News
Need for multipronged reform programme stressed
Pre-budget discussion
The need for multi-pronged broad reforms to stabilise the economy and to ensure long-term policy consistency were some of the key highlights at a pre-budget discussion held on Oct 21, addressing a number of economic issues currently faced by Sri Lanka.
The discussion, titled ‘Budget 2022: Sri Lanka’s Path to Economic Stability,’ was organised by NextGenSL and the Friedrich Naumann Foundation for Freedom in Sri Lanka. Justus Lenz, Policy Advisor for Economic and Financial Affairs at the Liberal Institute, the Friedrich Naumann Foundation for Freedom’s think tank, delivered the keynote speech, in which he shared Germany’s experience in economic revival with the hope of encouraging Sri Lanka to embark on broad and meaningful reforms to revive the economy, said a joint press release issued by NextGenSL and the Friedrich Naumann Foundation.
It said: Lenz drew attention to the fact that Germany’s success was based on four primary factors — 1) Free markets, property rights, and unregulated prices 2) The rule of law, infrastructure, and social policies provided by the state 3) Abstention from direct market interventions (mostly) and 4) Free trade and the EU’s common market.
“Actual economic growth depends entirely on entrepreneurs who develop products and services. But in order to drive development and progress, entrepreneurs need a well-functioning market order which provides freedom and security,” he told the audience. “Facing enormous difficulties, West Germany implemented the Social Market Economy and placed its trust in free markets, the entrepreneurial spirit, and an open society. East Germany bet on central planning and top-down control. In the first 10 or 20 years, the race to prosperity seemed to be a close one. But the long-term effects of both free and controlled markets soon became obvious,” he said.
“A lesson that can be drawn from looking at our experience in Germany is that reforms towards a free-market order can be very successful. If one pursues this direction, it is important to consider that success can take time. The implementation time can be painful and long, as seen both after 1948 and 1989”, adding, “Of course, there is no easy recipe for implementing a free-market order such as the Social Market Economy,” he added.
Following the keynote speech, a panel discussion featuring Prof. Sirimal Abeyratne, MP Mayantha Dissanayake, Sanjaya Mohottala, Chairman, Board of Investments, and Justus Lenz took place, primarily focusing on Sri Lanka’s need for broad economic reforms. Sathya Karunarathne of the Advocata Institute moderated the discussion.
Expressing his views at the panel discussion, Prof. Sirimal Abeyratne, a veteran economist, said that Sri Lana should move away from ad-hoc changes and work towards an overall reform package. “Even measures such as the removal of price controls should have come as part of an overall reform package. Without such an approach, there is going to be an enormous impact on low-income groups,” he said, adding that Sri Lanka should not look for short-term solutions for long-term problems.
“Budget is a short-term policy plan which only focuses on a period of 12 months. But it has to be consistent with a long-term plan. The absence of such consistency has been the problem in Sri Lanka,” he explained, adding that it was important to understand that a budget could not grant relief without someone paying for it.
“We had the space to print money during the early stages of the pandemic. Now, the vaccination process has seen significant progress and Sri Lanka has done a commendable job with the vaccination drive when compared to many other developing nations. As a result, inflation and aggregate demand are increasing, limiting the Central Bank’s ability to finance the budget deficit,” he pointed out. Prof. Abeyratne was also of the opinion that the current import controls were an “easy way-out” for Sri Lankan lawmakers.
“We must first understand what hinders the growth of domestic production. There are many factors contributing to this situation, but we brush them aside and resort to import controls because that is the easy way out. As a result, the core issues will remain the same,” he explained.
Parliamentarian Mayantha Dissanayake stressed the fact that both the Government and the opposition must work together with a common agenda to revive the economy and to reach a consensus on long-term policy reforms. “There is an urgent need to restore the trust of investors in the country. For this, a clear and cohesive message should be sent out,” Dissanayake said, adding, “We must find ways to restructure the management of these loss-making SOEs. They have become a severe burden on the economy. I would like to suggest a Temasek-like model for the divestment of government stake in these SOEs. Sri Lanka must strike a fine balance between the aspects of a welfare state and the much-needed economic reforms.”
