-By A Staff Writer
(Lanka-e-News -22.March.2025, 11.00 PM) If managing a bankrupt economy were an Olympic sport, Sri Lanka’s new government would have already secured a podium finish. Addressing Parliament during the budget debate, President Anura Kumara Dissanayake laid out an economic strategy that blends prudence with pragmatism, discipline with determination, and, above all, stability with sustainability.
“Our economy was officially and unofficially bankrupt when we took office,” the President declared. “But in just four months, we have turned a corner, restored investor confidence, and, as of December 21, 2025, Sri Lanka is no longer in the ‘financially embarrassed’ category.”
Of course, coming out of bankruptcy is not the same as stepping into prosperity. “We have stabilized the patient,” the President quipped, “but we’re not going to send him straight to a marathon.” The government, he emphasized, is taking a deliberate, ‘handle with care’ approach to reform, choosing stability over shock therapy.
The President was clear that reckless reform is not on the agenda. The administration is focused on creating an economy that works for its people, rather than one that merely looks good in PowerPoint presentations. “A vehicle with broken wheels cannot make sharp turns; first, the wheels must be fixed,” he said, using a metaphor that resonated with many who have experienced the realities of Sri Lanka’s roads.
The numbers paint a sobering picture. The expected total revenue for the year is LKR 4,999 billion, but interest payments alone demand LKR 2,950 billion. Add LKR 1,352 billion for public sector salaries and LKR 442 billion for pensions, and we are left with a grand total of LKR 246 billion to run the rest of the country.
Meanwhile, the state’s enterprises have been running on a model that makes loss-making an art form. SriLankan Airlines alone has accumulated LKR 340 billion in debt. Even media institutions, which should theoretically be profitable in an age of digital content, are drowning in red ink, with Sri Lanka Rupavahini Corporation posting losses of LKR 256 million and the Sri Lanka Broadcasting Corporation LKR 152 million.
A significant challenge for the NPP government was deciding whether to continue with the four-year Extended Fund Facility (EFF) program with the International Monetary Fund (IMF). While critics expected an anti-IMF stance, President Dissanayake surprised many by choosing to stay the course. “A fragile economy cannot afford ideological stubbornness,” he explained, in what was seen as a pragmatic shift away from past political rhetoric.
The decision to remain in the IMF program has helped Sri Lanka regain international credibility. On December 21, 2025, the country officially moved out of bankruptcy status. While the nation isn’t writing cheques just yet, it has secured a deal to restructure debt payments, giving it breathing space until 2028.
This shift has not gone unnoticed. Development projects that were previously stalled due to Sri Lanka’s economic woes are now back on track. The Indian-backed Sampur power plant is set to begin operations, while renewable energy projects in Mannar and Siyambalanduwa are also in the pipeline. Tourists, meanwhile, have been arriving in record numbers, with over 610,000 visiting the country by mid-March, setting Sri Lanka on course for an all-time high in annual arrivals.
While stability has been achieved, the President stressed that the next step is increasing revenue. “It’s time we expanded our tax base beyond the same 600 individuals and businesses,” he noted dryly, referring to the fact that a mere handful of taxpayers contribute 69% of the Inland Revenue Department’s collections. The government aims to correct this imbalance with better tax compliance and a fairer tax structure.
On the spending side, austerity measures have been introduced for politicians. Gone are the days of luxurious benefits; ministers and deputy ministers will now receive only their parliamentary salaries, and duty-free vehicle permits have been scrapped. The government is also moving to abolish the controversial parliamentary pension scheme and revise the Presidents Entitlements Act.
“We must first put our own house in order before asking the people to tighten their belts,” the President remarked, in a statement that earned rare bipartisan nods of approval.
Despite budget constraints, the government has not forgotten its responsibilities to the people. Allowances for kidney patients, pensioners, schoolchildren, and public sector workers have been increased. The Mahapola scholarship has been raised from LKR 5,000 to LKR 7,500, while a special Rs. 5,000 allowance has been introduced for orphaned children.
The focus on education reform is another key highlight of the government’s agenda. The administration is restructuring the school system to increase vocational training opportunities, aiming to create a workforce that meets modern economic needs rather than one that simply produces more graduates without job prospects.
In agriculture, subsidies for fertilizers and disaster compensation have been expanded. The government is also targeting a major transformation in the sector, emphasizing food security and productivity enhancements.
President Dissanayake’s speech was not merely about economic policies; it was a vision statement for a new political culture. Corruption, he emphasized, is an economic crime, and his government is committed to eliminating it from public institutions. “We must put an end to the culture where people say, ‘If you don’t take bribes, you can’t survive in politics,’” he said, in what appeared to be a direct challenge to entrenched interests.
The government is also planning to introduce an Investment Protection Act, along with amendments to the Strategic Development Projects Act, to ensure that tax concessions serve the national interest rather than individual businesses.
If history is any guide, Sri Lanka has had multiple opportunities to set its economy right—only to squander them due to mismanagement, political opportunism, and short-term thinking. President Dissanayake insists this time will be different. “We will not miss this opportunity under any circumstance,” he declared, setting the tone for what he hopes will be a lasting transformation.
The country is at a crossroads. Economic stability has been achieved, but real growth and reform require patience, discipline, and a commitment to long-term planning. The challenge now is not just to recover, but to ensure that Sri Lanka never falls into economic crisis again.
As Parliament digested the President’s words, one thing was clear: The ‘handle with care’ approach may not be flashy, but given Sri Lanka’s recent economic history, it might just be what the country needs to finally break free from the cycle of boom and bust.
-By A Staff Writer
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by (2025-03-22 18:10:20)
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