Business
Implementation seen as key to Budget 2025’s success
By Ifham Nizam
Despite the 2025 budget’s optimistic outlook, implementation remains the key to its success, warned Nandika Buddhipala, Chief Financial Officer of Commercial Bank PLC.
Speaking at a post budget seminar on Wednesday organized by the National Chamber of Commerce of Sri Lanka, Buddhipala stressed that while tax reforms and fiscal discipline are necessary, businesses will need clarity on regulatory frameworks—especially concerning VAT changes, investment incentives and trade policies.
In response to a question posed by The Island Financial Review, he added: “Budget 2025 sets the foundation for growth, but execution will be the true test. If we can manage debt effectively, encourage exports and attract investors, we can create a resilient economy.”
Buddhipala added: “We appreciate the government’s efforts in aligning the budget with the Public Finance Management Act and the IMF Debt Sustainability Framework. However, it is critical that we remain aware of the persistent debt servicing and interest cost burden.
“Sri Lanka’s high borrowing costs mean that interest payments remain a significant portion of government expenditure. Policymakers should adopt concrete plans for reducing this burden while ensuring economic stability.
“We must create an environment that fosters exports and attracts FDI. The emphasis should be on trade-oriented sectors rather than industries that do not contribute to foreign exchange earnings.
“The government’s aims to strengthen ties with ASEAN nations through participation in the Regional Comprehensive Economic Partnership (RCEP), is a move that could boost trade and investment opportunities.
“We need to expand Double Taxation Agreements (DTAs) beyond the current 46 countries. This would increase investor confidence and facilitate smoother trade flows.
“The proposed Development Bank, which seeks to provide financial support for SMEs and new entrepreneurs, is a positive step but access to finance must be streamlined.
“Providing tailored financial solutions for SMEs is essential. However, ensuring that the Development Bank is efficiently integrated into the existing banking system will determine its success.
“This budget is a strategic response to economic challenges. We need to strike a balance between private sector-driven growth and state intervention to ensure stability and equitable distribution of wealth.”
Meanwhile an official explained in response to another query raised by this newspaper: “The first reading of the budget, which will be followed by a month-long discussion in a budget-related forum, aims to clarify ambiguities and refine implementation strategies. There are a lot of concerns regarding implementation, but this one-month period allows us to fine-tune certain aspects.”
A senior Finance Ministry representative added the following: “We have to consider international expectations and commitments, especially in the context of the International Monetary Fund (IMF) agreements. The recent IMF release of USD 330 million following policy adjustments shows the importance of staying within global economic expectations.
Hasitha Radella of KPMG Sri Lanka, presenting an overview of tax reforms said that as Sri Lanka continues its recovery, the budget is focused on several taxation reforms. Sustained improvements in fiscal management will be key to maintaining growth momentum for the country.
“Clarifications on the Simplified Value Added Tax (SVAT) system and the transition from SVAT to a Risk-Based Refund System that will streamline the VAT refund process to an efficient process are urgent requirements, said Ms. Iyesha Asanthi, Commissioner, Tax Policy & legislation of the Inland Revenue Department.
She said that if any eligible exporter who exports more than 50 percent of total supplies requires VAT refunds under the new risk-based refund system, such a need could be included in a relevant pilot project.
She added that the current VAT threshold is Rs. 15 million per quarter and Rs. 60 million per year at the standard rate 18%. Due to the current situation in the country, the budget proposals of 2025 do not include tax exemptions or concessions. However, the budget proposals made to amend individuals’ tax rates by increasing tax relief from Rs 1.2 million to 1.8 million and the relaxing of tax brackets could benefit individuals, including employees.
Ms. Jayani Wickrama Arachchi, Director, Fiscal Policy Department of Ministry of Finance, Planning and Economic Development said that with the fiscal space being highly constrained, every policy move must be strategic, ensuring key fiscal targets are protected while safeguarding economic stability in the medium term. Interest payments remain a significant burden, accounting for substantial government recurrent expenditure, primarily due to Sri Lanka’s high borrowing costs.
She added: “We need to move ahead despite these challenges.”
Business
Advocata Institute highlights regulatory barrier limiting women’s overtime earnings
Advocata Institute says that, a regulatory barrier prevents Sri Lankan women achieving pay parity with their male counterparts despite recent legislative amendments that have opened doors for women to work night shifts.
Despite the 2024 and 2026 liberalizations of the Shop and Office Employees Act (SOEA), which allowed women over 18 to work night shifts in IT, BPO, and hospitality sectors, women remain legally barred from maximizing their income due to rigid overtime restrictions.
