Features

2025 Budget: Challenges, hopes and concerns

Published

1 year ago

2025/02/26

Sri Lanka’s recent government budget has sparked both hope and concern. While some see it as a positive step toward improving the country’s economy, others worry about whether the government’s proposals can be successfully implemented. This analysis explores the budget’s approach and what it could mean for the country’s financial future.

Credit Rating Improvement and What It Means

Fitch Ratings recently upgraded Sri Lanka’s credit rating, moving it from a risky “Restricted Default” (RD) to a “CCC+” rating. This shows that the country’s financial situation is improving, though it still faces a high risk of default. The government aims to increase its revenue, especially through trade taxes and income tax, but experts warn that the success of these plans is uncertain, particularly when it comes to lifting restrictions on imports.

Economic Democracy and Market Regulation

The government claims that this budget is based on the idea of “economic democracy,” aiming to balance market forces with government control. While it promises fairer distribution of wealth, critics argue that it still relies on market-driven policies that may not bring the desired changes. The budget seems to follow similar strategies to past administrations, despite the government’s claim of pursuing a new direction.

The current government, led by a Marxist-influenced party, has shifted its approach by aligning with global economic institutions like the International Monetary Fund (IMF). This represents a departure from its previous, more radical stance. The government’s vision focuses on rural development, support for small businesses, and an export-driven economy, continuing strategies from previous administrations rather than implementing drastic changes.

Stability and Continuity in Policy

One of the more positive aspects of the budget is its consistency with the fiscal policies of the past government. Sri Lanka’s economy has suffered from sudden policy changes in the past, often triggered by political transitions. By maintaining a steady course, the current government seeks to ensure stability in the recovery process, despite criticisms from political opponents.

Sri Lanka continues to face significant financial challenges, including a large budget deficit. The government’s spending in 2025 is expected to exceed its revenue by about LKR 2.2 trillion, leading to a deficit of around 6.7% of GDP. To cover this gap, the government plans to borrow both locally and internationally. However, debt repayment remains a major concern, with billions needed to settle existing obligations.

Tax Revenue and Public Spending Issues

Sri Lanka’s tax collection remains critically low, which worsens the country’s financial troubles. Tax evasion, exemptions, and inefficient administration make it hard to collect sufficient revenue. The government has raised VAT to 18% to boost income, but this could increase inflation, further harming families’ ability to afford basic goods. Additionally, corruption in public institutions continues to drain state resources, preventing effective use of funds for national development.

The Auditor General’s Department recently uncovered financial irregularities in several ministries, reinforcing concerns over systemic corruption.

Sectoral Allocations, Budget Inequities and Falures

Despite claims of prioritizing social welfare, the government’s budget allocation for key sectors remains insufficient. For example, while the government allocated LKR 500 million to improve 379 childcare centers nationwide, this amount pales in comparison to regional standards. In neighboring Bangladesh, the government spends around USD 60 per child annually, while Sri Lanka spends less than USD 25. It’s unclear whether this allocation represents an increase in funding or just a reshuffling of existing resources.

One of the biggest criticisms of the budget is its failure to address the high cost of essential goods, going against promises made during the election. Prices for basic items like rice and coconut are still high, due to supply chain issues, rising fuel costs, and tax policies. The absence of targeted subsidies or price controls has led to growing public dissatisfaction.

Public sector salary adjustments are also a point of contention. The government plans to introduce salary increases in three phases, with the full benefits expected by 2027. However, much of this increase was already granted in previous years through allowances, meaning the adjustment is more about restructuring existing funds than providing real pay increases. This slow approach raises concerns about whether employees’ purchasing power will improve, especially with inflation still a pressing issue.

The government has also urged the private sector to raise wages, but past experiences suggest that private companies often resist such requests. Without formal agreements or laws to enforce wage hikes, there is uncertainty over whether employees will see real wage growth that matches the rising cost of living.

Neglecting Vulnerable Workers and Obstinate Behaviour

Another group left out of the budget’s plans is casual and contract workers, who were expecting improvements in job security and wages, particularly those earning below LKR 1,800 per day. Despite promises made during the election, these workers have not seen any significant changes, which raises doubts about the government’s commitment to improving labor rights and income equality.

