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Economic crisis: Treasury Chief frowns on home-grown remedy tried by GR regime
Secretary to the Treasury and Finance Ministry Mahinda Siriwardana has said that even if Sri Lanka achieves the goal of zero corruption, tax revenue will still have to be increased to bridge the budget deficit and lessen the country’s debt burden.
Referring to the Supreme Court ruling pertaining to economic management delivered on Nov 14, 2023, Siriwardena said it was imperative that elected representatives and state officials ensure proper econmic management.
Pointing out that Sri Lanka’s government revenue as a percentage of GDP had been as low as 8.3 percent in 2021, Siriwardana said that the situation was so bad that the government found it difficult to meet day-to-day expenses.
The SC judgment had said the state officials under any circumstances couldn’t absolve themselves of the responsibility for acting in the best interests of the public and were entrusted with significant powers to uphold public trust, requiring them to adhere to the directives of the Constitution, Siriwardana said.
The Treasury Secretary said so delivering the inaugural Prof. K. Dharmasena memorial lecture at the Kelaniya University on Monday (Jan 30) close on the heels of undergraduates storming the main administrative building there to protest against a planned visit by President Ranil Wickremesinghe the following day.
Siriwardana succeeded S.R Attygalle in early April 2022 amidst the worst-ever economic crisis.
The Treasury Secretary explained why President Gotabaya Rajapaksa’s government had failed to secure a Rapid Financing Instrument (RFI) at the early staes of the crisis.
Although President Gotabaya Rajapaksa sought RFI from the International Monetary Fund (IMF) in April 2020, five months after being elected, his administration failed to accept the IMF prescribed immediate debt restructuring. Instead of adopting a strategy of macroeconomic reforms to restore fiscal and external buffers supported by the IMF, the government had opted for what Siriwardana called a home-grown solution.’
Sri Lanka sought RFI in the wake of significant tax reforms with sharp reductions in VAT (Value-Added Tax) and income tax rates and large increases in tax free thresholds. “When taxes were reduced at the end of 2019, nobody questioned how public services would be funded. The result was an unprecedented escalation in debt, leading to this economic crisis.
Siriwardana pointed out that for want of cohesive corrective measures to address the issues at hand, credit ratings continued to deteriorate. By September 2020, Moody’s had downgraded Sri Lanka to Caa1, Fitch downgraded Sri Lanka to CCC by November 2020, and S&P downgraded Sri Lanka to CCC by December 2020, Siriwardana pointed out.
“There have been long-standing structural weaknesses in the Sri Lankan economy which have been neglected for many decades, given the pain associated with remedying these issues. The weaknesses include fiscal sector imbalances, inadequate external policy buffers, financial and monetary sector vulnerabilities, deficiencies in governance, and shortcomings in the legal and institutional framework in the country. The recent external shocks faced by the country, including the Easter Sunday attacks, the COVID-19 pandemic, the Russia-Ukraine conflict, coupled with significant domestic policy errors, exposed these macroeconomic vulnerabilities and triggered the prevailing economic crisis.”
In macroeconomic terms, the crux of the problem has always been the persistent twin deficits – budget deficits in the fiscal account and current account deficits in the balance of payments (BOP) accounts, Siriwardana added.
The Treasury Secretary said that the country should have changed its unsustainable practices, beginning 2006/2007, when the opportunity to access concessional foreign financing diminished in the wake of Sri Lanka’s per capita GDP crossed the middle income threshold. Instead of gradually and significantly reducing its deficits and borrowing requirements, the then government shifted to commercial borrowings, primarily in the form of international sovereign bonds (ISBs). “Most of these bonds have up to a 10-year maturity periods, so, until around 2019, Sri Lanka did not face much difficulty in terms of repayment pressures for external debt.”
Siriwardana also discussed the often raised issue of whether ISBs caused the debt crisis. In fact, the government at the time made a conscious decision to raise additional funds amounting to USD 2.4 billion in long term ISBs to ensure Sri Lanka would have sufficient reserve buffers to get through a period of volatility amidst the election cycles of 2019 and 2020, Siriwwardana said. ” There have been claims that this increase in ISB borrowings was a cause of the debt crisis – however in reality, it was the additional reserve buffers created by those ISBs that enabled the government to avoid a crash in the economy during the worst of the COVID-19 pandemic.
“The government maintained primary surpluses in 2017 and 2018, indicating that the ISB borrowings were not driven by budget deficits, but in order to build up reserves and to improve the quality of reserves by converting maturing short term debt into longer term stable instruments such as ISBs and syndicated loans. The fundamental drivers of the economic crisis were fiscal and debt unsustainability, whereas ISBs were just one of many financing instruments.”
