Business
Belated economic reforms: Lankans to swallow more ‘painful medicine’
‘Accumulated issues in the past have now exploded
‘Time has come to put the house in order’
‘Dismal fiscal sector has caused imbalances in the macro-economy’
‘Engagement with IMF, a starting point in implementing critical reforms’
by Sanath Nanayakkare
The Ministry of Finance (MOF) said last week that Sri Lanka urgently needs to undertake difficult, but much needed and far-reaching reforms to address the accumulated and persistent issues in the country’s fiscal sector.
In a report titled ‘Fiscal Sector: Present Situation and Way Forward’, MOF pointed out that dismal fiscal sector performance has caused many imbalances in the macro-economy.
“Exceptionally low tax revenue, rigid recurrent expenditure, a large budget deficit, an accumulated and now unsustainable debt are the key concerns in the fiscal sector. Responsible and disciplined fiscal management has become more important than ever. In this process, the country and its citizens will have to go through a period of difficulty,” MOF warned.
The report further said:
“A strong social protection network is required for the vulnerable and needy segments as reforms will be painful.”
“The time has come to put the “house in order” and revamp the government’s fiscal operations to strengthen macroeconomic stability and facilitate economic growth in the medium to long term.”
“Deficit financing poses a critical challenge due to the shortfall of foreign financing following the loss of international capital market access. The resulting rise in monetary financing has caused severe macroeconomic imbalances.”
“The dismal performance of the fiscal sector over the years has contributed to macroeconomic instability and failed to support long-term growth. The excess aggregate demand generated by unsustainable fiscal deficits has resulted in elevated inflation, pressure on the balance of payments (BOP) and currency volatility.”
“Sri Lanka today is facing a severe BOP crisis with insufficient foreign exchange to buy essential imports such as food, energy,and pharmaceuticals, let alone meeting its debt service obligations. Sound macroeconomic fundamentals cannot be achieved without prudent and sustainable fiscal outcomes.”
“Accumulated issues in the past have now exploded and caused severe disruptions to the day-to-day lives of Sri Lankans, leading to widespread public displeasure and social unrest.”
“The fiscal sector performance in the recent past is characterised by exceptionally low government revenue, rigid recurrent expenditure, high budget deficits, and accumulated debt which is now unsustainable. The weak fiscal position has manifested in credit rating downgrades, loss of access to international capital markets and foreign financing. As a result, the government has increasingly relied on domestic financing of the budget, including monetary financing by the Central Bank, in turn leading to significant macroeconomic imbalances.”
“Government revenue declined particularly sharply in the last two years due to various reasons including the economic downturn caused by the COVID-19 pandemic, import restrictions imposed to ease the external sector pressure, but
most importantly, due to the ultra-low tax regime introduced in late 2019 and COVID-19 related easing measures in early 2020. Even before these tax cuts, Sri Lanka was a country with one of the lowest revenue-to-GDP ratios in the world, and the tax cuts drove Sri Lanka closer to the bottom of this list.”
“The government’s decision to seek the assistance of the International Monetary Fund (IMF) will be a starting point and a catalyst in implementing these critical reforms with the support of the citizens and other stakeholders.”
While acknowledging the fact that government fiscal operations have played an important role in improving economic and social conditions in Sri Lanka during its post-independence history, MOF went on to say that, “Failure to implement required policy reforms at this critical juncture will be very costly. However, it will lay a strong foundation to create a resilient economy for future generations.”
Central Bank Governor Dr. Nandalal Weerasinghe said on Friday that the Central Bank has taken measures required to stabilize the economy by taking the right monetary policy measures in terms of price adjustments and by increasing policy rates.
“Now, the fiscal side also needs implementing critical measures such as increasing state revenue by way of raising taxes. There is complete understanding on improving macro-economic fundamentals and decisions will be made to address the BOP issue, debt sustainability and enhancing state revenue in order to turn around the economy to a more resilient one,” he said.
The Governor noted that sooner the social and political stability were restored, the better it would be for stabilizing the economy and shifting it to growth path.
In September 2020, responding to a downgrade in credit ratings from Moody’s, a global rating agency, from a B2 to a Caa1, Sri Lanka’s Finance Ministry hit back claiming that such a report was ‘unwarranted, premature and reckless’.
In November 2021, former governor of the Central Bank Ajith Nivard Cabraal said that debt restructuring was underway without assistance from IMF and said, “We have to manage our debt without using the word ‘restructuring’ in a frivolous manner.”
Gigalingua Lanka, a premier German language institute, officially launched in Colombo with a ribbon-cutting ceremony attended by distinguished guests, including Dr. Felix Neumann, German ambassador to Sri Lanka. This marks a significant milestone for Sri Lankan professionals, especially nurses, looking to expand their careers in Germany’s thriving healthcare sector.