The government’s handling of private sector wage increases has also been criticized for a lack of transparency. In a televised discussion, A government representative became visibly agitated when questioned about the date of the agreement with employers, displaying obstinate behavior and refusing to answer the opposition MP’s inquiry.

Review of the Banking Sector’s Role in Govt. Revenue and Economic Growth

The banking sector helps generate national revenue through taxes such as corporate income tax, value-added tax (VAT), and financial transaction levies. However, the claim that it contributed 10% to government revenue in 2024 needs to be understood in context. Past figures have shown fluctuations in financial sector taxes, influenced by economic conditions and fiscal policies. The government’s growing reliance on the banking sector for tax revenue could signal financial stress, and this situation warrants further analysis to understand its long-term sustainability.

While the Sri Lanka Bankers Association (SLBA) emphasizes banks’ support for implementing the government’s budget proposals, their ability to do so effectively depends on broader economic conditions, regulations, and financial stability. Sri Lanka has faced persistent economic issues like high public debt and inflation, which could hamper the ability of banks to help implement fiscal policies effectively. The real impact of the banking sector in driving economic growth remains uncertain, especially given factors like currency instability and a lack of foreign investment.

Digitization and Financial Transparency

The proposal to introduce Point-of-Sale (POS) machines at VAT-registered businesses aligns with global trends in digital financial integration. This move is expected to improve transparency, reduce tax evasion, and increase banking efficiency. Research has shown that digital payments can boost financial inclusion and reduce informal economic activities. However, Sri Lanka faces challenges such as limited digital infrastructure, cybersecurity concerns, and resistance from businesses that still prefer cash transactions.

More digital services could strengthen anti-money laundering (AML) controls, improve transaction monitoring, and reduce cyber threats. However, shifting to a fully digital banking system requires substantial investments in technology, regulatory alignment, and digital literacy among consumers.

Support for SMEs and Development Banking Initiatives

The creation of a Credit Guarantee Institute for SMEs is a significant step. Research shows that credit guarantees can reduce lending risks and improve SME access to financing. However, past state-managed financial programs in Sri Lanka have been inefficient, often involving politicized lending practices.

For these new initiatives to succeed, they will need transparent governance, careful credit risk management, and strong regulations….

Conclusion

Sri Lanka’s banking sector is crucial for economic stability and revenue generation, but the increasing fiscal demands and the push for digital transformation present both significant opportunities and risks. Policymakers need to avoid over-taxation that could stifle credit expansion and investment while addressing digital finance challenges like cybersecurity and infrastructure gaps. The 2025 budget underscores the nation’s vulnerable fiscal situation, where efforts for economic stabilization are hampered by public debt, corruption, and welfare constraints. Achieving sustainability requires comprehensive tax reforms, better public expenditure management, and stronger anti-corruption measures. Without these reforms, Sri Lanka faces prolonged economic hardship, rising inequalities, and diminishing trust in governance. The budget also reflects a blend of ideological transformation and economic pragmatism, with policies largely aligning with past approaches. Fitch Ratings’ cautious optimism signals the potential for recovery, contingent on successful policy implementation. Ultimately, policy continuity is seen as Sri Lanka’s best bet for navigating fiscal uncertainty and achieving economic stability.

(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT University, Malabe. He is also the author of the “Doing Social Research and Publishing Results”, a Springer publication (Singapore), and “Samaja Gaveshakaya (in Sinhala). The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of the institution he works for. He can be contacted at saliya.a@slit.lk and www.researcher.com)

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Features

Political violence stalking Trump administration

Published

16 hours ago

2026/04/30

Sahan Weerasooriya

A scene that unfolded during the shooting incident at the recent White House Correspondents’ Dinner in Washington. (BBC)

It would not be particularly revelatory to say that the US is plagued by ‘gun violence’. It is a deeply entrenched and widespread malaise that has come in tandem with the relative ease with which firearms could be acquired and owned by sections of the US public, besides other causes.

However, a third apparent attempt on the life of US President Donald Trump in around two and a half years is both thought-provoking and unsettling for the defenders of democracy. After all, whatever its short comings the US remains the world’s most vibrant democracy and in fact the ‘mightiest’ one. And the US must remain a foremost democracy for the purpose of balancing and offsetting the growing power of authoritarian states in the global power system, who are no friends of genuine representational governance.

