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Budget 2026: Bankers present proposals to drive recovery

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Sri Lanka’s banking sector has presented a set of far-reaching proposals for inclusion in the government’s Budget 2026.

The proposals, developed and submitted by the Sri Lanka Banks’ Association (SLBA), on behalf of all licensed commercial banks, were handed over to Deputy Minister of Finance, Planning and Economic Development Dr. Anil Jayantha Fernando at the Presidential Secretariat recently.

The submission underscores the critical role of banks in rebuilding economic resilience, restoring investor confidence and accelerating growth. The recommendations are designed not only to stabilise the financial system but also to expand opportunity for businesses, entrepreneurs and households nationwide.

The SLBA has called for urgent reforms to strengthen the financial sector’s capacity to support recovery. Proposals include targeted credit guarantee schemes to help revive distressed enterprises, accelerated tax deductibility for impairment provisions to encourage restructuring, and alignment of banking sector taxation with regional benchmarks. Excessive taxation, currently at 53% for domestic banks and 65% for foreign banks, is described as a barrier to competitiveness and capital formation. A fairer regime, the Association argued, would allow banks to direct resources towards lending for critical infrastructure and priority sectors.

Recognising the backbone role of SMEs in the economy, banks have urged the government to accelerate SME formalisation through mandatory VAT registration at concessional rates, the adoption of subsidised accounting software, SME-specific business bank accounts, and national-level financial literacy programmes. The SLBA also proposed mandatory Taxpayer Identification Numbers for all new accounts, and incentives for SMEs to digitise transactions, which would expand the tax base and improve credit access.

To drive growth and consumption, banks recommend rationalising indirect taxes to improve household disposable income and investor appetite, while broadening the tax net through digitisation and the use of proxy data such as utility and vehicle records. Simplifying compliance by treating withholding tax as a final tax, even at higher rates, was also suggested as a way to improve liquidity and overall revenue collection.

Calling for decisive investment in the country’s digital infrastructure, the SLBA proposed the creation of a national cloud framework to serve both public and private stakeholders, alongside tax incentives for fintech startups and local payment gateways. The Association also stressed the importance of levelling the playing field by applying VAT on global digital services, such as Google, Meta, PayPal, while advancing digital transactions by capping large cash payments and mandating electronic settlement of supplier, tax and utility bills. A public–private initiative on cybersecurity was also recommended to lower compliance costs and safeguard systemic resilience.

In proposals aimed at catalysing investment, the SLBA urged expedited restructuring of SriLankan Airlines to improve the country’s sovereign rating, which it argued is currently a major barrier to foreign direct investment. The creation of regional one-stop shops for regulatory approvals, reforms to facilitate Port City investments, and tax incentives for corporate bond issuances were among other measures advocated.

Banks also underlined the urgent need to mobilise capital for sustainable growth, recommending tax exemptions for green lending and the issuance of tax-free green bonds. Parallel proposals called for tax-free public–private partnership bonds to fund infrastructure and long-term development needs.

In a clear message of partnership, the SLBA proposed closer collaboration between government, regulators and the financial sector to deliver structural reforms. Suggested measures include integrating ports, customs, banks and revenue authorities into a unified digital platform to improve valuations and tax transparency, and creating a national data repository for climate and sustainability analytics.

Sectoral initiatives, including long-term funding for tea replanting and agricultural mechanisation, were also featured, reflecting the Association’s recognition of the need to modernise and future-proof Sri Lanka’s traditional industries.

Commenting on the submission, the SLBA said the financial services industry is ready to partner the government in shaping a resilient, inclusive and digitally empowered economy. “These proposals are designed to address immediate fiscal challenges while laying the foundation for sustainable growth. We believe this budget can be a turning point for the country, and the banking sector stands committed to play its part,” the Association noted.



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India should be kept out of PC polls, matters related to 13 A – Mano

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Mano

Leader of the Tamil Progressive Alliance (TPA), Mano Ganeshan, MP, said that India shouldn’t intervene here regarding the long-delayed Provincial Council polls.

The former Yahapalana Minister of National Co-existence, Dialogue and Official Languages (2015-2018), Ganeshan, who represents the main Opposition Samagi Jana Balawegaya (SJB) in the current Parliament, stressed that New Delhi’s intervention wouldn’t do any good for them or for us.

Lawmaker Ganeshan said so when The Island asked him whether the TPA would ask India to pressure the NPP government to conduct PC polls, last held in 2014, during Mahinda Rajapaksa’s second term. Ganeshan said: “India shouldn’t get involved in the issue at hand . Such a strategy is also in their interest, particularly in the context of the evolving global order. India should not be perceived as a pro-Tamil state, but rather as a state that supports Sri Lanka as a whole.”

