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Combination of ill-timed decisions prevented Lanka recover from pandemic shock

Published

3 years ago

2022/09/24

The country has lost several hundred thousand jobs to Covid-19. The impact of the agrochemical ban on agriculture, the mismanagement of the exchange rate, a highly accommodative monetary policy, and the use of foreign exchange reserves for debt repayment thwarted the country’s ability to recover from the initial shock of COVID-19, an ILO study titled, ‘The labour market implications of Sri Lanka’s multiple crises,‘ has revealed.

“These policy decisions generated multiple crises which impacted on businesses, workers, and their families, manifesting in shortages of essential consumer goods including food, fuel, power, raw materials, and capital equipment on the one hand, and the disruption of key public services, such as education and health, on the other. The fiscal bind and looming debt crisis have also left Sri Lanka very little room to manoeuvre. The economic crises have, in turn, generated political instability and further constrained timely decision-making about how to deal with the crisis,” the ILO report said.

The multiple crises have intensified long-standing worrisome features of the labour market: they have expanded unemployment, widened gender gaps in labour force participation, and given rise to job insecurity, uncertainty, and hardship, it said.

“Sri Lanka lost more than 200,000 jobs to the pandemic between the fourth quarter 2019 and the second quarter 2021. The employment share of the informal sector increased because formal sector employment contracted more sharply. Although there was some recovery, during the second half of 2021, extensive job losse, among employers, augured ill for the vigorous regeneration of jobs,” the study reveals.

The report added that the pandemic also impacted the skills development sector. Efforts to provide education and training online were constrained, mainly due to problems of infrastructure access, particularly outside of the Western Province. Enrolment and completion of TVET courses in 2020, relative to 2019, declined by 50 and 57 percent respectively. However, the imposition of power cuts, in 2022, are likely to have disrupted even these limited measures.

“The pandemic also saw the emergence of the new poor — those who fell into poverty because of the pandemic – among the more educated and employed in industry and service sectors, particularly in urban areas and Western Province, the latter which accounted for the largest share of the new poor. These negative developments would have worsened in 2022 as the economic crises intensified,” it said.

Sri Lanka is currently in a full-blown debt and balance-of-payments crisis, leading to massive shortages of essentials and severe disruption to economic activity. As the crisis continues to deteriorate and is likely to lead to a deep impact on the labour market, which will require careful monitoring and analysis over the months to come, the ILO said. The severity of the crisis means that policy-makers need to grasp the nettle of structural reforms needed for recovery and job-rich growth, which will require carefully balancing macroeconomic stabilization with longer-term goals of creating decent, sustainable, and productive employment. The report suggests eight areas of policy intervention for the short, medium and long term.

They are; addressing current macroeconomic crisis through fiscal consolidation and debt restructuring, plus improved fiscal space, restoring investor confidence, reformulating investment, industry, and trade policies to support export-led growth, technological transformation, productive efficiency and job creation, especially for SMEs, increasing R&D and infrastructure investments with a clear focus on 3IR and 4IR technologies, promoting demand-driven skills development and adjustment to a post-COVID-19 economy, including remedial education/training, creating a social dialogue and legislative reform to support flexible arrangements while protecting workers, promoting policies that foster women’s entry into the labour market and support other hard-hit groups, and expanding access to adequate social protection to workers and families (including institutional reforms).

The report also said that Sri Lanka needs to work on improving learning outcomes. Even the TVET sector performs no better than the general education system, the ILO said. According to a 2018 ADB study, a sizable proportion of TVET graduates leave training programmes, without the skills that employers require. Tracer studies on the employability of TVET graduates reveal a high rate of unemployment among TVET graduates who had been trained for employment in even the fast-growing ICT, construction, tourism, and light engineering subsectors.

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Honorary Chair of The Nippon Foundation, pays courtsey call on PM

Published

15 mins ago

2025/11/8

Priyan

Mr. Yohei Sasakawa, Honorary Chair of The Nippon Foundation, paid a courtesy call on Dr. Harini Amarasuriya, at Temple Trees on 06 November.

