Deputy Minister of Urban Development Eranga Gunasekara says the government has taken Sri Lanka from a bankrupt nation to a middle-income country by stopping financial leakages in the state system, NewsFirst reported.
Addressing a gathering, Gunasekara said the turnaround since the country’s financial collapse rested on stronger revenue collection and an improved foreign exchange position. There was no “magic solution,” he argued — only careful management of public funds and foreign exchange earnings.
He said previous administrations had failed to prevent financial leakages within the state system, and that stronger state finances had allowed the government to grant salary increases exceeding what workers originally asked for. He blamed decades of political leadership for the hardships facing working families.
The middle-income claim checks out — and understates the position
On the classification itself, Gunasekara is correct, and in fact conservative. The World Bank moved Sri Lanka from lower-middle to upper-middle income status effective 1 July 2026, as we reported at the time — one of five economies upgraded that year, alongside Jordan, Micronesia, the Philippines and Vietnam.
But the Bank attached conditions to its own decision that the deputy minister’s framing leaves out:
- public debt remains elevated
- growth is projected to slow to around 3% in 2027
- poverty indicators have not returned to pre-2022 levels
- cost-of-living pressure on households continues
The Bank was explicit that the status is reversible: “The 2027 reclassification comes after a genuine crisis and a hard-fought recovery. That makes it more meaningful. However, as experienced in 2019, it does not make it permanent.” Sri Lanka held upper-middle income status in 2019, lost it the next year, and defaulted in 2022.
Growth is not the only reason the threshold was crossed
The mechanism matters to the claim. The upgrade is calculated from gross national income per capita under the Atlas method, and Sri Lanka crossed the line on a combination of 5% real GDP growth in 2025, an 8.8% rise in GDP at current prices, a shrinking population, and exchange-rate movement.
A falling denominator lifts per-capita income without any improvement in household welfare. Attributing the whole reclassification to closing leaks in the state system therefore claims more for policy than the arithmetic supports.
On the leaks themselves
Gunasekara offers no figures — no estimate of what the leakages cost, which ones were closed, or what the recovered sums were spent on. NewsFirst does not press him on any of it.
The claim also sits uneasily beside an open case the government has not resolved: the US$2.5 million lost from the Finance Ministry’s sovereign debt payment system in a cyberattack discovered in January and reported to the Committee on Public Finance in June. That was money leaving the state system under the current administration, and it has not been recovered.
A single-source report
This is a NewsFirst exclusive. A search of Daily Mirror, Hiru, Ada Derana, EconomyNext, Daily FT and Island found no other verified newsroom carrying Gunasekara’s remarks, so the account rests on one outlet.
Not reported
NewsFirst does not say where or when Gunasekara spoke, or to whom — “addressing the gathering” is the only description given, which makes the remarks impossible to place in context. Nor does the report say which salary increases he means or which category of workers received more than they requested, give any revenue or reserve figure to support the claim, or carry a response from the opposition.
