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Economic crisis: Treasury Chief frowns on home-grown remedy tried by GR regime

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Mahinda Siriwardana

Secretary to the Treasury and Finance Ministry Mahinda Siriwardana has said that even if Sri Lanka achieves the goal of zero corruption, tax revenue will still have to be increased to bridge the budget deficit and lessen the country’s debt burden.

Referring to the Supreme Court ruling pertaining to economic management delivered on Nov 14, 2023, Siriwardena said it was imperative that elected representatives and state officials ensure proper econmic management.

Pointing out that Sri Lanka’s government revenue as a percentage of GDP had been as low as 8.3 percent in 2021, Siriwardana said that the situation was so bad that the government found it difficult to meet day-to-day expenses.

The SC judgment had said the state officials under any circumstances couldn’t absolve themselves of the responsibility for acting in the best interests of the public and were entrusted with significant powers to uphold public trust, requiring them to adhere to the directives of the Constitution, Siriwardana said.

The Treasury Secretary said so delivering the inaugural Prof. K. Dharmasena memorial lecture at the Kelaniya University on Monday (Jan 30) close on the heels of undergraduates storming the main administrative building there to protest against a planned visit by President Ranil Wickremesinghe the following day.

Siriwardana succeeded S.R Attygalle in early April 2022 amidst the worst-ever economic crisis.

The Treasury Secretary explained why President Gotabaya Rajapaksa’s government had failed to secure a Rapid Financing Instrument (RFI) at the early staes of the crisis.

Although President Gotabaya Rajapaksa sought RFI from the International Monetary Fund (IMF) in April 2020, five months after being elected, his administration failed to accept the IMF prescribed immediate debt restructuring. Instead of adopting a strategy of macroeconomic reforms to restore fiscal and external buffers supported by the IMF, the government had opted for what Siriwardana called a home-grown solution.’

Sri Lanka sought RFI in the wake of significant tax reforms with sharp reductions in VAT (Value-Added Tax) and income tax rates and large increases in tax free thresholds. “When taxes were reduced at the end of 2019, nobody questioned how public services would be funded. The result was an unprecedented escalation in debt, leading to this economic crisis.

Siriwardana pointed out that for want of cohesive corrective measures to address the issues at hand, credit ratings continued to deteriorate. By September 2020, Moody’s had downgraded Sri Lanka to Caa1, Fitch downgraded Sri Lanka to CCC by November 2020, and S&P downgraded Sri Lanka to CCC by December 2020, Siriwardana pointed out.

“There have been long-standing structural weaknesses in the Sri Lankan economy which have been neglected for many decades, given the pain associated with remedying these issues. The weaknesses include fiscal sector imbalances, inadequate external policy buffers, financial and monetary sector vulnerabilities, deficiencies in governance, and shortcomings in the legal and institutional framework in the country. The recent external shocks faced by the country, including the Easter Sunday attacks, the COVID-19 pandemic, the Russia-Ukraine conflict, coupled with significant domestic policy errors, exposed these macroeconomic vulnerabilities and triggered the prevailing economic crisis.”

In macroeconomic terms, the crux of the problem has always been the persistent twin deficits – budget deficits in the fiscal account and current account deficits in the balance of payments (BOP) accounts, Siriwardana added.

The Treasury Secretary said that the country should have changed its unsustainable practices, beginning 2006/2007, when the opportunity to access concessional foreign financing diminished in the wake of Sri Lanka’s per capita GDP crossed the middle income threshold. Instead of gradually and significantly reducing its deficits and borrowing requirements, the then government shifted to commercial borrowings, primarily in the form of international sovereign bonds (ISBs). “Most of these bonds have up to a 10-year maturity periods, so, until around 2019, Sri Lanka did not face much difficulty in terms of repayment pressures for external debt.”

Siriwardana also discussed the often raised issue of whether ISBs caused the debt crisis. In fact, the government at the time made a conscious decision to raise additional funds amounting to USD 2.4 billion in long term ISBs to ensure Sri Lanka would have sufficient reserve buffers to get through a period of volatility amidst the election cycles of 2019 and 2020, Siriwwardana said. ” There have been claims that this increase in ISB borrowings was a cause of the debt crisis – however in reality, it was the additional reserve buffers created by those ISBs that enabled the government to avoid a crash in the economy during the worst of the COVID-19 pandemic.