The Prime Minister extended a warm welcome to Mr. Sasakawa and expressed her appreciation for his second visit to Sri Lanka. Mr. Sasakawa briefed the Prime Minister on the Leprosy Conference held earlier that morning, which was also attended by the President. He outlined The Nippon Foundation’s ongoing projects in Sri Lanka, highlighting initiatives that support persons with disabilities, especially students with special needs.

Mr. Sasakawa discussed the work of the Sri Lankan School of Prosthetics and Orthotics and proposed upgrading the institution to university level with government assistance. Prime Minister Dr. Amarasuriya responded positively, noting that she would instruct the Ministry of Education to assess the feasibility of this proposal.

The Prime Minister commended The Nippon Foundation’s “100 Schools Project” in the Northern Province and reaffirmed the Government’s commitment to improving educational and social inclusion for students with disabilities. She also acknowledged the resource limitations faced by some programmes and expressed appreciation for Japan’s continued support in addressing these challenges.

Akio Isomata, Ambassador of Japan to Sri Lanka, reiterated Japan’s commitment to enhancing bilateral cooperation with Sri Lanka, particularly in promoting inclusivity and social welfare.

Both sides concluded the meeting by expressing their shared commitment to strengthening collaboration between Sri Lanka, Japan, and The Nippon Foundation in advancing education, accessibility, and social inclusion.

The meeting was attended by Yohei Sasakawa, Honorary Chair of The Nippon Foundation; Akio Isomata, Ambassador of Japan to Sri Lanka; Ryo Takaoka, Second Secretary, Embassy of Japan; and Shota Nakayasu, Secretary to the Chairman, The Nippon Foundation.

Representing the Sri Lankan side were Pradeep Saputhanthri, Secretary to the Prime Minister; Ms. Sagarika Bogahawatta, Additional Secretary to the Prime Minister; Ms. Savitri Panabokke, Director General, East Asia & Oceania Division, Ministry of Foreign Affairs; and Ms. Gayanga Dias, Assistant Director, East Asia & Oceania Division, Ministry of Foreign Affairs.

[Prime Minister’s Media Division]

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Govt. corrals many more into tax net by lowering VAT threshold from Rs. 60 Mn to Rs. 36 Mn

Published

12 hours ago

2025/11/8

Thilina Walpola

Projected revenue at Rs. 5.3 Bn, budget deficit 1.75 Bn

Rs. 6,500 Mn allocated for Clean Sri Lanka initiative

Estate wages hiked to Rs. 1,750 from Rs. 1,350 per day

Rs. 1 Bn allocated to address human-elephant conflict

Rs. 342 Bn for road development programmes

The government has decided to reduce the annual turnover threshold for the registration of Value Added Tax and Social Security Contribution Levy from Rs. 60 million to Rs. 36 million.

The proposal will be implemented with effect from 01 April, 2026.

The new tax system has been proposed with the view of broadening the tax base, President Anura Kumara Dissanayake said during his 2026 Budget speech in Parliament yesterday.

He said that the total number of registered taxpayers in Sri Lanka has increased by 300,000 as of 30 September, 2025, compared to 2024.

The President made this revelation while delivering the 2026 Budget speech.

President Dissanayake also confirmed that the Simplified VAT System (SVAT) has been abolished with effect from 01 October, 2025, and has been shifted to an approved refund process to improve tax compliance and reduce misuse.

Presenting the Budget Proposals for the year 2026 commenced at 1.30 pm and continued till 5.57 pm.

According to the 2026 Budget proposal delivered by the President, the government’s expected revenue for 2026 is set at Rs. 5,300 million while the expenditure has been projected to be Rs. 7,057 million.

The Budget deficit will be Rs. 1,757 million or 5.1% of the Gross Domestic Product.

