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Budget 2025: AKD promises growth and progress

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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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Military held land: Govt. trying to maintain balance between security and civilian needs

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Deputy Defence Minister Maj. Gen. Jayasekera receiving a field briefing during a recent visit to the Jaffna peninsula (pic courtesy MoD).

The NPP government is trying to maintain a balance between continuing demands for releasing north-east land held by the military and post-war security requirements, says Deputy Defence Minister Major General Aruna Jayasekera (Retd), who has undertaken a series of visits to the northern and eastern provinces in the recent past to explore ways and means of releasing the land, without compromising national security requirements.

Since the armed forces brought the war to a successful conclusion in May, 2009, releasing of both privately- and state-owned land began cautiously in October, 2009, and by now over 90 percent of both categories have been released. At the height of the war, before the launch of Eelam War IV, in August 2006, Jaffna peninsula had the largest concentration of troops assigned to four Divisions.

In the first week of June, Deputy Minister Jayasekera visited the Trincomalee District to ascertain the situation. The Defence Ministry said that the Deputy Minister had assessed the current status of such lands and received briefings from senior military officers and relevant officials on security and administrative aspects regarding the properties.

Following the field inspection, the Deputy Minister chaired a meeting at the Governor’s Secretariat Office where the discussion focused on what the Defence Ministry called a balanced and practical approach to address land-related issues, protect the livelihoods of the people, and ensure that national security requirements were properly managed.

Jayasekera, with a career spanning well over three decades, retired in November, 2019, after having last served as the Eastern Commander for about a year.

During his June visit, the Deputy Minister visited various security forces establishments, including the 22 Infantry Division.

A senior retired military official said that those who had been demanding that all security forces held land, both state- and privately-owned, be released, have conveniently forgotten that this was made possible due to the eradication of the LTTE.

The Deputy Defence Minister conducted a series of field visits in the Jaffna and Wanni regions to assess the security situation and operational commitments. According to the Defence Ministry, the Deputy Minister addressed senior tri forces personnel at the Security Forces Headquarters – Jaffna (SFHQ-J) and the Security Forces Headquarters – Wanni (SFHQ-Wanni).

The Deputy Minister chaired civil-military coordination meetings in the Mannar and Jaffna districts to the ongoing land ownership issues, fostering socio economic growth, and streamlining local infrastructure layout in close cooperation with the regional administrative mechanism. The Ministry said that the Deputy Minister inspected agricultural zones, private residences and public common areas, presently placed within the operational infrastructure of the Sri Lanka Navy across several locations, in Mullikulam, Silawathura, Talaimannar, Wankalapadu, and Pallimune.

Members of Parliament for the Vanni Electoral District, Selvam Adaikalanathan, Kader Masthan, Thurairasa Ravikaran and the District Secretary for Mannar were also present at the meeting where matters related to socio economic grievances, local infrastructure demands, and land rights of the local residents were central topic in the agenda.

The Deputy Minister of Defence chaired a second meeting at the Governor’s Office in Jaffna where the main focus was existing land issues in the districts of Vavuniya, Mannar, Mullaitivu, Kilinochchi, and Jaffna.

The Jaffna proceedings were co-chaired by the Minister of Fisheries, Aquatic and Ocean Resources and Chairman of the District Coordinating Committee for the Jaffna and Kilinochchi Districts Ramalingam Chandrasekar and Deputy Minister of Co-operative Development Upali Samarasinghe.

The Defence Ministry said that stability depended on striking an optimal balance between prioritising national security obligations and resolving outstanding issues related to both state owned and privately used lands. “We are implementing a transparent mechanism to swiftly transition designated lands back into the hands of local communities for housing, fishing, and agriculture.”

The participation of the Commander of the Army and the Commander of the Navy underscored the importance of the discussions held in the north.

In the Mannar region the focus was on lands, presently used by the Navy, in the areas of Mullikulam, Silawathura, Talaimannar, Wankalapadu, and Pallimunai.