“The government maintained primary surpluses in 2017 and 2018, indicating that the ISB borrowings were not driven by budget deficits, but in order to build up reserves and to improve the quality of reserves by converting maturing short term debt into longer term stable instruments such as ISBs and syndicated loans. The fundamental drivers of the economic crisis were fiscal and debt unsustainability, whereas ISBs were just one of many financing instruments.”

Siriwardana said: “There have been various theories as to what caused the economic crisis, including the COVID-19 pandemic, ISB borrowings, the Debt Standstill policy. However, it is clear that the fundamental cause has been long standing macroeconomic vulnerabilities and domestic policy errors. There have also been various alternative proposals and theories as to how the country can recover without the citizens having to bear a burden. But, we have seen today that measures such as asset recovery, collection of taxes in arrears, elimination of corruption, while all being essential actions, do not serve as an alternative to the macroeconomic reforms being implemented today. Those are reforms that were known to all of us for years if not decades. But, those much needed reforms were delayed mainly due to political reasons. In the past, and up to now, the present generation lived a better life by borrowing thereby sacrificing the lives of the future generations.

“However, it is critical to understand that now we have come to a situation where the present generation should make sacrifices for the betterment of the lives of the future generations.” (SF)



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No child should be deprived of vocational or higher education due to poverty – PM

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Prime Minister Dr. Harini Amarasuriya stated that all government strategic plans must be formulated in a manner that ensures no child in the country is deprived of vocational education or any other educational opportunity due to economic hardship.

The Prime Minister made these remarks while addressing a workshop on budget formulation and strategic planning of institutions affiliated with the vocational education sector, held on  29th and 30th of January 2026 at the Grand Monarch.

The workshop was organized with the participation of heads and senior officials of nine institutions, including two universities affiliated with the vocational education sector.

The Prime Minister pointed out that it is essential to align the development plans of key institutions and the affiliated institutions with the National Economic Development Plan.

The Prime Minister stated that while educational institutions produce individuals with vocational knowledge, reforms must also nurture compassion, empathy, care for others, and ethical values. The Prime Minister noted that the objective of this initiative is to nurture professionals enriched by humanity.

She further emphasized that it is the responsibility of the government to further expand pathways for children who are experiencing economical disadvantages to access vocational education and secure their future.

Attention was also drawn to the sectors of AI revolution and the future of vocational education. The Prime Minister observed that there is still no comprehensive global understanding of the changes taking place in the world of work and vocational fields due to artificial intelligence (AI). She stressed that integrating vocational education into the mainstream education process through educational reforms is an urgent necessity at this time.

The revolution brought about by AI technology is often driven by profit. Just as we were exploited during past industrial revolutions, we must ensure that we are not left behind or marginalized in this revolution. We must not merely confine ourselves to a data center.

The Prime Minister highlighted that while teaching and learning activities can be carried out online, the impact of technology is limited in professions involving human care and compassion, such as childcare and caregiving services underscoring the importance of developing soft skills and adopting a human-centered approach.

It was discussed that the flexible pathways should be created to enable a student to progress continuously through vocational education up to doctoral level, as well as to re-enter education while being employed (lateral entry). While ensuring such flexibility in the system, maintaining high standards and quality in education was highlighted as essential to ensuring credibility.

The event was attended by the Deputy Minister of Education and Higher Education Dr. Madhura Senevirathna, Deputy Minister of Vocational Education Nalin Hewage, Secretary to the Ministry of Education Nalaka Kaluwewa, Vice Chancellor of the University of Vocational Technology Professor Prasanna Premadasa, Vice Chancellor of the Ocean University Professor Nalin Rathnayake, Chairman of NIBM Dr. G. Thantirigama, Director General D.M.A. Kulasooriya, and several other officials.

(Prime Minister’s Media Division)

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National Assessment and Policy Review: The impact of social media on children

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Deputy Minister of Digital Economy, Eranga Weeraratne, stated that the Ministry of Education, the Ministry of Women and Child Affairs and the Ministry of Digital Economy are planning to initiate a national assessment and policy review on the impact of social media on children.

The Deputy Minister emphasized that the initiative is expected to be advanced by giving due consideration to the insights of experts across all relevant fields, including child protection, education, health, mental health, cyber security, law and research, as well as by listening to the voices of civil society and youth.

Full statement made by Deputy Minister, Eranga Weeraratne.