The government has proposed to remove the Special Commodity Levy on imported coconut oil and palm oil and implement the general tax structure including Value Added Tax.

The new tax system on imported coconut oil and palm oil will be implemented from April 2026, President Dissanayake said.

At present, locally produced coconut oil and palm oil are subjected to Value Added Tax and Social Security Contribution Levy, while imported coconut oil and palm oil are subjected to Special Commodity Levy at Rs. 150 per kilogram and Rs. 275 per kilogram, respectively.

The new tax proposal has been proposed to ensure a level playing field, the President stated.

President Dissanayake said that a total of Rs. 6,500 million has been allocated for the Clean Sri Lanka programme for next year.

President Dissanayake said that the land acquisition process for the proposed Kurunegala-Dambulla expressway is currently underway.

Accordingly, through the 2026 Budget, the government has allocated Rs. 1,000 million to complete the land acquisition process, the President said.

The government has allocated a sum of Rs. 342 billion for road development programmes in the 2026 Budget, President Dissanakaye stated. A total of Rs. 66.1 billion has been allocated for the Kadawatha-Mirigama section of the Central Expressway through the 2026 Budget.

Furthermore, Rs. 10.5 billion for the Pothuhera-Rambukkana and Rs. 20 billion for the Rambukkana-Galagedara section of the central expressway have been allocated through the Budget.

The President said that through the 2026 Budget, a sum of 25,500 million has been allocated to develop Sri Lanka’s digital economy. He also pledged to establish a Digital Economy Council next year.

The allocation will facilitate the infrastructure needs, streamlining investment processes and fostering an innovation-friendly environment.

The government has proposed to allocate an additional provision of Rs. 1,000 million to the Department of Wildlife Conservation to expedite the completion of electric fence constructions and related projects aimed at mitigating human-elephant conflict across the country, the President said.

In addition, Rs. 10 billion has been proposed for research initiatives to identify long-term, research-based solutions beyond the construction of electric fences to reduce these elephant-human conflicts, he said.

Estate worker wages are to be hiked to a total of 1,750 rupees a day, President Dissanayake said, presenting the Budget for 2026.

“We believe that estate workers should be paid a fair daily wage, commensurate with their work,” the President said.

The current minimum wage of an estate worker is 1,350 rupees a day.

An additional 200 rupees will be given daily by the government to encourage estate workers to come to work, Dissanayake said.

“This is as an incentive for them to show up for the 25 days.” The government will allocate 5,000 million rupees for this, he said.

The Budget Debate on the Second Reading of the Appropriation Bill will commence on 08 November and continue for six days. The vote on the Second Reading is scheduled for 14 November (Friday) at 6 pm.

The Committee Stage Debate is set to begin on 15 November and will continue for 17 sitting days, including three Saturdays, until 05 December. The vote on the Third Reading of the Appropriation Bill is to be taken up at 6 pm on 05 December.

During the budget period, Parliament will meet daily, except on Sundays and public holidays. Sessions will begin at 9.30 am on Mondays and at 9 am on other days. Each day’s sittings will continue until 6 pm, with time from 6 to 6.30 pm allocated for adjournment motions, shared equally between the Government and the Opposition, except on voting days.

In addition, during the Committee Stage Debate, provision has been made for five Questions for Oral Answers and one Question under Standing Orders 27(2), apart from the regular business under Standing Orders 22(1) to (6).

News

Justice Thurairaja sworn in as Actg CJ

Published

13 hours ago

2025/11/8

Thilina Walpola

Supreme Court Justice S. Thurairaja was sworn in as the Acting Chief Justice before President Anura Kumara Dissanayake yesterday (07) at the Presidential Secretariat.

The appointment was made to discharge the duties of the position during the absence of Chief Justice Preethi Padman Surasena, who is currently overseas.

Secretary to the President, Dr. Nandika Sanath Kumanayaka, was also present on the occasion.