Therefore, the recent breaching of the security cordon surrounding the White House Correspondents’ Dinner in Washington at which President Trump and his inner Cabinet were present, by an apparently ‘Lone Wolf’ gunman, besides raising issues relating to the reliability of the security measures deployed for the President, indicates a notable spike in anti-VVIP political violence in particular in the US. It is a pointer to a strong and widespread emergence of anti-democratic forces which seem to be gaining in virulence and destructiveness.

The issues raised by the attack are in the main for the US’ political Right and its supporters. They have smugly and complacently stood by while the extremists in their midst have taken centre stage and begun to dictate the course of Right wing politics. It is the political culture bred by them that leads to ‘Lone Wolf’ gunmen, for instance, who see themselves as being repressed or victimized, taking the law into their own hands, so to speak, and perpetrating ‘revenge attacks’ on the state and society.

A disproportionate degree of attention has been paid particularly internationally to Donald Trump’s personality and his eccentricities but such political persons cannot be divorced from the political culture in which they originate and have their being. That is, “structural” questions matter. Put simply, Donald Trump is a ‘true son’ of the Far Right, his principal support base. The issues raised are therefore for the President as well as his supporters of the Right.

We are obliged to respect the choices of the voting public but in the case of Trump’s election to the highest public position in the US, this columnist is inclined to see in those sections that voted for Trump blind followers of the latter who cared not for their candidate’s suitability, in every relevant respect, and therefore acted irrationally. It would seem that the Right in the US wanted their candidate to win by ‘hook or by crook’ and exercise power on their behalf.

By making the above observations this columnist does not intend to imply that voting publics everywhere in the world of democracy cast their vote sensibly. In the case of Sri Lanka, for example, the question could be raised whether the voters of the country used their vote sensibly when voting into office the majority of Executive Presidents and other persons holding high public office. The obvious answer is ‘no’ and this should lead to a wider public discussion on the dire need for thoroughgoing voter education. The issue is a ‘huge’ one that needs to be addressed in the appropriate forums and is beyond the scope of this column.

Looking back it could be said that the actions of Trump and his die-hard support base led to the Rule of Law in the US being undermined as perhaps never before in modern times. A shaming moment in this connection was the protest march, virtually motivated by Trump, of his supporters to the US Capitol on January 6th, 2021, with the aim of scuttling the presidential poll result of that year. Much violence and unruly behaviour, as known, was let loose. This amounted to denigrating the democratic process and encouraging the violent take over of the state.

In a public address, prior to the unruly conduct of his supporters, Trump is on record as blaring forth the following: ‘We won this election and we won by a landslide’, ‘We will stop the steal’, ‘We will never give up. We will never concede. It doesn’t happen’, ‘If you don’t fight like hell, you’re not going to have a country anymore.’

It is plain to see that such inflammatory utterances could lead impressionable minds in particular to revolt violently. Besides, they should have led the more rationally inclined to wonder whether their candidate was the most suitable person to hold the office of President.

Unfortunately, the latter process was not to be and the question could be raised whether the US is in the ‘safest pair of hands’. Needless to say, as events have revealed, Donald Trump is proving to be one of the most erratic heads of state the US has ever had.

However, the latest attempt on the life of President Trump suggests that considerable damage has been done to the democratic integrity of the US and none other than the President himself has to take on himself a considerable proportion of the blame for such degeneration, besides the US’ Far Right. They could be said to be ‘reaping the whirlwind.’

It is a time for soul-searching by the US Right. The political Right has the right to exist, so the speak, in a functional democracy but it needs to take cognizance of how its political culture is affecting the democratic integrity or health of the US. Ironically, the repressive and chauvinistic politics advocated by it is having the effect of activating counter-violence of the most murderous kind, as was witnessed at the White House Correspondents’ Dinner. Continued repressive politics could only produce more such incidents that could be self-defeating for the US.

Some past US Presidents were assassinated but the present political violence in the country brings into focus as perhaps never before the role that an anti-democratic political culture could play in unraveling the gains that the US has made over the decades. A duty is cast on pro-democracy forces to work collectively towards protecting the democratic integrity and strength of the US.