Authoritative sources said that since the end of the war, the military had given up held areas and what remained occupied were essential for security purposes. The depletion of the area under direct control should be examined taking into consideration gradual overall reduction of combined security forces strength over the years. At the end of the war, the Army had approximately 205,000 officers and men, both regular and volunteer. That figure has been reduced to 150,000 to 160,000. In line with the government thinking the Army strength would be brought down to 100,000 by 2030, a plan first announced by President Ranil Wickremesinghe.

By Shamindra Ferdinando

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Yoshitha granted bail, travel ban imposed

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Ex-Navy officer Yoshitha Rajapaksa, second son of former President Mahinda Rajapaksa, being taken to the Colombo Chief Magistrate's court yesterday.

Colombo Chief Magistrate Lahiru de Silva yesterday granted bail to Yoshitha Rajapaksa, second son of former President Mahinda Rajapaksa, on three sureties of Rs. 5 million each, and imposed an overseas travel ban.

The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) arrested Yoshitha yesterday morning when he called over to make a statement regarding an ongoing investigation into his recruitment to the Sri Lanka Navy and training at the UK Royal Naval Academy.

CIABOC said that the arrest had been made in connection with an investigation into the 2006 recruitment of cadet officers to the executive branch of the Sri Lanka Navy.

It has been alleged that individuals were recruited without meeting the required qualifications and state funds were used outside established procedures for their training at the Royal Naval Academy in the UK.

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EV Adoption critical for renewable energy growth and economic stability, says Minister Karunathilaka

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Expanding the use of electric vehicles (EVs) in Sri Lanka is not only vital for reducing the country’s dependence on costly fossil fuel imports but also essential for unlocking the full potential of renewable energy and strengthening the national economy, Power and Energy Minister Anura Karunathilaka said yesterday.

Addressing a stakeholder consultation workshop on the formulation of the National EV Charging Infrastructure Policy, Minister Karunathilaka stressed that Sri Lanka’s transition towards cleaner transport could yield substantial economic and environmental benefits.

“At present, electric vehicles account for only about one per cent of the country’s vehicle fleet. If we can significantly increase that share and ensure that these vehicles are charged using renewable energy, Sri Lanka can save billions of rupees currently spent on importing fossil fuels,” the Minister said.

He noted that such a shift would also enable the country to maximize its renewable energy potential while making a meaningful contribution to economic growth.

The workshop, held in Colombo, brought together policymakers, regulators, energy experts and industry stakeholders to discuss strategies for developing a comprehensive EV charging infrastructure network across the country.

Minister Karunathilaka acknowledged that several barriers continue to limit the growth of EV adoption in Sri Lanka. He said the government was identifying these challenges and exploring practical solutions to overcome them.

Among the measures under consideration are the introduction of lower electricity tariffs for vehicle charging during off-peak daytime hours, the establishment of charging stations outside major urban centres, and the strengthening of the national power grid to accommodate future demand from electric mobility.

“The objective is to create an enabling environment that encourages more Sri Lankans to switch to electric vehicles while ensuring that the necessary infrastructure is available throughout the country,” he said.

The consultation forms part of a broader initiative jointly organized by the Ministry of Energy, the United Nations Development Programme and the Climate and Clean Air Coalition.

Representatives from the Public Utilities Commission of Sri Lanka, Sri Lanka Sustainable Energy Authority, the National System Operator, electricity distribution companies and other key institutions participated in the discussions.

Deputy Minister of Energy Arkam Ilyas, Energy Ministry Secretary Russel Aponsu, Director General (Engineering) K.I.D. Jayasundara, and UNDP Resident Representative Azusa Kubota were among the senior officials and experts attending the event.

Energy sector observers say the development of a robust charging infrastructure and supportive policy framework will be crucial if Sri Lanka is to accelerate the adoption of electric mobility, reduce greenhouse gas emissions and lessen its vulnerability to volatile global fuel prices.

The proposed National EV Charging Infrastructure Policy is expected to provide the roadmap needed to drive that transformation and position Sri Lanka for a cleaner and more sustainable transport future.

By Ifham Nizam

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