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Budget 2025: AKD promises growth and progress

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1 year ago

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President Dissanayake

* Minimum public sector salary increased by Rs 15,750

* Retirement benefits to be calculated on the basis of new salary structure

* Private sector minimum salary increased to Rs 27,000 from Rs 21,000

* Plantation sector daily wages raised to Rs 1,700

* Move to revise pensions of those who retired before 1 Jan., 2020 in three phases

* Significant revenue boost expected from liberalisation of motor vehicle imports

By Saman Indrajith

President Anura Kumara Dissanayake yesterday (17) proposed to increase the minimum public sector basic salary by Rs. 15,750 – from Rs. 24,250 to Rs. 40,000 The President said that the current ad-hoc interim allowance and special allowance would be integrated into the basic salary, giving a net increase of Rs. 8,250 in the minimum salary.

The President was delivering his maiden budget speech. He said that the proposed minimum monthly basic salary increase would also be applicable to judicial services, public corporations, statutory boards, university staff, and officers of the armed forces, on the same basis in line with the minimum basic salary increase for public sector employees.

In addition, the President proposed to increase annual salary increment by 80%. Consequently, the minimum annual salary increment of Rs. 250 will be increased to Rs. 450. It is also proposed to adjust annual salary increments for all public sector employees to the same percentage, the President mentioned.

The President said: “The total estimated cost of this salary increase is expected to be Rs. 325 billion. Considering the present fiscal constraints, it is proposed that this salary increase be implemented in phases. Of the total net salary increase, Rs. 5,000 and 30 percent of the balance amount will be paid, starting from April 2025, with the remaining 70 percent being paid in equal portions, beginning in January 2026 and January 2027.

“Therefore, it is proposed that Rs. 110 billion be allocated for the proposed salary increase in 2025.

“As part of this salary increase, it is proposed that the retirement benefits for officers retiring on or after 01.01. 2025 be calculated, based on the new salary structure, ensuring that they receive retirement benefits under the proposed 2025 salary scheme.

“Considering the increase in the minimum basic salary of state employees, the limit on distress loans for public servants, which is currently set at Rs. 250,000, will also be increased to Rs. 400,000. .

“The Employers’ Associations have already agreed to increase the monthly Minimum Wage to the Private Sector workers, from Rs. 21,000 to Rs. 27,000, in April 2025, and to Rs. 30,000 from 2026.

“The government will intervene to increase the daily wages of the Plantation workers to Rs. 1,700.

“Commenting on public sector pensions, the President said that immediately after the presidential election, a Rs 3,000 monthly increase was granted to resolve pension anomalies of those who retired before January 1, 2020.

The President said: “We observe that there will be a pension anomaly created by revising the pensions of the Government employees who retired from 2016 – 2020 only, based on the salary scale of the fifth phase related to the year 2020, since all the pensioners who retired till 31.12.2017 are on the same salary scale.

As this issue remains unresolved for a long time, we believe that it has to be resolved in a phased manner within the existing limited fiscal space. Therefore, we propose to revise the pensions of all pensioners who retired before 01.01.2020 in three phases, corresponding to the salary scales applicable to the year 2020 as per the Public Administration Circular No. 03/2016.

As the first phase, the pensions of all pensioners who retired before 01.01.2018 will be revised in line with the third stage salary scales relevant to the year 2018 in the Public Administration Circular No. 03/2016 and to be implemented from July 2025. For this phase, we propose to allocate Rs. 10,000 million through the Budget 2025.

Furthermore, we also propose to implement the pension conversions related to the fourth and fifth stages of the salary conversion from July 2026 and July 2027, respectively.”

The President dealt with revenue measures. The Parliament was told that Sri Lanka’s economic reform programme is based on a foundation of revenue-based fiscal consolidation. This is reflective of the fact that leading up to the economic crisis, Sri Lanka had one of the world’s lowest Government tax revenue levels of 7.3 percent of GDP in 2022.