He was also of the strong view that all reforms must be done in strict adherence to democratic practices, aiming to improve the efficiency and effectiveness of these SOEs. “I am a firm believer of monitoring and evaluation processes. This is why I believe getting rid of the National Audit Commission is an undesirable move by the current administration. Sectoral Oversight Committees, another important tool to ensure accountability, should have been allowed to continue,” the MP said.
He said another pressing problem confronting Sri Lanka at the moment is brain-drain. Even during the time of war, when a number of political leaders were assassinated, we did not see a brain drain of this magnitude,” he said. “This is a serious problem the government must address through meaningful reforms.”
BOI Chairman Sanjaya Mohottala said Sri Lanka’s focus at the moment was to create a compelling environment for FDIs through consistent immediate and long-term reforms. “What we need from the budget the most is stability,” Mohottala said. “This includes better clarity, better transparency, and better consistency.” He added that the country must set the foundation to double the GDP in 10 years with the minimum inconsistencies while addressing a host of other areas and assured the audience that the current administration was working on a number of measures to address the issues faced by investments including ‘simplifying’ the system.
“We must now get out of the pandemic mindset and look for opportunities. We are currently working towards building the capacity in the legal sector to remove some of the impediments. Digitalization of the legal process is a must. Also, we are working to build infrastructure allowing the justice system to address all regulatory-related issues expeditiously,” he said, proposing a pragmatic policy on taxation that would create a better climate for the youth to work in Sri Lanka.
In his remarks at the panel discussion, Justus Lenz said every country must find its own way to address its own. “But we must not forget that good policies are not expensive. Long-term commitment to stability and free-market reforms are not expensive,” he stressed. The German expert also pointed out that it was critically important to remain optimistic and create a long-term consensus on reforms without losing clarity.
Chamindra Kularatne, the suspended Deputy Secretary General of Parliament and Chief of Staff, has told the Opposition that he will seek the intervention of the Inter-Parliamentary Union (IPU), Commonwealth Parliamentary Association (CPA), Association of Secretaries General of Parliament (ASGP) and the United Nations Human Rights Council (UNHRC).
Kularatne has also declared his intention to move the Court of Appeal against the suspension that came into effect on 23 January on the basis of an inquiry conducted by retired Additional Secretary S.K. Liyanage.
The inquiry found fault with Kularatne for receiving a pension for a three-year and seven-month period he served as the Secretary to the Chief Government Whip during the previous administration. However, political sources said that though that particular appointment had been on a contract basis, in terms of a gazette issued at that time, it was made pensionable. Therefore, there couldn’t have been any issue with regard to Kularatne receiving a pension as stipulated in the gazette, sources said. The Island learns that Public Administration, Provincial Councils and Local Government Ministry advised that the Cabinet of Ministers be consulted regarding the matter but the Parliament acted even without bothering to seek Kularatne’s explanation.
The Staff Advisory Committee (SAC), chaired by Speaker Dr. Jagath Wickremaratne, has initiated the inquiry, though such an action should have been the prerogative of the Secretary General of Parliament, Kushani Rohanadeera, sources familiar with the developments relating to the unprecedented case, said. The SAC has also disregarded stipulation that in case of an inquiry against the Deputy Secretary General of Parliament, it should have been conducted by an officer senior to him.
The SAC consists of the Speaker, Chief Government Whip Bimal Rathnayake, Deputy Finance Minister Prof. Anil Jayantha (he represents President Anura Kumara Dissanayake who also holds the Finance portfolio) and Opposition Leader Sajith Premadasa/Chief Opposition Whip Gayantha Karunatilleke. Sources said that the SAC had been deeply divided over the decision, with SJB Karunatilleke expressing opposition to the course of action proposed by the Speaker, while Prof. Jayantha didn’t extend his support. Before Kularatne had been informed of the SAC decision on 23 January, he wasn’t given an opportunity to respond to whatever allegations directed at him, sources said.
Kularatne’s complaint to IPU would be the second against Speaker Dr. Wickremaratne since his appointment as the Speaker on 17 December, 2024. The first complaint has been lodged by Jaffna District independent group member Ramanathan Archuna. Parliament accepted the NPP’s proposal to appoint the Polonnaruwa District lawmaker after their first choice Asoka Ranwala resigned after being exposed for false claims of his higher educational qualifications.
