News
Lanka should aim for revenues of 12-pct of GDP, avoid shortfalls: IMF
Sri Lanka should aim to get state revenues more than 12 percent of gross domestic product and avoid revenue shortfalls next year, International Monetary Fund Senior Mission Chief Peter Breuer said.
Sri Lanka projected revenues (including non-tax) of 3,408 billion rupee (11.3 -pct of GDP) and the IMF 3,286 billion rupees (about 10.9-pct).Up to July revenues were up 39 percent and tax revenues were up 43 percent, but IMF expects year end revenues to be 15 percent below target.
“Clearly the objective is not to let it happen next year and make up for that shortfall,” Breuer told reporters after Sri Lanka and the IMF reached a staff level agreement incorporating the next set of targets and reforms.
“So, one of the objectives is to get revenue that exceeds 12 percent of GDP and accordingly measures will have to be implemented to achieve that objective.”
Sri Lanka has met all quantitative targets, except for the June indicative revenue target, and most structural benchmarks required up to June have been completed, Breuer said. The new staff level agreement will set the targets and reforms for the next phase of the program.
In 2020 in the worst deployment of macro-economic policy by the country’s official economists and their advisors from the private sector, taxes were also cut on top of rates, eventually driving the country to external default. Revnues collapsed from 11.9 percent in 2019 to about 8.5 percent of GDP by 2021.
As forex shortages build up, Sri Lanka’s economic bureaucrats also ban vehicle and non-essential imports, hitting revenues and further worsening the fiscal picture, in an cascading policy error that repeats often, an economic observer said.
Car imports are still banned
Sri Lanka has now slammed high rates of progressive income tax which are hitting employed workers in the corporate sector, triggering a brain drain, particularly of professionals with young children who cannot make ends meet and keep paying housing loans. There are no exemptions for dependents.
A steep currency collapse has also hit alcohol consumption, with industry officials indicating a 40 percent drop from pre-crisis levels, though some firms are said to be avoiding paying collected taxes amid corrupt practices.
The IMF has recommended a series of reforms in a governance diagnostic report including for revenue authorities. Sri Lanka will have to implement “compensating measures” and improve tax administration to get more revenues, the IMF team said.
In the first stabilization year after rate cuts trigger a currency crisis, revenues are difficult to raise due to the slowdown. This year the economy is contracting and revenues are driven partly by inflation, analysts note.
News
Plans for 2026 on the journey towards a digital economy Under President’s review
A discussion to review the progress of projects implemented under the Ministry of Digital Economy in 2025 and to examine new projects planned to be implemented under the 2026 budgetary allocations was held on Monday (19) morning at the Presidential Secretariat under the patronage of the Minister of Digital Economy, President Anura Kumara Dissanayake.
Special attention was paid to the plans and progress of programmes to promote a cashless economy.
Accordingly, an extensive discussion was held on the progress of projects planned by the Government to promote a cashless economy in Sri Lanka, including the digitalisation of government institutions, promotion of QR transactions, establishment of a Cloud infrastructure centre, a national programme to provide high-speed broadband facilities, provision of single-window facilities, the digital identity card project and the project to digitalise payment of traffic spot fines.
Noting that much of the economic activity of rural communities remains in the informal sector, the President emphasised the need to formally document these activities and stressed that this is essential when formulating future economic and development plans.
The performance, progress and future plans of institutions under the Ministry of Digital Economy, including Sri Lanka CERT, the Data Protection Authority and the Telecommunications Regulatory Commission (TRC), were also reviewed.
The current status and new recruitments of the GovTech institution, established to implement the Government’s digitalisation programme, were also discussed.
Deputy Minister of Digital Economy, Eranga Weeraratne, Secretary to the President, Dr. Nandika Sanath Kumanayake, Senior Presidential Adviser on Digital Economy, Dr. Hans Wijayasuriya, Senior Additional Secretary to the President, Roshan Gamage, Secretary to the Ministry of Digital Economy, Varuna Sri Dhanapala, senior officials of the Ministry and heads of institutions under the Ministry also participated in the discussion.
News
Power sector reforms: CEB trade unions threaten strike
A simmering confrontation between the government and the powerful Ceylon Electricity Board (CEB) trade unions intensified yesterday, with the latter signalling continued industrial action, even as authorities moved decisively to prevent any disruption to electricity supply.