In collaboration with its strategic partner Global Care Solutions (Pvt) Ltd – a renowned company in the foreign recruitment industry – Gigalingua Lanka offers a unique pathway for Sri Lankan nurses and apprentices to master the German language and pursue rewarding career opportunities in Germany.
Dr. Felix Neumann, the Chief Guest at the event, expressed his support for the initiative, emphasizing the importance of language education as a bridge to global career prospects. In his speech, Dr. Neumann noted, “German language is not only a means of communication, it is a gateway to global career opportunities.” He commended Gigalingua Lanka for providing valuable opportunities for Sri Lankans and addressing the critical demand for skilled workers, especially in the nursing sector in Germany.
Gigalingua Lanka is the first private institute in Sri Lanka to offer comprehensive German language training up to the B2 level, and conduct TELC exam. The institution also provides language training for apprentices, allowing them to undertake the Apprenticeship Program and contribute to the growing labor market in Germany. The collaboration between Gigalingua Lanka and Global Care Solutions is designed to meet Germany’s growing need for skilled workers, particularly in the healthcare sector.
The event was attended by a number of prominent figures, including Dr. Felix Neumann , Arthur Senanayake (chairman of IWS Holdings), Eran Wickramaratne – former MP, Chandra Schaffter – ( Founder of Janashakthi Insurance ), Dhammika Attygalle (Director Upali Group of Companies and President Automobile Association of Ceylon) Former Wing Commander Buwaneka Abeysuriya (Ex- chairman Janatha Estates Development Board).
Chairman of Global Care Solutions, Thomas Michael Kriwat, who is also chairman of the Mercmarine Group of Companies in Germany, highlighted the significance of the new training center. He said, “We are bringing world-class German occupational language training to Colombo, offering a structured, career-focused pathway for Sri Lankan professionals. By introducing TELC (The European Language Certificates) as an officially certified German language test authority, we are increasing accessibility for students seeking internationally recognized qualifications.”
At the thanksgiving speech, Dr. Rajan Sara, Managing Director of Global Care Solutions and Director of Gigalingua Lanka, outlined the critical need for foreign nurses in Germany. “Germany is facing a significant shortage of nurses, estimated to need an additional 150,000 by 2025. This is exacerbated by an aging population and increasing healthcare demands. Over 47,000 vacancies in the healthcare sector remain unfilled, making it an ideal time for Sri Lankan nurses to seize this opportunity,” Dr. Sara explained. (Gigalingua Lanka)
In keeping with its vision to consistently evolve and address accelerated business growth needs, Brown & Company PLC recently unveiled its new state-of-the-art manufacturing and warehouse facility in Katunayake. Strategically located within minutes of the Bandaranaike International Airport and the nation’s rapidly evolving highway network, the space is positioned to significantly enhance Browns’ logistical capabilities. The hub will enable seamless access to key markets across the island, further solidifying the Company’s principal role in a cross-section of industries.
The inaugural event of the Browns Group Industrial Park was attended by Ishara Nanayakkara, Chairman, Brown & Company PLC and Deputy Chairman, LOLC Holdings PLC and Kapila Jayawardene, Group Managing Director/CEO, LOLC Holdings PLC along with key officials from the Browns and LOLC Group.
Dialog Axiata PLC, Sri Lanka’s #1 connectivity provider, has successfully launched the highly anticipated vivo V50 smartphone, marking a significant milestone in its commitment to bringing 5G technology and pro-level mobile experiences to Sri Lankan customers, with the first customer handover taking place on 27th March 2025.
The vivo V50, designed in collaboration with ZEISS, combines advanced features such as a 50MP ZEISS OIS Main Camera, a powerful Snapdragon® 7 Gen 3 processor, and a stunning 6,000mAh battery, all housed in a sleek, ultra-slim design. Available at an attractive price, the vivo V50 delivers unmatched mobile performance for work, play, and creativity, offering features such as AI-enhanced photography, 4K video recording, and lightning-fast 90W FlashCharge technology. The vivo V50 also boasts a 41° golden curvature for a comfortable grip and a premium, cinematic mobile experience.
Dialog’s partnership with vivo underscores its commitment to bringing the latest in 5G innovation to Sri Lanka, providing customers with access to next-generation mobile experiences and empowering them to capture, create, and connect like never before. The vivo V50 is now available for purchase at Dialog’s Experience Centers and via https://www.dialog.lk/phones/vivo-v50-5g-12gb.
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Sun directly overhead Nainamadama, Sandalankawa, Kundasale, Mahiyanganaya and Kalmunanai at about 12:12 noon today [08]
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