Prime Minister John Key said he will set out his concerns about human rights issues "pretty directly" when he has his formal meeting with Sri Lanka's President later today, but said overall the relationship between the two countries was improving.
Mr Key is due to meet with Mahinda Rajapaksa mid-afternoon (NZ time).
He said New Zealand's relationship with Sri Lanka was improving.
"We've had limited engagement here for a long period of time. A lot of New Zealanders used to come here, then when the civil war was at its height, very few came. It is changing and evolving, there are more opportunities opening up here. There is a lot happening here."
He said Sri Lanka would have to work to address the issues of human rights and reconciliation with the Tamil population, and he intended to ask what steps Sri Lanka would be taking.
"We're not going to go in and lecture the President because I don't think that will take us anywhere. But we can put on the table legitimate questions that we need answers to."
He said the step up in the relationship was evidenced by a new dairy cooperation deal announced between the two parties on the sidelines of the Commonwealth Heads of Government meeting.
Fonterra has a base in Sri Lanka and uses local milk to make its products here. The agreement will see New Zealand providing more expertise and technology to lift milk production.
The leaders of the Commonwealth held their full day retreat yesterday and Mr Key said he also had a good meeting with Pakistan President Nawaz Sharif, who gave his perspective on regional issues.
He said he was hopeful his efforts at Chogm had helped get New Zealand further votes for the Security Council bid for a non-permanent seat in 2015/16, which will be voted on at the United Nations next year.
He again rejected suggestions he was soft-peddling on the issue of Sri Lanka and human rights, saying there was nothing to be gained from boycotting the meeting and it had raised extra international attention.
"No one is arguing things are perfect here. But I think there is some progress being made. There is an awful lot more to be done here, but this is a country that is evolving."
"But we are here because we are a member of the Commonwealth. We are not trading away any of our core values and principles just to get a seat on the Security Council."
The leaders and representatives of the 53 Commonwealth nations will decide on the next host country for the biennial summit today.
Mauritius was due to host it but that was abandoned after it boycotted this year's conference in protest at Sri Lanka's refusal to investigate alleged war crimes.
Mr Key said it was possible New Zealand would offer if that was desired, but Malta was keen to take over as host and that was more likely.
Mr Key will leave Colombo for Thailand to meet up with a New Zealand trade delegation late tonight.