Siriwardana said: “There have been various theories as to what caused the economic crisis, including the COVID-19 pandemic, ISB borrowings, the Debt Standstill policy. However, it is clear that the fundamental cause has been long standing macroeconomic vulnerabilities and domestic policy errors. There have also been various alternative proposals and theories as to how the country can recover without the citizens having to bear a burden. But, we have seen today that measures such as asset recovery, collection of taxes in arrears, elimination of corruption, while all being essential actions, do not serve as an alternative to the macroeconomic reforms being implemented today. Those are reforms that were known to all of us for years if not decades. But, those much needed reforms were delayed mainly due to political reasons. In the past, and up to now, the present generation lived a better life by borrowing thereby sacrificing the lives of the future generations.
“However, it is critical to understand that now we have come to a situation where the present generation should make sacrifices for the betterment of the lives of the future generations.” (SF)
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ITS Giuseppe Garibaldi’ departs Colombo
The Italian Naval Vessel ‘ITS Giuseppe Garibaldi’ departed the Port of Colombo today, 12 September 2026, after completing a replenishment stop for logistics and services.
During the ship’s stay, the Commanding Officer of ITS Giuseppe Garibaldi, Captain Marco GUERRIERO, called on the Commander Western Naval Area, Rear Admiral Harsha De Silva, at the Western Naval Command Headquarters.
Members of the visiting crew also toured several tourist attractions across the Colombo area during their port call.
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Green Climate Fund (GCF) Regional Dialogue for East and South Asia will be held from 14 to 17 September 2026 at Cinnamon Life at City of Dreams Hotel, Colombo
The Green Climate Fund (GCF) Regional Dialogue for Eastern and Southern Asia is scheduled to be held from September 14 to 17, 2026, at Cinnamon Life at City of Dreams, Colombo.
The Dialogue is hosted by the Government of Sri Lanka. The Green Climate Fund is the world’s largest dedicated climate fund established under the United Nations Framework Convention on Climate Change to assist developing countries in responding to the challenges of climate change.
The Green Climate Fund aims to promote a paradigm shift towards low-emission and climate-resilient development
pathways by supporting developing countries in reducing their greenhouse gas emissions and adapting to the impacts of climate change.
The Ministry of Environment of Sri Lanka serves as the country’s National Designated Authority for the Green Climate Fund, playing a critical role in coordinating access to climate finance, nominating institutions for accreditation to the Green Climate Fund and approving funding proposals, and ensuring that activities supported by the Green Climate Fund are aligned with national development objectives.
More than 120 delegates from 10 countries are expected to participate. The participating countries are Bangladesh, Bhutan, China, India, the Maldives, Mongolia, Nepal, Pakistan, the Republic of Korea, and Sri Lanka.
Participants will include representatives of National Designated Authorities of the above countries, Direct Access Entities, Accredited Entities, civil society organizations, the private sector, development partners, and technical institutions across the region.
Sri Lanka’s delegation comprises Dr. Dammika Patabendi, Minister of Environment, Anton Jayakody, Deputy Minister of Environment, K.R. Uduwawala, Secretary, Ministry of Environment, and high-level government officials.
The Dialogue will provide a platform to:
Share challenges, experiences, and lessons learned from the implementation of climate change projects and programmes.
Strengthen regional cooperation and partnerships on climate finance.
Discuss the Green Climate Fund’s evolving strategies, policies, and approaches.
Identify opportunities to accelerate climate investments across East and South Asia.
Hosting the Regional Dialogue in Colombo will provide Sri Lanka with an important opportunity to engage with senior government officials, private-sector representatives, development partners, technical experts, and international climate finance institutions.
The event is expected to support Sri Lanka’s efforts to improve access to climate finance and international grants, showcase national climate action initiatives and achievements, and strengthen the country’s engagement with the global climate community.
The Dialogue will also offer a strategic platform for Sri Lankan institutions that have applied for direct accreditation to present their project concepts and engage directly with representatives of the Green Climate Fund. These engagements are expected to support the accreditation process and contribute to the expansion of Sri Lanka’s network of Direct Access Entities through stronger regional partnerships and increased cooperation on climate finance, the Regional Dialogue will
contribute to positioning Sri Lanka as a credible and reliable partner for climate investment.
Projects that Sri Lanka has received funding from this fund are:
• The main projects that Sri Lanka has received support from the Green Climate Fund at present include the Wevu Gam Pubuduwa Project (52.1 USD Million) and the GCF Knuckles Project (49 USD Million).
7.5 USD Million has been allocated from GCF for 5 National Designated Authority Readiness Projects (NDA Readiness Projects) and for the National Adaptation Plan Readiness Project (NAP Readiness Project).