Sources said that the ruling party had targeted Kularatne because an influential section, within the government, believed that he had sneaked on the Speaker. Kularatne’s sacking and related accusations and counter accusations dominated social media.
Opposition Leader Sajith Premadasa and ITAK Batticaloa District lawmaker Shanakiyan Rasamanickam threw their weight behind Kularatne with Premadasa questioning the legality of the action taken without seeking an explanation from the official.
Authoritative sources said that in terms of the Parliament (Powers and Privileges) Act, in addition to members of Parliament, officials, too, received protection.
During the United National Front government of Prime Minister Ranil Wickremesinghe, the then Speaker, the late W.J. M. Lokubandara, interdicted Director General (Administration) Lacille de Silva over alleged misconduct though the official claimed he was punished for leaking information. Lacille de Silva successfully moved court against his interdiction and secured his position.
By Shamindra Ferdinando
The Ambassador of the United Arab Emirates (UAE) to Sri Lanka, Khaled Nasser Al Ameri, met Minister of Power and Energy Eng. Kumara Jayakody yesterday (26) to review progress on bilateral energy cooperation and explore new avenues for collaboration, with a strong focus on regional energy security and strategic infrastructure development.
The high-level discussion centred on the implementation status of understandings reached in recent years, particularly in the energy sector, and on identifying fresh opportunities to deepen engagement between Sri Lanka and the UAE. Both sides underscored the importance of translating earlier agreements into tangible outcomes amid Sri Lanka’s ongoing energy transition.
A key focus of the talks was the proposed development of the Trincomalee region as a regional energy hub. The meeting reviewed follow-up actions related to the tripartite Memorandum of Understanding signed last year between Sri Lanka, India and the UAE, which envisages collaborative development of energy-related infrastructure and logistics in and around Trincomalee, leveraging its strategic location in the Indian Ocean.
Officials discussed the next steps required to operationalise elements of the agreement, including coordination mechanisms, investment frameworks and timelines, with a view to positioning Trincomalee as a focal point for energy storage, supply and distribution in the region.
The discussions also addressed broader cooperation on regional energy security, with both parties acknowledging the growing importance of resilient, diversified and sustainable energy systems amid global volatility.
The UAE reiterated its willingness to support Sri Lanka’s energy objectives, including through technical expertise, investment and strategic partnerships aligned with the country’s long-term power sector goals.
Minister Jayakody highlighted Sri Lanka’s commitment to strengthening international partnerships to ensure energy security, accelerate infrastructure development and support the shift towards a more reliable and future-ready energy mix.
Ambassador Al Ameri reaffirmed the UAE’s interest in expanding its role as a key partner in Sri Lanka’s energy sector, building on existing goodwill and cooperation.
The meeting reflects Colombo’s broader diplomatic and economic efforts to attract strategic partners to its energy sector, particularly for large-scale projects with regional significance, as Sri Lanka seeks to stabilise supply, enhance security and position itself as an emerging energy and logistics hub in the Indian Ocean, the Ministry said.
By Ifham Nizam
The Pathfinder Foundation’s Repository for Sri Lanka Peace Initiatives was inaugurated by Erik Solheim—former Norwegian Special Envoy to the Sri Lanka peace process, former Minister of the Environment and International Development of Norway, and former Executive Director of the United Nations Environment Programme (UNEP)—at the invitation of Milinda Moragoda, Founder, and Bernard Goonetilleke, Chairman of the Pathfinder Foundation, both among the principal negotiators of the peace process.
Over several decades, Sri Lanka repeatedly sought to resolve the separatist conflict through negotiations. Despite several initiatives, none succeeded in bringing the conflict to a negotiated conclusion.
Over the years, numerous publications—both local and foreign—have examined Sri Lanka’s conflict. SCOPP maintained a substantial body of documentation on the peace process, from January 2002 to January 2008, and the Norwegian facilitators also hold an extensive collection of records. Nevertheless, a major gap remains: the absence of a consolidated repository that brings together available documentation on the peace process, particularly one that preserves material relating to negotiations that did not reach a conclusive settlement.
Responding to this gap and encouraged by many associated with or studying the process, the Pathfinder Foundation has taken steps to establish a dedicated repository to collect and preserve documentation on Sri Lanka’s peace initiatives. Under this project, the Foundation will gather relevant information on the peace process from local and international sources.
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