“Many parents in Sri Lanka today face the challenge of understanding the impact of social media on their children and determining what measures they should take to ensure their safety. The solution is not to restrict children’s access to technology. Social media offers numerous benefits, including educational opportunities, the development of creative skills and improved communication. However, there is also a reality we must acknowledge. The online environment can often be unsafe, overwhelming and psychologically stressful for children. The resulting harm can negatively affect a child’s sleep, education, friendships and overall mental well-being. In some cases, excessive engagement with social media becomes difficult to control. Attempts to prevent such overuse may sometimes lead to conflicts, anger, or harsh disciplinary measures, which further impact learning and mental health. Consequently, children may experience stress, diminished self-confidence and emotional distress.

Online cyber bullying is another major concern. Additionally, children are often exposed to age-inappropriate content, including violent, sexual, or otherwise harmful material. There have been cases where children repeatedly engage with such harmful content, becoming increasingly absorbed in it. Some online games also present situations that encourage children to engage in disruptive or unsafe behaviour.

In extreme cases, such engagement has even led children to put their lives at risk. For this reason, ensuring the online safety of children has become a national priority in many countries. Our approach, likewise, must be guided by three fundamental principles.

First, the safety of children is paramount. This remains a non-negotiable policy of the government. Second, our actions must be based on evidence and research. We never proceed based on assumptions. Third, while safeguarding rights and privacy, our goal is to minimize excessive surveillance. Striking a balance between rights, safety and innovation is our primary objective.

Many countries around the world are already taking measures in this regard. It has become a timely necessity for us to carefully study these experiences, adapt them to our context and develop a comprehensive programme to protect our children. As a first step, we hope to initiate a national assessment and policy review on the impact of social media on children, in consultation with the Ministry of Education and the Ministry of Women and Child Affairs.”

Experts in fields such as child protection, education, health, mental health, cyber security, law and research, along with the voices of civil society and youth, must be engaged in this effort. This is not a challenge that the government can address alone. Parents, teachers and children themselves all need to participate collaboratively. Through this approach, we can create an environment where our children can make full use of technology safely and responsibly.

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Public officials must clearly understand public expectations against corruption and fraud – Secretary to the President

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In line with the Government’s programme to build a clean, transparent and corruption-free public service, a workshop to brief heads of 250 state institutions that have been instructed to establish Internal Affairs Units was held on Thursday  (29) at the auditorium of the Sri Lanka Foundation Institute, under the patronage of Secretary to the President, Dr. Nandika Sanath Kumanayake.

As the first phase of this programme, Internal Affairs Units were previously established in 106 state institutions and the relevant officers were trained accordingly. As part of the second phase, instructions have been issued to establish Internal Affairs Units in an additional 250 state institutions. Accordingly, this workshop was organised by Presidential Secretariat, with the assistance of the Clean Sri Lanka Programme.

Although Sri Lanka continues to maintain relatively high rankings in sectors such as education and healthcare, Secretary to the President, Dr. Nandika Sanath Kumanayake noted that the country is ranked 121st in the 2024 Corruption Perceptions Index, a position that could adversely affect its overall standing in other key sectors.

Addressing the gathering, the Secretary to the President stated that while the primary slogan of the recent public uprising was against the corrupt politics, the allegations were directed not only at corrupt politicians but also at corrupt public officials. He emphasised that the public uprising occurred at a time when the country had become economically bankrupt and its adverse consequences were being directly felt by the people.

He further observed that such public uprisings are not sudden events, but rather the culmination of a prolonged and systematic process, driven by public frustration and the erosion of trust in governance.

Further addressing the workshop, Secretary to the President emphasised that public uprisings should not be underestimated, noting that they represent a powerful expression of public will.

He stated that it is essential for public officials, as well as politicians, to have a clear understanding of public aspirations and public sentiment. As public servants, he stressed, there is an obligation to deliver a clean, transparent and accountable public service to the people.

Accordingly, he explained that a structured programme has been initiated to strengthen the integrity of public service delivery. The establishment of Internal Affairs Units forms a key component of this initiative, aimed at ensuring greater transparency and accountability within state institutions.

Dr. Kumanayake further noted that public officials must remain mindful of upholding ethical standards while performing their duties, as strengthening individual integrity can contribute to transforming the broader culture of corruption within the public sector.

He highlighted that Internal Affairs Units can be viewed both as a mechanism for fostering a culture of integrity within the public service and as a platform that enables the public to raise concerns regarding the conduct of public officials, thereby strengthening accountability and public trust.

At the event, Additional Secretary to the President, Ms. Chandima Wickramasinghe and Senior Lecturer at the University of Kelaniya,  Tharindu Dhananjaya Weerasinghe delivered keynote presentations.

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