Lowest tax-to-GDP ratios, lower foreign direct investment compared to other middle-income countries, lack of skilled workers, high rates of poverty in the Northern and Eastern Provinces, ineffective governance were some of the challenges.

The World Bank Group said effective leadership will be needed to steer Sri Lanka forward on a path that will continue its strong progress in ending poverty and promoting shared prosperity.

World Bank has made this conclusion in its Systematic Country Diagnostics, a comprehensive assessment of constraints and drivers of progress towards the twin goals of ending poverty and boosting shared prosperity, which is an important input to how the World Bank Group engages with its client countries.

According to the World Bank, Sri Lanka performed very well on the Millennium Development Goals and has ended its internal armed conflict. The island nation's growth has averaged over 6 percent per year in the past decade and poverty declined from 22.7% in 2002 to 6.1% in 2012/13.

The global lender says the country has ample opportunities to build on its success due to its enviable location for trade, relatively educated work force and remarkable natural assets.

However, in order to sustain its progress on the twin goals and fulfill its development potential, according to the World Bank, Sri Lanka needs to address five challenges.

The Fiscal Challenge, the Challenge of Fostering Growth and Jobs for the Bottom 40 Percent, the Social Inclusion Challenge, the Governance Challenge and the Sustainability Challenge are the five main challenges.

The World Bank Group said effective leadership will be needed to steer Sri Lanka forward on a path that will continue its strong progress in ending poverty and promoting shared prosperity and offers to stands ready to partner with the country to take on these challenges.