For the year 2025, the bulk of revenue gains is expected to be delivered by the liberalisation of motor vehicle imports that took place on 1st February 2025. This process is being carefully monitored to ensure that import of vehicles does not result in undue negative impacts on external sector stability. Other key revenue measures which have already been announced in Parliament, previously in December 2024, include the increase of tax-free threshold for personal income tax, further adjustments to the second income tax slab, removal of VAT on fresh milk and yoghurt. The Government also decided to not pursue this year the Imputed Rental Income Tax that had been agreed by the previous administration. To compensate for any revenue losses, the Government already presented in Parliament measures, including the introduction of VAT on digital services, the imposition of corporate income tax on export of services, and an increase in the corporate tax on cigarettes/liquor, and gaming.

The tax policy measures outlined here are expected to deliver the required revenue to enable Sri Lanka to meet the revenue targets of 15.1 percent of GDP in 2025. Nonetheless, in parallel, the Government is taking concerted efforts to improve tax administration and compliance. In fact, Sri Lanka’s revenue strategy for the upcoming Budget aims to enhance fiscal sustainability by strengthening tax administration, improving compliance, improve institutional strength through enhanced digitalization and rigorous monitoring mechanisms; while providing relief to the most vulnerable groups of the society. Efforts will be directed toward digitalizing tax systems to reduce leakages and enhance transparency while minimizing human interactions in tax administration.

Sri Lanka is moving towards a cashless economy as a part of its broader digitalization agenda to formalize the economy and improve revenue collection. The use of Point-of-Sale (POS) machines across businesses, especially in VAT-registered enterprises, will be implemented as a key initiative to facilitate digital transactions and reduce cash dependency. A cashless economy will not only curb tax evasion and illicit financial activities but also enhance fiscal efficiency, contributing to Sri Lanka’s economic stability and growth.

Digitalisation of revenue agencies and the overall digital economy drive is expected to provide significant impetus to the revenue enhancing efforts. However, it is not just the tax collection authorities that have a responsibility in this regard. Several other stakeholders, including audit firms and tax accountants, have a responsibility to discharge their duties in a socially responsible manner such that the Government is not deprived of due tax revenue. Appropriate measures will be taken to ensure compliance with the regulatory and legal framework in this regard as well.

We are confident that these tax administration and tax compliance enhancement measures will enable Sri Lanka to surpass revenue targets beyond 2025. At that point, it will be possible to provide further relief to the public in a manner that does not jeopardize the achievement of revenue targets and ensure the country’s fiscal and economic stability. “


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Prison officers urge Justice Minister to protect their colleague who opened fire

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8 hours ago

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2026/07/9

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Coffins of prison staff killed in Monday's clashes at the Negombo Prison, placed at Prison headquarters, Welikada (pic by Nishan S. Priyantha)

Prison officers yesterday requested Justice and National Integration Minister Harshana Nanayakkara to protect their colleague who opened fire at the Negombo Prison during Monday’s riot.

They made that request when the Minister visited the Welikada Prison to pay his last respects to seven officers killed by inmates during the clashes. Soon thereafter, the National Hospital reported that another prison officer had succumbed to his injuries.

The Minister was told that the officer had opened fire through a small opening in the main door to prevent the rioting prisoners from escaping.

The Opposition has demanded to know who ordered the prisons officer to fire. The concerned officer’s colleagues told the Minister that had a breakout occurred the inmates would have posed a serious threat to the public.

Altogether, authorities transferred 1,033 inmates from Negombo to other prisons. Among them was Katuwellegama Suresh, who is alleged to have spearheaded Sunday’s attack on a group of prisoners that led to the following day’s clashes.

Executive Director of the Committee for Protecting the Rights of Prisons, Attorney-at-Law Senaka Perera told The Island that some of the transferred inmates had been mercilessly assaulted in other prisons.

Sources familiar with the situation at prisons said that they were able to accommodate between 11,000 to 12,000 inmates but over 40,000, both convicted and suspects were held in the country’s prisons. About 30,000 of them are suspects. Due to severe overcrowding, prison management had been compelled to accommodate both the convicts and suspects at the Negombo Remand Prison, sources said, adding that the clashes had erupted between the two groups.

Those who had been convicted were accused by the other group of passing information to the previous prison management resulting in elimination of narcotics and other banned items in the prison, sources said. They went on the offensive after both the administrator and the second-in-command were transferred separately and the authorities ignored the volatile situation and proceeded with routine work on Monday.

