By Sanath Nanayakkare

The 2025 Government Budget has begun to attract multiple comments from the corporate sector, academics, the government ranks and the Opposition. Reproduced below are a few of them.

First Capital Research’s analysts pointed out that the budget heavily leant towards social welfare and infrastructure development significantly increasing government expenditure.

“The already announced tax revenue measures and the digitalization drive are expected to boost Government Revenue allowing the Budget Deficit to be contained at 6.7% of GDP. A significant portion of increased government spending has been directed towards social spending with increased public sector salaries and pensions, coupled with higher allocation for assistance programs such as Aswesuma and other additional social benefits. While this ensures financial relief for many households, it also influences overall economic behavior in ways that will be felt across society. Efforts have also been made to support the lagging economy via public investments with spending targeted towards road construction, water projects, housing and city developments,” First Capital said.

“Despite the extravagant spending increases, a substantial increase in revenue is also planned with bulk of the revenue increase expected from taxes on vehicles while VAT on digital services, the imposition of corporate income tax on the export of services, and an increase in the corporate tax on cigarettes/liquor, and gaming is expected support to achieve the target. Further support is anticipated via digitalization and the expansion in the economy where the Government expects to provide a boost through spending on infrastructure, with the aim to balance spending with fiscal discipline while fostering long-term economic stability,” First Capital noted.

Government

“The Opposition was helpless when the President presented a progressive budget that brings good times for the people of this country. It was the most successful budget when looking back at the budgets presented in the past few decades,” Deputy Minister of Fisheries Ratna Gamage said.

“The government has delivered the best salary increments for state employees. The basic salaries of all state employees have increased across the board in significant amounts. Deputy Minister of Labour, Mahinda Jayasinghe said.

Academics

“Sri Lanka needs new technology-driven production economy. For that the contribution of the private sector is needed. The budget has not focused on that aspect,” Economist Professor Wasantha Athukorale said.

“There is some risk emanating from the increase of state employee salaries which will cost Rs. 300 billion within the next three years. This is more than what is collected from PAYEE tax. Dhananath Fernando of Advocata said.

Opposition

“The Budget represented the voice of the IMF, the sovereign bondholders and the scam-laden super-rich,” Peratugami Activist Pubudu Jayagoda said.

“The Budget presented by President Anura Kumara Dissanayake was the mother of all deceptions”, SLPP General Secretary Sagara Kariyawasam said.

“When state employees get their salary in April, they will realize that they have been taken for a ride by the government, SJB MP Marikkar said.

Janasetha Peramuna leader Ven. Baththaramulle Seelarathan said the government which came to power through the massive support of Buddhist monks., has not made an allocation in the budget for enhancing the quality of education at Pirivenas although other areas of education had allocations.”

Udaya Gammanpila , Leader, Pivithuru Hela Urumaya said that they have identified 12 projects that no allocations were set apart for, through the budget.

Referring to a popular verse about wearing someone else’s pants and strutting about, Gammanpila said,” “The essence of the Budget reveals that the President is confidently adopting Ranil Wickremesinghe’s policies as if they were his own.

By Ifham Nizam

As Sri Lanka accelerates its transition to renewable energy, particularly through the widespread adoption of rooftop solar installations, it is encountering significant hurdles in maintaining the stability of its national power grid.

While the country’s commitment to sustainability aligns with global trends, the increasing reliance on intermittent sources like solar energy has introduced complex challenges, especially during periods of low industrial demand such as weekends and holidays.

A senior electrical engineer, speaking to The Island Financial Review, raised alarm over the escalating frequency fluctuations and instability in the power system, particularly on sunny Sundays when energy demand plummets. The high penetration of non-despatchable renewable energy (NCRE), such as solar power, has reduced system inertia, putting the grid at a heightened risk of failure during these low-demand periods.

He said one critical example was on September 22, 2024, when the national grid registered its lowest demand of 670 MW at 10:53 AM. To keep the grid stable, the Ceylon Electricity Board (CEB) had to curtail 160 MW of solar power and other NCRE sources between 10:00 AM and 3:00 PM. This action was taken to elevate the grid demand to 820 MW, thus ensuring the dispatch of higher-inertia power plants that provide more stability.

Despite these efforts, the CEB has warned that continued low demand could lead to more frequent instances of under-frequency load shedding (UFLS). In extreme cases, the instability could even result in the tripping of large thermal power plants, such as the Lakvijaya Power Plant in Norochcholai.

The CEB has identified a series of interventions aimed at mitigating these risks and ensuring the power grid remains stable:

New Tariff Structures for Industries: The CEB proposes incentivized electricity rates for industries during weekends and holidays to encourage higher electricity consumption, helping to balance demand fluctuations.

Hydropower as a Stability Solution: Large hydroelectric plants, including Victoria, Kothmale, and Samanalawewa, could be operated in synchronous condenser mode, which would allow them to provide reactive power support without generating electricity, bolstering grid stability.

Gas Turbine Generators for Inertia Support: The operation of the Kelanitissa Gas Turbine 7, with its high inertia, in synchronous condenser mode is being considered to provide further grid stability.

Fast Frequency Response and Energy Storage: Investments in energy storage technologies such as battery energy storage systems (BESS), flywheel storage, and fast-acting gas turbines are seen as critical for stabilizing frequency fluctuations quickly.

NCRE Control Desk Implementation: A dedicated monitoring and forecasting unit for renewable energy generation will help to manage the fluctuating supply of renewable energy more effectively.

Review of Spinning Reserve Requirements: The CEB is reassessing the adequacy of the current hot spinning reserve of 5%, considering the growing proportion of renewable energy on the grid.

Regulatory Framework for NCRE Curtailments: The establishment of a regulatory mechanism to control the dispatch of renewable energy, particularly from plants larger than 5 MW, will be essential in ensuring grid stability.

Optimization of Power Plant Operations: The CEB is exploring ways to optimize the operations of hydro and thermal power plants, particularly concerning their minimum operating power levels and ramp rates, to increase the overall inertia of the system.

Sri Lanka’s banks have welcomed the maiden budget of the new government, describing it as “positive” and one that seeks to maintain policy consistency, especially on the fiscal path.

In a statement, the Sri Lanka Banks’ Association (SLBA), which represents all licensed banks in Sri Lanka, commended the budget proposals presented to Parliament by President Anura Kumara Dissanayake in his capacity as Minister of Finance, Planning and Economic Development.

In particular, the SLBA commended the budget’s emphasis on digitization, the proposed establishment of Credit Guarantee Institute for Small and Medium Enterprises (SMEs), and the focus on export orientation, and said the key to achieving the envisaged outcomes would be effective and consistent implementation of the proposals in both “letter and spirit.”

Pointing out that the banking sector contributed about 10% of government revenues in 2024 and continues to play a significant role in the growth agenda of the country, the SLBA said the country’s banks remain committed to supporting the implementation of the proposals in the budget.

The Association noted that Point-of-Sale (POS) machines at every VAT registered business entity would lead to transparent business transactions in digitized form, reducing the use of physical cash, and that this would result in a greater percentage of cash-flows being captured in the banking channels.

“Increased digitalization of the financial economy would also increase investments from the financial institutions into digital infrastructure to drive online transactions, tighten anti-money laundering procedures, improve surveillance, and control cyber-crime,” the SLBA said.

It said the establishment of a credible Credit Guarantee Institute for the SMEs and establishing a development bank through the infrastructure of an existing state bank are positive steps that should enhance the segment’s capacity to secure credit and improve the quality of its relationship with the banking sector.