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Budget 2026: Bankers present proposals to drive recovery
Sri Lanka’s banking sector has presented a set of far-reaching proposals for inclusion in the government’s Budget 2026.
The proposals, developed and submitted by the Sri Lanka Banks’ Association (SLBA), on behalf of all licensed commercial banks, were handed over to Deputy Minister of Finance, Planning and Economic Development Dr. Anil Jayantha Fernando at the Presidential Secretariat recently.
The submission underscores the critical role of banks in rebuilding economic resilience, restoring investor confidence and accelerating growth. The recommendations are designed not only to stabilise the financial system but also to expand opportunity for businesses, entrepreneurs and households nationwide.
The SLBA has called for urgent reforms to strengthen the financial sector’s capacity to support recovery. Proposals include targeted credit guarantee schemes to help revive distressed enterprises, accelerated tax deductibility for impairment provisions to encourage restructuring, and alignment of banking sector taxation with regional benchmarks. Excessive taxation, currently at 53% for domestic banks and 65% for foreign banks, is described as a barrier to competitiveness and capital formation. A fairer regime, the Association argued, would allow banks to direct resources towards lending for critical infrastructure and priority sectors.
Recognising the backbone role of SMEs in the economy, banks have urged the government to accelerate SME formalisation through mandatory VAT registration at concessional rates, the adoption of subsidised accounting software, SME-specific business bank accounts, and national-level financial literacy programmes. The SLBA also proposed mandatory Taxpayer Identification Numbers for all new accounts, and incentives for SMEs to digitise transactions, which would expand the tax base and improve credit access.
To drive growth and consumption, banks recommend rationalising indirect taxes to improve household disposable income and investor appetite, while broadening the tax net through digitisation and the use of proxy data such as utility and vehicle records. Simplifying compliance by treating withholding tax as a final tax, even at higher rates, was also suggested as a way to improve liquidity and overall revenue collection.
Calling for decisive investment in the country’s digital infrastructure, the SLBA proposed the creation of a national cloud framework to serve both public and private stakeholders, alongside tax incentives for fintech startups and local payment gateways. The Association also stressed the importance of levelling the playing field by applying VAT on global digital services, such as Google, Meta, PayPal, while advancing digital transactions by capping large cash payments and mandating electronic settlement of supplier, tax and utility bills. A public–private initiative on cybersecurity was also recommended to lower compliance costs and safeguard systemic resilience.
In proposals aimed at catalysing investment, the SLBA urged expedited restructuring of SriLankan Airlines to improve the country’s sovereign rating, which it argued is currently a major barrier to foreign direct investment. The creation of regional one-stop shops for regulatory approvals, reforms to facilitate Port City investments, and tax incentives for corporate bond issuances were among other measures advocated.
Banks also underlined the urgent need to mobilise capital for sustainable growth, recommending tax exemptions for green lending and the issuance of tax-free green bonds. Parallel proposals called for tax-free public–private partnership bonds to fund infrastructure and long-term development needs.
In a clear message of partnership, the SLBA proposed closer collaboration between government, regulators and the financial sector to deliver structural reforms. Suggested measures include integrating ports, customs, banks and revenue authorities into a unified digital platform to improve valuations and tax transparency, and creating a national data repository for climate and sustainability analytics.
Sectoral initiatives, including long-term funding for tea replanting and agricultural mechanisation, were also featured, reflecting the Association’s recognition of the need to modernise and future-proof Sri Lanka’s traditional industries.
Commenting on the submission, the SLBA said the financial services industry is ready to partner the government in shaping a resilient, inclusive and digitally empowered economy. “These proposals are designed to address immediate fiscal challenges while laying the foundation for sustainable growth. We believe this budget can be a turning point for the country, and the banking sector stands committed to play its part,” the Association noted.
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The Government is taking steps to regulate early childhood education to ensure quality education while enhancing the professionalism of preschool teachers. — PM
Prime Minister Dr. Harini Amarasuriya stated that the Government is taking steps to maintain early childhood education within an appropriate regulatory framework, while ensuring quality education by enhancing the professionalism of preschool teachers.
The Prime Minister made these remarks while participating in the awareness programme for preschool teachers of the Puttalam District on the National Early Childhood Education Curriculum Framework, held under the theme “A Safe World for Children, A Creative Future Generation” on Friday [16th of January] at the Sudasuna Hall in Chilaw.