The dispute centres on the government’s determination to restructure and unbundle the CEB under amendments to the Electricity Act, a reform drive officials describe as unavoidable to curb losses, strengthen governance and stabilise the national power sector. This has also been a long-standing demand of international donors, particularly the International Monetary Fund and the World Bank.
Some 24 CEB unions, including powerful engineers’ and workers’ organisations, have rejected the move, warning that the proposed restructuring could weaken institutional coordination, undermine job security and eventually place additional pressure on consumers.
Union representatives said work-to-rule campaigns and other limited forms of industrial action would continue, despite electricity services being declared an essential service — a legal measure that effectively curtails full-scale strike action.
“These reforms are being imposed without proper consultation. Decisions taken in haste could have serious consequences for grid stability and public confidence,” a senior union official told The Island.
The government, however, has adopted a firm posture, cancelling all categories of leave for CEB staff and directing management to ensure uninterrupted operations across generation, transmission and distribution.
A senior official at the Power and Energy Ministry said the administration would not allow labour unrest to jeopardise electricity supply, stressing that energy security was central to economic recovery.
“Electricity is a critical public service. Any attempt to disrupt supply will be dealt with firmly,” the official said.
Engineers’ unions have separately cautioned that restructuring without a clearly articulated technical and regulatory framework could compromise long-term planning and system reliability, though they have stopped short of calling for an outright shutdown.
Despite ongoing discussions between union leaders, CEB management and government representatives, there is no indication of an early resolution, raising the prospect of a prolonged standoff at one of the country’s most strategically important state institutions.
The dispute unfolds amid Sri Lanka’s IMF-backed reform programme, under which state-owned enterprises — particularly in the energy sector — are under increasing pressure to reduce losses and ease the burden on public finances.
Analysts warn that sustained unrest at the CEB could complicate reform timelines and dent investor confidence, even as the government seeks to signal policy resolve.
A retired CEB top official said: “For now, while major strike action remains legally constrained, the confrontation has once again placed the power sector at the centre of national debate, with consumers and businesses watching closely for any fallout.”
By Ifham Nizam ✍️
News
Dumbara Prison being expanded to accommodate nearly 30,000
Of over 37,000 held in country’s prisons, nearly 27,000 are suspects
Dumbara Prison built to accommodate 699 persons is now being expanded to hold 2,900 persons. At the moment, Dumbara Prison holds 2,246 men and women – a staggering 1,547 individuals more than its maximum capacity. Of the 2,246 persons held there, 107 are females.
This was revealed when Justice and National Integration Minister Harshana Nanayakkara responded to a query posed by Samagi Jana Balawegaya (SJB) lawmaker Chamindrani Kiriella, in Parliament yesterday (20).
The Kandy district SJB MP raised a spate of questions regarding the current status of prisons with the focus on how the NPP government intended to address the growing congestion within prisons.
The Minister explained that a major building project was now underway to expand Dumbara Prison, situated at Pallekelle, to accommodate 2,500 men and 400 women.
According to Attorney-at-Law Nanayakkara, the proposed Dumbara Prison complex would include 102 housing units for prison personnel.
The Parliament was told that the entire project would cost the taxpayer a staggering Rs 4.3 bn and that Engineering Consultants (Pvt.) Limited (ECL) was responsible for planning and supervision.
The project was progressing and by January 4, 2026, a substantial part of the complex had been built and 2146 inmates already accommodated.
The Minister said that the facility was to accommodate those who were previously held at Nuwara and Bogambara Prisons.
Of some 37,761 held at various prisons, about 27,000 were suspects, the Parliament was told.
MP Kiriella urged Minister Nanayakkara to consider an arrangement, similar to that of South Africa where those languishing in prisons, due to the inability to pay fines, received the required financial assistance from a special fund created for that purpose.
While appreciating the SJB’ers proposal, Minister Nanayakkara said that during 2025, 17,000 persons hadn’t been remanded as part of the government response to overcome overcrowding in prisons. They were being held under supervision, the Minister said.
Minister Nanayakkara said that the primary reason for the congestion was the significant number of those remanded on narcotics-related charges. Of the over 37,000 held in prisons about 30,000 were those who had been arrested on narcotics-related offences, the Minister said. According to the Minister, delay on the part of the Government Analyst’s Department in furnishing relevant reports had created a crisis and action was being taken to recruit 82 persons to that Department. The idea was to establish a system to secure GA reports within three months, the Minister said.
By Shamindra Ferdinando ✍️
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