Amid Sri Lanka's economic crisis, poverty and vulnerability have surged. Poverty rates doubled between 2021 and 2022 from 13.1% to 25% with an additional 2.5 million people living below the poverty line in 2022 alone. To address this crisis, Sri Lanka introduced the "Aswesuma" social welfare system, which consolidates four essential programs aimed at assisting the most vulnerable households – those living in poverty, the elderly, individuals with disabilities, and those suffering from chronic kidney disease.

Social protection is a central component of Sri Lanka's 'National Transformation Roadmap' and aligns with IMF Extended Fund Facility (EFF) recommendations. The government is committed to pro-poor economic policies, prioritizing the well-being of vulnerable populations and fostering inclusive growth.

SDG target 1.4, contributes to SDG 2 (Zero hunger) by ensuring access to productive resources for vulnerable groups, SDG 5 (Gender equality) by addressing women's economic empowerment, and SDG 12 (Responsible consumption and production). While synergies exist with some targets linked to goals such as clean water and sanitation (SDG 6) and life on land (SDG 15), there are also trade-offs within these same SDGs.

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A World Food Programme report highlights that more than 6 million Sri Lankans (constituting around 30% of the population and 86% of families) face food insecurity, largely due to unaffordability during the hyperinflation of 2022. The cost of living continues to rise due to elevated input costs and disruptions in agricultural practices caused by unusual weather patterns.

Investing in achieving SDG target 2.4 can mitigate food waste (which accounts for roughly 30-40% of production), and foster agri-oriented research and innovation to improve agricultural practices, especially in value chains. These practices offer promising returns, such as solar-powered cold chain storage for vegetables (8-11% return) and fruits (over 56% return).

Investing in target 2.4 will also help mitigate the impact of climate change on agriculture, thereby increasing the sector's contribution to GDP, which stood at 7.5% in 2022. It can also enhance the physical and mental well-being of people (SDG 3.4) and contribute to reducing poverty (SDG 1.2).

As signified by the trade-offs, increased productivity and production should not be at the cost of increased pollution (SDG 6.3) and an even higher dependence on fossil fuels (SDG 7.2). An approach that will enable sustainable management of natural resources is vital (SDG 12.2).

Securing renewable energy generation is crucial for Sri Lanka's sustainable development. The nation's ongoing reliance on fossil fuel-generated electricity harms both the environment and the economy, with 30% of export earnings spent on fuel imports. Additionally, only 9.7% of electricity was derived from renewable sources in 2020. To address these challenges, the government envisions a long-term transition to achieving at least 70% renewable energy generation by 2030.

Propelling SDG 7.2 forward can foster economic growth by achieving higher levels of economic productivity (SDG 8.2) and sustainable industrialization (SDG 9.2), while also encouraging responsible consumption and production practices (SDG 12.4)

The renewable energy sector is expected to grow at a compound annual growth rate of over 25% for a time-frame of 5-10 years, which can help other industries to reduce their environmental footprint.

Potential investment in this area should, however, ensure that the transition to renewable energy is accessible to all in the society, and therefore an inclusive approach is needed that will be able to circumvent any trade-offs, such as the exploitation of natural resources, e.g., water (SDG 6.3).

In 2021, Sri Lanka had a significant gender gap in labor force participation, with 71% for males and only 31.8% for females. A substantial 58.4% of the workforce was engaged in the informal sector, and the economic crisis in 2022 exacerbated existing challenges, leading to increased youth unemployment and a brain drain. Additionally, those in the informal sector lacked sufficient social protection coverage.

Increasing investments to accelerate SDG target 8.5 will aid Sri Lanka in achieving decent work and productivity, which will have a multiplier effect on the development of other SDG targets, such as target 4.1 (Improving education), target 4.4 (Vocational training for decent work), and 9.5 (Upgrading technological capabilities). It will also help reducing poverty and ensuring women's full and effective participation is recorded and rewarded with equal pay (latest data shows female participation in the informal sector is 49.7%).

However, achieving full employment should not compromise on increasing renewable energy (SDG 7.2) and energy efficiency (SDG 7.3) which are potential trade-offs that need to be managed.

The Government of Sri Lanka views corruption as a macroeconomic concern and  aims to improve governance by implementing measures to strengthen the anti-corruption framework, enhance state-owned enterprise governance and to leverage e-government platforms for revenue collection and expenditure management.

In line with the IMF recommendations, the following legislation is in place:

1. As the country recognizes the need for a durable institutional framework, supporting flexible inflation targeting and greater exchange rate flexibility. To achieve this, by strengthening the autonomy of the Central Bank, a new Central Bank Act has been passed by the parliament and will soon be implemented.
2. To enhance fiscal transparency and governance, strengthen anti-corruption measures and conduct thorough governance assessments, an Anti- Corruption Bill was passed in Parliament.
3. The Public Financial Management (PFM) department collaborates with other government institutions to improve the management of public resources, fostering growth, development and poverty reduction. To address existing gaps and loopholes, a new PFM law will be introduced, ensuring legal clarity in the budget formulation process and establishing requirements for information and accountability.

Governance will be critical as Sri Lanka embarks on the next phase of the crises and ensuring trust in the institutions to support the rest of the SDGs including SDG 17.3 on mobilizing resources and partnership.

In terms of foreign direct investment (FDI),Sri Lanka has implemented investor-friendly policies to attract external capital. The Board of Investment (BOI) is key in promoting FDI in manufacturing, tourism and infrastructure. Special economic zones and incentives are also in place to attract multinational corporations. BOI aims for US$1.5 billion FDIs in 2023, with $211 million achieved in the first quarter and $3 billion FDI inflows by 2026.

Sri Lanka's remittances from migrant workers have bounced back after a slump in 2021-2022, providing crucial support to its vulnerable external sector. In June, the country received $475.7 million, a slight dip from April’s $479.7 million, but substantially higher than the $274.3 million received a year ago during a period of acute foreign exchange challenges. These inflows play a key role in stabilizing Sri Lanka’s external finances.

The government has also made several efforts to establish a conducive ecosystem for innovative/ sustainable financing to meet Sri Lanka’s SDG targets while achieving debt sustainability. Noteworthy measures comprise a sustainable financing road map, green taxonomy, green bond framework and new instruments, such as Debt-for-Nature swaps. Furthermore, the 2023 National Budget introduces a ‘Marine Spatial plan’ to attract sustainable investments and uphold nature conservation targets aligned with SDG commitments.

Sri Lanka actively nurtures South-South cooperation, engaging with both bilateral counterparts like China, India and Thailand and with multilateral alliances, including the Association of Southeast Asian Nations, the BRICS, the Regional Comprehensive Economic Partnership and the South Asian Association for Regional Cooperation.

However, Sri Lanka has not made a specific calculation of the SDG financing requirements. An estimate made in 2019 indicated that achieving the SDGs by 2030 would necessitate an annual investment equivalent to 9% of GDP. Considering this estimate was from 2019, it is likely that the funding gap has widened due to the challenges faced.

Sri Lanka's active engagement in international cooperation, as outlined in SDG target 17.3, has far-reaching synergies across most of the SDGs. Notably, this contributes to the promotion of affordable and clean energy (SDG 7) and climate action (SDG 13) the most, among other goals. It reflects a holistic approach to sustainable development.