Features

22nd Anniversary Gala …action-packed event

Published

16 hours ago

2026/04/30

Sahan Weerasooriya

The Skyliners: Shanaka Viswakula (bass), Mario Ranasuriya (lead guitar), Daryl D'Souza (keyboards) and Kushmin Balasuriya (drums)

The Editor-in-Chief of The Sri Lankan Anchorman, a Toronto-based monthly, celebrating Sri Lankan community life in Canada, is none other than veteran Sri Lankan journalist Dirk Tissera, who moved to Canada in 1997. His wife, Michelle, whom he calls his “tower of strength”, is the Design Editor.

According to reports coming my way, the paper has turned out to be extremely popular in Toronto.

In fact, The Sri Lankan Anchorman won a press award in Toronto for excellence in editorial content and visual presentation.

However, the buzz in the air in Canada, right now, is The Sri Lankan Anchorman’s 22nd Anniversary Gala, to be held on Friday, 12 June, 2026, at the J&J Swagat Banquet Convention Centre, in Toronto.

An action-packed programme has been put together for the night, featuring some of the very best artistes in the Toronto scene.

The Skylines, who are classified as ‘the local musical band in Toronto’, will headline the event.

Dirk Tissera and wife Michelle: Supporting Sri Lanka-Canada community events, in Toronto, since launching The Anchorman
in 2002

They have performed and backed many legendary Sri Lanka singers.

According to Dirk, The Skylines can belt out a rhythm with gusto … be it Western, Sinhala or Tamil hits.

Also adding sparkle to the evening will be the legendary Fahmy Nazick, who, with his smooth and velvety vocals, will have the crowd on the floor.

Fahmy who was a household name, back in Sri Lanka, will be flying down from Virginia, USA.

He has captivated audiences in Sri Lanka, the Middle East and North America, and this will be his fourth visit to Toronto – back by popular demand,

Cherry DeLuna, who is described by Dirk as a powerhouse, also makes her appearance on stage and is all set to stir up the tempo with her cool and easy delivery.

“She’s got a great voice and vocal range that has captivated audiences out here”, says Dirk.

Chamil Welikala, said to be one of the hottest DJs in town, will be spinning his magic … in English, Sinhala, Tamil and Latin.

Both Jive and Baila competitions are on the cards among many other surprises on the night of 12 June.

This is The Anchorman’s fifth annual dance in a row – starting from 2022, 2023, 2024 and 2025 – and both Dirk and Michelle, and The Anchorman, have always produced elegant social events in Toronto.

“We intend to knock this one out of the park,” the duo says, adding that Western music and Sinhala and Tamil songs is something they’ve always delivered and the crowd loves it.

“We have always supported Sri Lanka-Canada community events, in Toronto, since launching The Anchorman, in 2002, and we intend to keep it that way.”

No doubt, there will be a large crowd of Sri Lankans, from all communities, turning up, on 12 June, to support Dirk, Michelle and The Anchorman.

Features

Face Pack for Radiant Skin

Published

16 hours ago

2026/04/30

Sahan Weerasooriya

* Apple and Orange:

Blend a few apple and orange pieces together. Add to it a pinch of turmeric and one tablespoon of honey. Apply it to the face and neck and rinse off after 30 minutes. This face pack is suitable for all skin types.

According to experts, apple is one of the best fruits for your skin health with Vitamin A, B complex and Vitamin C and minerals, while, with the orange peel, excessive oil secretion can be easily balanced.

* Mango and Curd:

Ripe mango pulp, mixed with curd, can be rubbed directly onto the skin to remove dirt and cleanse clogged pores. Rinse off after a few minutes.

Yes, of course, mango is a tasty and delicious fruit and this is the mango season in our part of the world, and it has extra-ordinary benefits to skin health. Vitamins C and E in mangoes protect the skin from the UV rays of the sun and promotes cell regeneration. It also promotes skin elasticity and fights skin dullness and acne, while curd, in combination, further adds to it.

* Grapes and Kiwi:

Take a handful of grapes and make a pulp of it. Simultaneously, take one kiwi fruit and mash it after peeling its skin. Now mix them and add some yoghurt to it. Apply it on your face for few minutes and wash it off.

Here again experts say that kiwi is the best nutrient-rich fruit with high vitamin C, minerals, Omega-3 fatty acids and vitamin E, while grapes contain flavonoids, which is an antioxidant that protects the skin from free radical damage. This homemade face pack acts as a natural cleanser and slows down the ageing process.