-By Parliamentary Affairs Correspondent
(Lanka-e-News -24.Feb.2025, 11.00 PM) When the National People's Power (NPP) government assumed office, Sri Lanka was a nation teetering on the edge of economic collapse. Bankruptcy was not just a word thrown around in opposition rallies—it was the grim reality. The country was drowning in debt, foreign reserves were at rock-bottom, and the economy was gasping for breath. Yet, as the months have rolled on, the government has taken the bull by the horns, implementing policies that seek to not only stabilize the economy but also promote long-term growth.
Vijitha Herath, a prominent NPP leader, recently defended the government's economic agenda, adressing the Parliament, describing the 2025 budget as a “people’s budget for people’s aspirations.” The phrase has since taken on a life of its own, sparking both praise and criticism from different political quarters.
But is this budget truly for the people, or is it just another neatly packaged set of numbers and promises?
Sri Lanka’s financial woes were no secret. By the time the NPP government took charge, the nation was grappling with a mountain of debt, skyrocketing inflation, and an overall sense of despair. The country had defaulted on its external debt, the rupee had depreciated significantly, and essential commodities were becoming increasingly expensive.
The government’s first priority was clear: rescue the economy from total collapse. Enter the International Monetary Fund (IMF). Though IMF-led economic restructuring is often met with skepticism, the NPP saw it as a necessary step to restore financial credibility. As part of this effort, the government implemented tough economic reforms, reduced capital expenditure by 4%, and aimed to increase foreign reserves to $6.1 billion. On February 27th, Sri Lanka will receive its third IMF payment of $335 million—yet another crucial step toward economic stabilization.
Of course, no economic policy comes without its critics. The opposition has accused the government of blindly following the IMF’s structural adjustments without considering the long-term burden on the people. Critics argue that IMF reforms often come with stringent conditions that disproportionately impact lower-income groups.
However, the government remains unfazed. The NPP insists that these measures, though tough in the short term, are essential for long-term stability. “The opposition might come up with some sort of wishy-washy criticism,” said Herath. “But we are focusing on long-term economic growth and we have a mandate from the people to roll out this program.”
One of the key pillars of the NPP’s economic strategy is improving productivity across sectors. “We are promoting productivity to increase economic growth,” Herath noted. “At the same time, we are investing in tourism and agriculture.”
Agriculture, the backbone of Sri Lanka’s rural economy, has been a primary focus. The government has reinstated fertilizer subsidies, ensuring that farmers have the resources needed to boost production. Additionally, efforts are being made to encourage exports, particularly in the tea and spice industries, which have long been economic mainstays.
Meanwhile, tourism—a sector that was decimated by the Easter attacks, COVID-19, and political unrest—is showing signs of revival. January alone saw a record 253,000 tourist arrivals, an encouraging milestone. To build on this success, the government is establishing a National Tourism Commission that will work alongside a Provincial Tourism Development Committee. The goal? Attract 3 million tourists this year.
Recognizing that tourism workers were among the hardest hit during the economic crisis, the NPP is also introducing a pension scheme for those involved in the industry—a move that has been widely welcomed.
Before the NPP came to power, critics predicted that the party’s policies would scare off foreign investors. “They said we couldn’t build international relationships,” Herath reminded reporters. “But all those scaremongering tactics went up in thin air.”
Indeed, the numbers tell a different story. Sri Lanka has seen investment pouring in from India, China, the United States, the European Union, and even the Middle East. A recent agreement with the United Arab Emirates (UAE) marks a significant step in attracting further investment.
To ensure transparency, the government has introduced the Investment Promotion and Protection Law, aiming to create a business-friendly environment without the notorious backroom deals of the past. Herath was keen to emphasize that the government is not taking commissions from investors—a veiled dig at previous administrations accused of corruption.
Foreign employment has long been a double-edged sword for Sri Lanka. While remittances from overseas workers contribute significantly to the economy, recruitment processes have been riddled with corruption. The infamous EH visa scandal is just one example of how certain individuals exploited the system for personal gain.
The NPP government is now reforming the process. New agreements with South Korea will see 5,000 Sri Lankans employed in fisheries and farming, ensuring both job creation and steady remittance inflows.
Beyond economic reforms, the NPP has set its sights on a major political undertaking: a new constitution. Unlike previous governments that introduced constitutional changes through parliamentary maneuvering, the NPP is committed to drafting a new constitution through a referendum.
One of the most notable pledges is the abolition of the Prevention of Terrorism Act (PTA), which has long been criticized for enabling human rights abuses. Additionally, the government plans to reform the Online Safety Bill to balance security with freedom of expression.
On the social front, Herath emphasized the government’s commitment to recognizing Malayalam and Tamil identities and promoting cultural diversity. In a country with a history of ethnic tensions, such measures are crucial in fostering national unity.
One of the government’s proudest achievements so far has been maintaining political stability. Unlike previous transitions of power that saw unrest and violence, both the presidential and general elections under the NPP were remarkably peaceful. “Not a single incident was reported,” Herath pointed out.
This stability has, in turn, strengthened investor confidence. With a government that commands a majority in Parliament, policies can be implemented efficiently—an advantage that Herath believes is already yielding dividends.
The geopolitical landscape is also shifting, and Sri Lanka is looking to capitalize on global developments. The resolution of the Ukraine conflict, if achieved, could bring stability to global markets, benefiting nations like Sri Lanka. Additionally, with global travel and trade bouncing back post-pandemic, the island nation stands to gain significantly.
Is the NPP budget truly a “people’s budget”? The answer depends on who you ask. Supporters argue that the government has made tangible progress, from securing IMF funding to reviving tourism and agriculture. Critics, on the other hand, warn that IMF-driven policies could lead to austerity measures that burden ordinary citizens.
What is undeniable, however, is that Sri Lanka is no longer in free fall. The government has stabilized the economy, restored investor confidence, and embarked on ambitious reforms. While challenges remain, the foundations for recovery are being laid—brick by brick.
In the months ahead, the real test will be whether these policies translate into real improvements in people’s lives. If they do, then Vijitha Herath’s words may indeed ring true: this is a budget for the people, driven by their aspirations.
-By Parliamentary Affairs Correspondent
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by (2025-02-24 20:14:22)
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