In the aftermath of more than two decades of war, Sri Lanka is now in a position to fuel its economy to regain its lost economic growth momentum and achieve economic prosperity. To achieve such economic prosperity, Sri Lanka has a significant need for a realistic, feasible and comprehensive road map for future development. In order to successfully do that, an assessment of existing policy structures as well as an assessment of socioeconomic loss of war is vital. This study makes recommendations on required changes to the defence expenditure framework within the system of national accounts based on theoretical investigation of the System of National Accounts and other global best practices.
Further, assessment of the true cost of war which includes socioeconomic impact on the country is another important requirement for new policy formulation. This study assesses sectorial losses due to war and constructs a socioeconomic cost of war index, which facilitates an understanding of the overall GDP loss throughout the period. The aspects discussed in this paper and the solutions provided work together to provide a good platform for policy makers to start their hard work on development planning.