Sources said that the authorities were yet to release the exact number of convicts and suspects killed and wounded during clashes between the two groups and with prison staff. According to the Health and Media Ministry the total number of persons admitted to the National Hospital, following the incidents, were 29. Of them, 14 were inmates. The Ministry said that of the 29, 12 were in the intensive care unit.

Prof. Prathiba Mahanamahewa told The Island that the overcrowding of prisons should be carefully examined, taking into consideration that even some innocent people were held in various prisons. Poisons, Opium and Dangerous Drugs (Amendment) Act of No 41 of 2022 was being exploited and misused by law enforcement authorities to frame and arrest people. In terms of this law, those who had been framed couldn’t secure bail from the High Court but had to seek the intervention of the Court of Appeal. The lawyer explained how Section 54 of the Act was being used indiscriminately against people.

According to Mahanamahewa about 80 percent of those suspects held were on narcotic charges.

By Shamindra Ferdinando

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Negombo Prison riot: Ensuring protection of prisoners fundamental responsibility of the state – UN

Published

8 hours ago

on

2026/07/9

By

Marc-André Franche

Expressing concern over the death of prisoners, both convicts and suspects, as well as correctional officers, the United Nations Resident Coordinator in Sri Lanka, Marc-André Franche has emphasised that ensuring that protection is a fundamental responsibility of the State.

Twenty prisoners and seven correctional officers were killed in clashes on Sunday and Monday. Over 100 received injuries.

Issuing a statement, the United Nations extended its condolences to the families affected by the tragedy and wished a speedy recovery to those injured.

Underscoring prison officials carried out challenging duties in service of the State, and the general public, the UN Resident Coordinator said that their loss was deeply felt. The UN also stressed that inmates who died, or were injured, were under the care and protection of the State, emphasising that both correctional officers and prisoners require greater protection. Ensuring that protection is a fundamental responsibility of the State, he said.

The UN statement highlighted the urgent need for continued investment and reform within Sri Lanka’s prison system.

It pointed to longstanding challenges, including overcrowding, outdated practices and poor conditions in detention facilities, which remain concerns in prison systems both in Sri Lanka and globally.

The UN said Sri Lanka’s engagement with international human rights standards, relating to the treatment, safety and wellbeing of persons deprived of liberty, provides an important framework for addressing these issues.

The United Nations welcomed the establishment of an independent committee to investigate the circumstances surrounding the prison violence and emphasised that the committee’s findings should lead to concrete and lasting improvements in detention conditions.

The UN also reaffirmed its commitment to supporting Sri Lanka through technical cooperation aimed at improving prison security, strengthening detention conditions, and supporting the welfare of correctional personnel.

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Govt. considers banning or restricting social media for children under 16: PM

Published

8 hours ago

on

2026/07/9

By

Harini Amarasuriya

The government was considering imposing restrictions or a possible ban on social media access for children under 16, Prime Minister Harini Amarasuriya told Parliament yesterday (8).

Responding to a question raised by SJB Gampaha District MP Harshana Rajakaruna, the Prime Minister said discussions with relevant stakeholders were currently underway to assess the impact of social media use on children and explore measures to ensure their safety.

She said the consultations, led by the Ministry of Women and Child Affairs, were focussed on the social, mental and health effects of excessive social media use, digital security concerns and global developments in regulating online platforms.

The Prime Minister said the National Child Protection Authority and the National Childcare and Protection Society were also engaged in discussions on the proposal, while steps were being taken to draft national guidelines on restricting access to social media platforms for children below 16 years.

She added that awareness programmes would also be introduced to safeguard children’s mental and physical wellbeing in an increasingly digital environment.

According to the Prime Minister, several government institutions, including the Ministries of Women and Child Affairs, Education, Higher Education and Vocational Education, Health, Mass Media and Digital Economy, along with the Sri Lanka Police, Department of Probation and Child Care Services and the National Child Protection Authority, were collaborating on the initiative.

The PM said the government, together with World Vision, was implementing a programme aimed at addressing mobile phone addiction among children under 18, which had already shown positive results.

Prime Minister Amarasuriya said the government’s focus was to strike a balance between protecting children from potential online harms and ensuring they benefit from digital opportunities.

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