Approval has also been obtained for 3 regional projects. (Cooling Facility Programme, Global Fund for Coral Reef Investment Window, PEEB COOL Programme)
Sri Lanka has also identified 5 project concepts as priority projects for the Green Climate Fund period 2024-2027 and has taken steps to submit those project concepts (Concept Notes) for
approval by the Green Climate Fund.
The “Climate-resilient Fisheries in Sri Lanka” project concept (USD 107.5 million) submitted by DFCC Bank has already received approval.
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Prof. Pieris says Buddha Dhamma recognised as source of law under Constitution
Former Minister and People’s Joint Opposition Convener Prof. G.L. Peiris has challenged the assertion that the Supreme Court’s determination on the 22nd Amendment to the Constitution would be based solely on law and not Buddhist teachings, arguing that such a position is inconsistent with Article 9 of the Constitution and established judicial precedent.
In a special statement, titled “Buddhist Doctrine as a Source of Law in Sri Lanka”, Prof. Peiris has said the issue had arisen during the 22nd Amendment determination proceedings when Ven. Balangoda Kassapa referred to the Buddha Dhamma in his submissions.
According to Prof. Peiris, the Chief Justice responded that the determination would be made on the basis of the law and not Buddhist teachings.
Describing this as a “cavalier dismissal” of the Buddha Dhamma. Prof. Peiris has said it is contrary to Article 9, which gives Buddhism the foremost place and requires the State to protect and foster the Buddha Sasana.
Full text of the statement: In the 22nd Amendment determination proceedings, Venerable Balangoda Kassapa, in his submissions, made reference to the Buddha Dhamma. His Lordship the Chief Justice, in reply, made the strong assertion that the determination would be made on the basis of the law and not Buddhist teachings. This cavalier dismissal of the Buddha Dhamma is totally inconsistent with Article 9 of the Constitution and its authoritative interpretation in judicial decisions.
I. Authoritative Sri Lankan Judicial Authority A few examples may be cited.
In the Antiquities Amendment Bill, the Supreme Court, in its determination, observed: “The expression Buddha Sasana is wider than Buddhism and includes the entire establishment, together with objects and places of religious practices and worship of Buddhists”.
In Re the Thirteenth Amendment to the Constitution and the Provincial Councils Bill, 1987 2 Sri Lanka LR 312, Wanasundera J, referring to the term Buddha Sasana, said that it was “a compendious term encompassing all ancient, historic and sacred objects and places which have from ancient times been associated with the religious practices and worship of Sinhala Buddhists”.
It is clear that the Buddha Sasana is not confined to matters of ritual or practice, but includes the substance of Buddhist teachings. This is borne out clearly in other judgments of the Supreme Court.
An explicit example is the determination of the Supreme Court in the Ayurveda Amendment Bill, SCSD, numbers 22-35/2023, where the Court declared: “We hold that Buddha Sasana in Article 9 of the Constitution includes the dhamma, principles and teachings of Buddhism, including in particular recognized and undisputed codifications of the teachings of Lord Buddha”.
There are several other passages in the judgment which offer strong authority on the point.
The Court declared: “We determine that the word Buddha Sasana in Article 9 is a compendious term and includes the entire establishment of Buddhism as defined above. We conclude that the Tripitaka, consisting of the Vinaya Pitaka, the Sutta Pitaka and the Abhidhamma Pitaka, falls within the word Buddha Sasana. Hence the State has a duty inter alia to protect and foster the Tripitaka”.
The Court was uncompromising in its declaration that “While retaining the word Buddhism to denote the religion to which foremost place has been accorded in the Republic, the word Buddha Sasana was used to impose a duty on the State to protect and foster the entire establishment of Buddhism”.
The Court’s approach is very clear from the following passage: “We must proceed to interpret Article 9 of the Constitution on the basis that this change was intentional on the part of the legislature. It was meant to cover an area wider than Buddhism”.
II. International Judicial Authority
There is valuable material in the jurisprudence of the International Court of Justice at The Hague.
Judge C. G. Weeramantry, in his dissenting opinion in the ICJ’s 1996 advisory opinion on the legality of the threat or use of nuclear weapons, said that Buddhism could provide an important humanitarian perspective when considering the legality of nuclear weapons. The judge cited as his source the work by Walpola Rahula, entitled What the Buddha Taught, 1959.
Similarly, Judge Weeramantry, in his separate opinion in the maritime delimitation in the area between Greenland and Jan Mayen case, 1993, commented on the international legal concept of equity. In this connection, he referred to “the elaborately researched concept of fairness and justice in Buddhism”.
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