Business

Belated economic reforms: Lankans to swallow more ‘painful medicine’

Published

4 years ago

2022/05/2

Failure to implement required policy reforms at this critical juncture will be very costly, the Ministry of Finance says.

‘Accumulated issues in the past have now exploded

‘Time has come to put the house in order’

‘Dismal fiscal sector has caused imbalances in the macro-economy’

‘Engagement with IMF, a starting point in implementing critical reforms’

by Sanath Nanayakkare

The Ministry of Finance (MOF) said last week that Sri Lanka urgently needs to undertake difficult, but much needed and far-reaching reforms to address the accumulated and persistent issues in the country’s fiscal sector.

In a report titled ‘Fiscal Sector: Present Situation and Way Forward’, MOF pointed out that dismal fiscal sector performance has caused many imbalances in the macro-economy.

“Exceptionally low tax revenue, rigid recurrent expenditure, a large budget deficit, an accumulated and now unsustainable debt are the key concerns in the fiscal sector. Responsible and disciplined fiscal management has become more important than ever. In this process, the country and its citizens will have to go through a period of difficulty,” MOF warned.

The report further said:

“A strong social protection network is required for the vulnerable and needy segments as reforms will be painful.”

“The time has come to put the “house in order” and revamp the government’s fiscal operations to strengthen macroeconomic stability and facilitate economic growth in the medium to long term.”

“Deficit financing poses a critical challenge due to the shortfall of foreign financing following the loss of international capital market access. The resulting rise in monetary financing has caused severe macroeconomic imbalances.”

“The dismal performance of the fiscal sector over the years has contributed to macroeconomic instability and failed to support long-term growth. The excess aggregate demand generated by unsustainable fiscal deficits has resulted in elevated inflation, pressure on the balance of payments (BOP) and currency volatility.”

“Sri Lanka today is facing a severe BOP crisis with insufficient foreign exchange to buy essential imports such as food, energy,and pharmaceuticals, let alone meeting its debt service obligations. Sound macroeconomic fundamentals cannot be achieved without prudent and sustainable fiscal outcomes.”

“Accumulated issues in the past have now exploded and caused severe disruptions to the day-to-day lives of Sri Lankans, leading to widespread public displeasure and social unrest.”

“The fiscal sector performance in the recent past is characterised by exceptionally low government revenue, rigid recurrent expenditure, high budget deficits, and accumulated debt which is now unsustainable. The weak fiscal position has manifested in credit rating downgrades, loss of access to international capital markets and foreign financing. As a result, the government has increasingly relied on domestic financing of the budget, including monetary financing by the Central Bank, in turn leading to significant macroeconomic imbalances.”

“Government revenue declined particularly sharply in the last two years due to various reasons including the economic downturn caused by the COVID-19 pandemic, import restrictions imposed to ease the external sector pressure, but

most importantly, due to the ultra-low tax regime introduced in late 2019 and COVID-19 related easing measures in early 2020. Even before these tax cuts, Sri Lanka was a country with one of the lowest revenue-to-GDP ratios in the world, and the tax cuts drove Sri Lanka closer to the bottom of this list.”

“The government’s decision to seek the assistance of the International Monetary Fund (IMF) will be a starting point and a catalyst in implementing these critical reforms with the support of the citizens and other stakeholders.”

While acknowledging the fact that government fiscal operations have played an important role in improving economic and social conditions in Sri Lanka during its post-independence history, MOF went on to say that, “Failure to implement required policy reforms at this critical juncture will be very costly. However, it will lay a strong foundation to create a resilient economy for future generations.”

Central Bank Governor Dr. Nandalal Weerasinghe said on Friday that the Central Bank has taken measures required to stabilize the economy by taking the right monetary policy measures in terms of price adjustments and by increasing policy rates.

“Now, the fiscal side also needs implementing critical measures such as increasing state revenue by way of raising taxes. There is complete understanding on improving macro-economic fundamentals and decisions will be made to address the BOP issue, debt sustainability and enhancing state revenue in order to turn around the economy to a more resilient one,” he said.

The Governor noted that sooner the social and political stability were restored, the better it would be for stabilizing the economy and shifting it to growth path.

In September 2020, responding to a downgrade in credit ratings from Moody’s, a global rating agency, from a B2 to a Caa1, Sri Lanka’s Finance Ministry hit back claiming that such a report was ‘unwarranted, premature and reckless’.

In November 2021, former governor of the Central Bank Ajith Nivard Cabraal said that debt restructuring was underway without assistance from IMF and said, “We have to manage our debt without using the word ‘restructuring’ in a frivolous manner.”

All News Advertisement

Business

Asia-Pacific business leaders to accelerate sustainable business action

Published

19 hours ago

2026/08/27

Sahan Weerasooriya

More than 200 senior business leaders, policymakers, investors, sustainability practitioners and United Nations representatives convened in Colombo on 11–12 August for Forward Faster Now | APAC 2026: Driving Business Leadership for Sustainable and Inclusive Growth—the United Nations Global Compact’s flagship regional forum in Asia-Pacific.

Hosted by UN Global Compact Network Sri Lanka and organized by the UN Global Compact APAC Hub in collaboration with 14 Global Compact Country Networks, the forum strengthened regional collaboration and demonstrated the growing role of business leadership in advancing sustainable and inclusive growth across Asia-Pacific.

More than 80 high-level speakers from across the region contributed to the two-day programme, bringing together expertise from business, finance, government, the United Nations and civil society. The forum also convened an exceptional audience of CEOs, C-Suite, Board Directors, Heads of UN agencies and senior decision-makers, creating one of the region’s most significant platforms for cross-sector dialogue on sustainable business.

