hub status of places like Dubai and Doha, Sri Lanka could position itself as a safe haven for capital and talent in the Indian Ocean with the proper reforms, an economist has said.
“If they’re being hit, then others may be attracted for capital and people… Can we be some kind of centre, shall we say, in the Indian Ocean?” Ganeshan Wignaraja, Visiting Senior Research Fellow at ODI Global, London and a former Director of Research at the ADB Institute, Tokyo, said.
“We have to continue macroeconomic stability,” Wignaraja said, speaking at a forum on ‘A Global Economy in the Shadow of Middle-East War: Implications for Sri Lanka’s Debt Recovery’ held at the Regional Centre for Strategic Studies in Colombo.
The dialogue brought together senior serving and retired policy makers, diplomats, defence, academic, think-tank, civil society and media representatives.
Wignaraja advocated for reforms to pivot from a cyclical recovery to a newer role as a regional financial pillar.
Critics warn that “red tape” and rigid labor laws remain significant barriers to FDI.
Recent governance failures, including the Treasury cyber breach and a bank fraud case, undermine investor confidence and creditor trust, he said, and raised concern at the possibility that external actors could refrain from committing capital to Sri Lanka under current conditions.
Sri Lanka remains under intense international scrutiny following its 2022 default.
Wignaraja cautioned that Sri Lanka should consider an 18th IMF programme, with the current programme ending in mid-2027 and significant debt repayments due from 2028, the effects of Cyclone Ditwah and the war in West Asia have made “what was once a contingency, increasingly inevitable, and that planning for it is the responsible course of action.”
He pointed to the IMF’s April 2026 World Economic Outlook, which projects global growth slowing to 3.1% in 2026, with downside risks dominating: prolonged conflict, geopolitical fragmentation, and renewed trade tensions bearing down hardest on emerging and developing economies.
It is against this external environment, he said, that Sri Lanka’s vulnerabilities must be understood as the ramifications of the war had hit Sri Lanka through rising oil-gas-fertilizer prices, disrupted remittances, airline and tourism disruptions.
He noted that the war presents Sri Lanka some long-term opportunities; as Gulf states lose their safe-haven status, Sri Lanka could, if it builds the right regulatory, governance, and infrastructure environment, position itself as an Indian Ocean hub for maritime trade, aviation, finance, and professional services.
Whether that opportunity is seized or not, he said, depends on decisions and reforms that should taken now. (Colombo/May6/2026)