A game-changer for Sri Lanka’s capital market

As the global community convened for the World Bank Group’s 2025 Spring Meetings under the timely theme “Jobs: The Path to Prosperity,” one message stood out: prosperity in the developing world depends not only on physical infrastructure but also on strong financial systems.

Among the influential voices at this year’s gathering was Douglas L. Peterson, Special Advisor to S&P Global and a longstanding advocate of resilient market economies.

Drawing from a decade-long tenure as CEO of S&P Global, Peterson delivered key insights that resonate deeply with the challenges and opportunities facing emerging economies such as Sri Lanka.

Peterson stressed that while global capital is abundant, it doesn’t move indiscriminately. “It follows signals, namely, data, transparency, regulatory certainty, labour and market stability.”

“When investors look to deploy capital in developing markets, they’re seeking a solid financial infrastructure,” Peterson said. “That includes reliable data, transparent pricing mechanisms, independent credit rating agencies, and clearly defined bankruptcy laws.”

These factors may not make headlines, but Peterson underscored their essential role.

“Financial infrastructure enables confidence, and confidence attracts investment,” he said.

A key initiative Peterson is championing in collaboration with the World Bank is titled ‘Originate to Distribute’, a structured finance approach where loans are created by institutions like the World Bank but sold to private investors.

Traditionally, loans from development banks remain on their balance sheets for decades. This initiative proposes standardising and structuring such loans so that private investors can purchase, pool, and trade them – essentially converting infrastructure loans into a new, tradable asset class.

“This is about creating velocity and scale,” Peterson said. “If the World Bank can originate loans and distribute them to the private sector, every dollar stretches further. It helps close the multi-trillion-dollar infrastructure investment gap.”

For countries like Sri Lanka, where public finances are under pressure, such a model could unlock significant private capital provided the regulatory environment and financial infrastructure are prepared to support it.

In alignment with the World Bank’s focus on job creation, Peterson prioritised five sectors he believes are pivotal for employment growth in developing nations: infrastructure (both physical and digital), agri-business, healthcare, tourism, and manufacturing. The common thread across all these sectors, he asserted, is infrastructure.

“Build an airport and you get hotels, transport services and even carbon savings,” Peterson said. “A bridge not only connects communities but also cuts costs, travel time, and emissions.”

According to Peterson, infrastructure investment yields a multiplier effect, often generating an additional $1.40 to $1.60 for every dollar spent. It also catalyses other industries. Manufacturing depends on roads and ports; tourism needs transport and energy; agriculture requires logistics and storage; and healthcare relies on reliable access and communication systems.

Peterson’s reflections also touched on a more structural issue that Sri Lanka is currently facing; the need to develop robust domestic capital markets. He emphasised moving beyond a banking-dominated financial system toward one that includes institutional investors like insurance companies and pension funds.

“These institutions become long-term investors,” he noted. “They form the foundation for sustainable infrastructure investment. Homegrown capital reduces reliance on external debt and increases financial resilience.”

Peterson’s remarks serve as a timely reminder as job creation and long-term prosperity in Sri Lanka will not come through piecemeal efforts. Instead, they require coordinated investments in both physical and financial infrastructure, from better roads and ports to regulatory frameworks that inspire investor confidence.

Unlocking private capital through trust, transparency, and smart financial engineering is the way forward. And as leaders like Peterson have shown, the tools and models already exist. It is now up to policymakers and financial leaders in Sri Lanka to ensure Sri Lanka is ready to embrace them.

Douglas L. Peterson currently serves on the board of the UN Global Compact and was formerly CEO of S&P Global, where he expanded the company’s market capitalisation from $16 billion to over $150 billion. He also led the G7 task force on sustainable finance in 2021.

By Sanath Nanayakkare