Across plenary dialogues, leadership panels and action-oriented workshops, participants explored the issues shaping the future of business in Asia-Pacific, including climate action, sustainable finance, gender equality, resilient supply chains, water stewardship, governance and integrity, digital innovation, human rights due diligence, circular economy solutions and ESG data for decision-making. Rather than focusing solely on ambition, Forward Faster Now challenged businesses to move from broad sustainability goals to target setting, practical decisions, stronger systems and action that can deliver progress at scale.

A defining milestone of the forum was the visit of Sanda Ojiambo, Assistant Secretary-General, CEO and Executive Director of the UN Global Compact. Her presence in Sri Lanka underscored the country’s growing role within the regional sustainability agenda and reinforced the importance of private sector leadership in delivering the Sustainable Development Goals.

Beyond the public programme, her visit included a series of bilateral engagements and strategic convenings with business and institutional leaders, deepening relationships and opening new avenues for engagement between the UN Global Compact and stakeholders in Sri Lanka.

The event also marked the launch of three significant initiatives by UN Global Compact Network Sri Lanka that will extend the impact of the convening well beyond the event itself. The Responsible Business Coalition was introduced as a new partnership to embed sustainability, and strengthen governance by bringing together Sri Lanka’s leading professional and industry associations to embed the Ten Principles of the UN Global Compact into their existing convening, training and thought-leadership channels, moving responsible business from a standalone function to a shared C-Suite and Board responsibility.

Business

Sri Lanka Insurance Corporation General celebrates ‘One Team, One Vision’ sales excellence at Annual Awards 2025

Published

19 hours ago

2026/08/27

Sahan Weerasooriya

The Sri Lanka Insurance Corporation General Ltd. (SLICGL) team gathered to honour its top-performing sales professionals at the Annual Sales Awards 2025, held under the theme ‘One Team, One Vision’ on 20th August at the Monarch Imperial.

The evening convened sales leaders and high achievers throughout the island to celebrate a year of sustained performance, customer trust, and commitment which has kept SLICGL at the forefront of Sri Lanka’s general insurance sector.

Affirming SLICGL’s appreciation for the people driving success on the ground, the Sales Awards 2025 recognised those who went beyond targets, deepened client relationships, and contributed directly to the company’s continued expansion.

The event drew an unprecedented audience of over 700 participants. This year’s celebrations recognised a record number of winners, more than double the achievements honoured last year covering a diverse range of award categories reflecting excellence at every level of the business.

Nusith Kumaratunga, Chairman, Sri Lanka Insurance Corporation graced the event as the Chief Guest together with the Board of Directors and senior management of SLICGL also present as invited guests, encouraging and commending the winners for their outstanding achievements.

The award winners at this year’s ceremony included Insurance Advisors, Marketing Executives, Branch Managers, Regional Managers, and members of the Head Office Sales Channels, who were recognised and celebrated for their outstanding achievements in multiple categories.

Business

Sri Lanka to host SEARIC Summit 2026 for the first time, welcoming over 500 youth leaders from across South East Asia

Published

19 hours ago

2026/08/27

Sahan Weerasooriya

(Left to Right: District Rotaract Representative of Sri Lanka and Maldives - PHF Rtn. Rtr. PP Dr. Jude Lucian, Chief Executive Officer of Destination Management Sector at John Keells Holdings PLC – Nalaka Amaratunga, SEARIC Summit Sri Lanka 2026 Chair – PDRR Akhila Wijetunga, Rotary District 3220 Governor of Sri Lanka and Maldives - Rtn. Kumar Sundararaj)

Sri Lanka is set to host the SEARIC Summit 2026 from 11 to 13 September 2026 at the Pegasus Reef Hotel, marking the first time the country will host the flagship regional gathering of the South East Asia Rotaract Information Centre (SEARIC).

Hosted by Rotaract in Rotary International District 3220 (RID 3220) – Sri Lanka & Maldives, the three-day summit is expected to bring together more than 500 delegates from six countries, creating a regional platform for leadership development, knowledge exchange, cultural understanding and collaboration among young leaders. The South-East Asia Rotaract Information Centre (SEARIC) serves as a regional platform connecting Rotaract districts across South East Asia. It facilitates collaboration, information exchange, cultural understanding and joint initiatives among Rotaractors across the region. The annual SEARIC Summit serves as the network’s flagship gathering, bringing together Rotaractors and Rotarians from participating countries for shared learning, fellowship, cultural exchange and collective growth.

Under the theme “The Role of Technology in the Future of Careers and Services,” SEARIC Summit Sri Lanka 2026 will explore the rapidly changing relationship between technology, careers, leadership and community service. As emerging technologies continue to transform industries and the way people work, the summit will provide a platform for young leaders to examine how technology can be used not only to prepare for the future of work, but also to strengthen the way communities are served. Across three days, delegates will participate in leadership and professional development sessions, discussions, cultural experiences, networking opportunities and community-focused programming, with the central theme reflected throughout the summit programme.

Beyond the Rotaract movement, the event also contributes to Sri Lanka’s broader positioning as a destination for international conferences, youth leadership programmes and regional collaboration. With hundreds of international delegates travelling to the country, the summit provides an opportunity to showcase Sri Lanka’s hospitality, culture and potential as a host destination for future international gatherings. The event further creates a platform for young leaders from across South East Asia to connect with Sri Lankan counterparts, exchange ideas and explore opportunities for cross-border collaboration.