Under current regulations, women cannot be employed under the Shop and Office Act for more than nine hours per day, a limit that strictly includes overtime. While Regulation 6 of the Act permits up to twelve hours of overtime per week, this daily “hard cap” creates a practical barrier that prevents women from accessing the full overtime entitlement available to male workers. This creates a regulatory paradox: while the law now permits women to work at night, it simultaneously restricts them from working the hours necessary to take home the same pay as a man performing the same role.
The urgency for reform is underscored by the Sri Lanka Labour Force Survey for the third quarter of 2025, which reveals a significant participation gap. Female labour force participation stands at 33.9 percent, compared to 68.6 percent for men. Closing this gap is a key structural reform priority under Sri Lanka’s International Monetary Fund Extended Fund Facility (EFF) programme, which highlights the importance of modernizing labour laws to expand labour supply and support long-term economic growth.
Debates on reforming these restrictions are often framed around the concern that removing gender-specific protections could expose women to exploitation. However, a woman’s vulnerability in the labour market is shaped less by the absence of gender-specific laws and more by structural challenges such as inadequate public transport, poor workplace infrastructure, weak enforcement of law and order, and limited access to childcare.
Addressing these underlying barriers is critical to ensuring both protection and opportunity. True empowerment requires shifting the focus from paternalistic hour-caps to creating a safe, gender-neutral environment that allows women the agency to maximize their earnings and contribute fully to the national economy.
Business
Drifting lubricant barrels trigger oil spill on southern coast; 99% of clean-up completed
Authorities have traced the oil contamination reported along sections of the Hikkaduwa and Peraliya coastlines in the Galle District to drifting barrels of industrial lubricant, while rapid response teams have already removed almost all visible oil deposits from the affected beaches.
The Marine Environment Protection Authority (MEPA), together with the Sri Lanka Coast Guard, launched an immediate response after oil patches were detected along about a 20-metre stretch of coastline in the Hikkaduwa and Peraliya areas.
Addressing a media briefing at the Ministry of Environment, MEPA Chairman Samantha Gunasekara said emergency shoreline clean-up operations began on March 7 under the instructions of Environment Minister Dammika Patabendi.
“Nearly 99 percent of the oil patches have already been cleared from the affected coastal stretch,” Gunasekara said, adding that the swift intervention by authorities had prevented the incident from escalating into a wider marine pollution crisis.
Investigations carried out by MEPA have confirmed that the contamination originated from barrels containing Shell Corena S2 P 100 lubricant oil that had apparently been lost at sea and later drifted ashore.
The lubricant manufactured by Shell plc is commonly used to lubricate the internal components of reciprocating piston air compressors. Officials said the substance is not classified as a hazardous or toxic oil, easing initial fears of severe environmental damage.
MEPA General Manager Jagath Gunasekara said monitoring of the coastline was continuing to ensure that no additional oil patches washed ashore.
Meanwhile, the Department of Wildlife Conservation said there had been no confirmed reports of harm to marine animals, including sea turtles and coastal wildlife, following inspections in the affected areas.
Wildlife officials said they were continuing to keep the situation under close observation to ensure that marine fauna along the southern coast remained safe.
Authorities stressed that protecting the ecological integrity of the southern coastal belt—particularly around the Hikkaduwa marine area—remains a priority, while further investigations are under way to determine how the lubricant barrels ended up drifting in Sri Lankan waters.
By Ifham Nizam
Business
Support for psychological well-being: Launch of telemedicine psychology program in response to Ditwa Cyclone
The Sri Lanka College of Psychiatrists has launched an innovative telemedicine psychology program designed to provide essential support and mental health care to individuals adversely affected by the Ditwa Cyclone. This initiative is a vital response to the psychological challenges faced by the community in the aftermath of the disaster.
However, the implementation of this program has faced significant obstacles, primarily due to a considerable lack of access to smart devices among the target beneficiaries. Recognizing the urgency of this situation, S-lon Lanka (Pvt) Ltd has made a commendable contribution by donating tablet devices through its corporate social responsibility initiative, the “Suwasahana Charika” Program. This generous donation aims to bridge the technological gap, ensuring that individuals in need can access the psychological services offered by the telemedicine program.
The collaborative efforts were strengthened during a recent event that was attended by key figures, including Mr. S.C. Weerasekara, the Group Director / Chief Operating Officer of The Capital Maharaja Group, and Dr. Dashanthi Akmemana, the Chairman of the Sri Lanka College of Psychiatrists.
The Sri Lanka College of Psychiatrists expressed its gratitude to S-lon Lanka for its support and is committed to addressing the community’s mental health needs during this challenging time.
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