Ganeshan said that the Indian state bears a moral responsibility in this matter. “That responsibility arises from the fact that India’s diplomacy and military intervention played a decisive role in neutralising the Tamil armed struggle in Sri Lanka. Although India’s mission remained unfinished, it nevertheless lost nearly two thousand soldiers in the process. There was also a prelude to this involvement, when Tamil militant groups received training in India. Consequently, the Indian connection became a sensitive issue for both the Sinhalese and Tamils of Sri Lanka.”

But, whatever had happened, the national issue should be settled among us. ” The solution must be found and settled within Sri Lanka itself. We do not need Western interventions in this regard.”

” In recent years, whenever we in the Tamil Progressive Alliance (TPA) have met Indian dignitaries—including the Prime Minister, the External Affairs Minister, and, most recently, the Vice President—the subjects of the 13th Amendment and Provincial Councils have never featured on our agenda.”

The 13th Amendment is part of Sri Lanka’s Constitution. Therefore, it is for Sri Lankans themselves to decide whether to retain, improve, fully implement, reform, or even repeal it, Ganeshan said.

MP Ganeshan found fault with those who represented the Northern and Eastern provinces for failing to utilise the goodwill and influence India enjoyed with successive Governments of Sri Lanka to pursue an amicable political settlement. The parliamentarian said that they should acted after the end of the war in May, 2009. Unfortunately, they failed to effectively use the Provincial Council framework to consolidate their political position and advance further, thereby earning the confidence of both India and successive Sinhala-majority governments, MP Ganeshan said.

Responding to another query, MP Ganeshan said: “

We should keep the ethnic issue separate from bilateral relations with India, while deepening economic connectivity and cooperation on the basis of mutual benefit and a win-win partnership.”

By Shamindra Ferdinando

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US boost for SLAF

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Helicopters from the US. (Pic courtesy SLAF)

Sri Lanka has taken delivery of 10 TH-57 ‘Sea Ranger’ multi-role helicopters provided by the United States of America to the Sri Lanka Air Force. Air Forces headquarters said that the helicopters arrived here by sea.

The SLAF has said: “The arrival of these aircraft marks a significant milestone in the longstanding defence cooperation between Sri Lanka and the United States and represents a valuable contribution towards enhancing the operational and training capabilities of the Sri Lanka Air Force.

“The helicopters are currently undergoing configurations and technical preparations at SLAF Base Ratmalana. Following the completion of requisite inspections, acceptance procedures and test flights, the aircraft will be inducted into service and deployed for operational duties.

“The TH-57 fleet is expected to significantly strengthen the Air Force’s aviation training capacity while enhancing the ability to support a broad spectrum of national requirements. The aircraft will primarily be employed for pilot training, humanitarian assistance and disaster response (HADR) operations, search and rescue (SAR) missions and other public service commitments undertaken by the Sri Lanka Air Force.”

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TPA demands House committee to probe Tilvin’s claim PC polls cannot be held due to fund constraints

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Harsha

Referring to the recent declaration made by JVP General Secretary Tilvin Silva that the Provincial Council elections couldn’t be held this year as funds allocated for that purpose were utilised to provide Ditwah cyclone relief, Tamil Progressive Front (TPA) leader Mano Ganeshan, MP, has asked Dr. Harsha de Silva, MP Chairman, Committee on Public Finance, to inquire into the issue at hand and take action deemed appropriate.

The text of MP Ganeshan’s letter: “I write with reference to a statement reportedly made by Tilvin Silva, General Secretary of the Janatha Vimukthi Peramuna (JVP), the principal constituent party of the National People’s Power (NPP) Government.

According to media reports, Silva stated, in substance, that funds allocated and set aside for the conduct of Provincial Council Elections had been utilised by the Government for disaster-rebuilding and related purposes.

While he is reported to have made further remarks, I confine my attention to the above statement, which raises a serious matter concerning public finance and parliamentary oversight.

To the best of my knowledge, Parliament has not approved any transfer or reallocation of funds, earmarked for Provincial Council Elections, to any other expenditure head or purpose. If the statement, attributed to Mr. de Silva, is accurate, it may indicate that such funds have been utilised without the requisite parliamentary authorisation.

In view of the above, I respectfully request that the Committee on Public Finance inquire into this matter and ascertain whether any transfer, reallocation, or expenditure of funds allocated for Provincial Council Elections has occurred in a manner inconsistent with parliamentary approval and financial regulations.

I would be grateful if the Committee could examine the facts and take any action deemed appropriate within its mandate.”

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