The Prime Minister stated,
“The main objective of our government in 2024 was to bring about a transformative change in this country. We bear a major responsibility in achieving that transformation. When we assumed office, one of our primary responsibilities was to build a stable and resilient economy. However, I believe that with equal responsibility and commitment, our government has prioritized creating a transformative change in the education system of the country. We assumed office with that objective in mind. The discussions within our party and political movement on the necessary changes in education did not begin recently. They are the result of a long-standing process.
This transformation cannot be achieved overnight or within a single year. It is a step-by-step process. When implementing this decisive and qualitative change within the education system, it is essential to consider the system as a whole. We made this intervention by examining every stage of a child’s educational journey. Therefore, we have recognized early childhood education, from age one to age five, as an integral part of education and development.
Thereby, Early childhood development is viewed as the very first step of our education structure. At present, early childhood education exists in an unregulated manner. Our aim is to develop this early childhood education in an organized and systematic way, while enhancing the professionalism of teachers and ensuring quality education within an appropriate regulatory framework.
Accordingly, the Ministry of Women and Child Affairs and the Ministry of Education have jointly appointed a committee and initiated discussions to formulate a policy and curriculum framework for early childhood education. During the past year, we developed the preschool curriculum framework. We are working towards implementing a unified curriculum across all preschools in a structured manner. It is essential to integrate early childhood development with primary, secondary, and university education. Early childhood development is one of the most critical stages of an individual’s life. The responsibility of socializing the child, introducing them to society in a structured manner, and nurturing a disciplined, empathetic individual lies with you. This is not something that can be achieved at the primary level or beyond.
There is a common criticism that children are not taught letters and numbers at preschool. However, early childhood development is not about formal schooling. It is about helping children to develop their social skills.
It is also an objective of our government to ensure that both preschools and schools become places where parents can confidently leave their children, knowing they are safe.
We are aware of the issues relating to your allowances and pensions. Discussions have been held in this regard between the Ministry of Education and the Ministry of Women and Child Affairs. Granting due recognition to preschool certificates during school admissions is also very important, and the government’s attention has been drawn to all these matters”.
The event was attended by Minister of Public Administration, Provincial Councils and Local Government prof. Chandan Abayarathna; Members of Parliament Gayan Janaka, Hiruni Wijesinghe, and Mohamed Faisal; officials of the North Western Province Early Childhood Education Development Authority; and a large number of preschool teachers from the Puttalam District.


[Prime Minister’s Media Division]
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Police step up crackdown on organised crime after securing 95 Interpol Red Notices
Police have stepped up their crackdown on organised crime, after securing Interpol Red Notices for 95 suspects believed to be hiding overseas.
Police Spokesman SSP F. U. Wootler told a media briefing yesterday that the move marked a major escalation in efforts to track down and extradite high-profile figures linked to organised crime syndicates and online fraud networks.
He said the strategy was already producing results. In 2024, Sri Lanka secured the return of 10 suspects through Interpol channels, while a further 11 were extradited in 2025 to face legal proceedings.
In addition to Red Notices, authorities have relied on formal legal mechanisms to overcome jurisdictional barriers. “During the 2024–2025 period, 21 suspects were extradited under the Extradition Act,” SSP Wootler said.
The briefing coincided with three more fugitives being escorted back to Sri Lanka yesterday following the issuance of Interpol Red Notices.
SSP Wootler said many of the fugitives had continued to coordinate criminal activities here from abroad, including sophisticated online scams, underscoring the importance of international cooperation.
Two male suspects, for whom Red Notices had been issued and who were overseas, and a female suspect wanted in connection with defrauding state funds, were flown back.
Following their arrival yesterday morning at Katunayake Airport, they were taken into custody by a team of officers from the CID.
The arrested suspects are residents of Kandana and Uragasmanhandiya, aged 30 and 52, respectively. The female suspect is a 56-year-old resident of Mount Lavinia.
The suspect residing in Kandana is an individual wanted in connection with an attempted murder. It has been revealed that while overseas, he is connected to a range of crimes, including orchestrating a shooting incident that resulted in a homicide in the Kandana area on 2025.07.03. This suspect has been handed over to the Officer-in-Charge of the Kelaniya Division for further investigations.
The one hailing from Uragasmanhandiya is a suspect wanted in connection with carrying out homicides using sharp weapons and being involved in a series of organised crimes in the Uragasmanhandiya area. This suspect has been handed over to the Officer-in-Charge of the Elpitiya Division for further investigations.
The female suspect, residing in Mount Lavinia, who is reported to have worked at an Embassy in 2014, is an accused in a case where the Criminal Investigations Department is investigating the defrauding of state funds. She has been sentenced to imprisonment, fines, and also ordered to compensate victims by the Colombo High Court.
“These operations were carried out with the strong support of the Government of the United Arab Emirates, including Abu Dhabi International Police, Dubai Police, as well as Sri Lankan diplomatic missions,” he said.
Interpol Red Notices function as international alerts requesting law enforcement agencies worldwide to locate and provisionally arrest individuals pending extradition.
Wootler said efforts would continue to identify and pursue suspects operating from foreign jurisdictions, particularly those involved in organised and cyber-related crimes posing threats to national security.
By Norman Palihawadane and Hemantha Randunu
News
Julie’s exit gladdens Udaya’s heart
Leader of the Pivithuru Hela Urumaya (PHU), Udaya Gammanpila, yesterday launched a scathing attack on outgoing United States Ambassador to Sri Lanka Julie Chung, accusing her of interfering in Sri Lanka’s internal affairs and exerting undue influence over recent political developments.
Addressing a press conference in Colombo, Gammanpila said Chung’s departure, after a four-year tenure, marked a “day of national relief,” claiming her presence had been harmful to the country.
He said patriots marked the occasion by sharing kiribath (milk rice), which he described as a symbolic celebration.
Gammanpila alleged that Ambassador Chung had remained in Sri Lanka longer than the customary three-year diplomatic term because of, what he described as, her success in bringing the country under American influence. Drawing comparisons with past foreign diplomats, he claimed that Chung was the most influential envoy since Indian High Commissioner J.N. Dixit in the 1980s. He alleged that successive Sri Lankan governments had failed to challenge what he described as interference by the envoy.
The PHU leader accused Chung of playing a behind-the-scenes role in the 2022 protest movement, commonly known as the Aragalaya, claiming it was orchestrated to destabilise the country. He alleged that young protesters were unknowingly “acting out a foreign script” under the guise of patriotism.
Gammanpila also alleged that Chung played a key role in elevating the National People’s Power (NPP), which he referred to as the “Malimawa” movement, into a governing force in 2024. He claimed the movement had been transformed from its earlier ideological roots into, what he described as, a pro-Western political project, asserting that President Anura Kumara Dissanayake had come to power with foreign backing. He cited a photograph shared on Chung’s social media account of her visit to the NPP headquarters as evidence of what he termed political proximity.
According to Gammanpila, Ambassador Chung’s public criticism of governance issues sharply declined following the change of government. He alleged that while she had frequently commented on incidents under previous administrations, she had remained silent on alleged corruption and governance failures over the past 14 months.
Turning to the future, Gammanpila urged caution regarding the incoming US Ambassador, Eric Meyer, stating that any engagement on religious or cultural matters should be viewed carefully. He called on President Dissanayake to pursue an independent foreign policy, free of external influence.
Gammanpila also criticised the government over, what he described as, repeated “policy blunders,” particularly in relation to issues affecting children and social values. He cited several instances, including proposals to promote Sri Lanka as a destination for same-sex couples, educational material controversies, and a recent People’s Bank advertisement that he claimed subtly promoted same-sex symbolism. While stating that he held no animosity towards the LGBTQ community, Gammanpila said he opposed, what he described as, attempts to influence children through state institutions.
In addition, the PHU leader condemned legal action taken by the Coast Conservation Department against nine individuals, including four Buddhist monks, for installing a Buddha statue within a coastal conservation zone in Trincomalee. He described the arrests as discriminatory, alleging that similar structures belonging to other religions and commercial entities had been overlooked.
Calling the current administration “anti-Buddhist,” Gammanpila urged authorities to apply the law equally and not just in words, and “not to turn legal frameworks into instruments against Buddhism.” He also accused members of the government of ingratitude, alleging that many had once sought refuge in temples during periods of political violence.
By Anuradha Hiripitiyage
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