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Gunaruwan: ACSA, SOFA, MCC could be part of US Indo-Pacific strategy
US leaves Lanka out of MCC
By Shamindra Ferdinando
The much-touted Millennium Challenge Corporation Compact (MCCC) would have undermined Sri Lanka’s status as a sovereign country, Prof. Lalithasiri Gunaruwan said yesterday (17).
Prof. Gunaruwan, an economist, who headed a four-member committee that examined the controversial agreement was responding to the US decision to terminate the offer of USD 480 mn (Rs 89 bn) development assistance against the backdrop of Sri Lanka declining the grant.
The Colombo University don whose four-member committee strongly objected to the agreement as it is, told The Island that the compact posed a threat to Sri Lanka.
He said that he wasn’t aware of negotiations between the two parties on the basis of their report handed over to President Gotabaya Rajapaksa on Feb 17, 2020 at the Presidential Secretariat.
The team consisted of Prof. Gunaruwan (Chairman), one-time Transport Secretary Dr. D. S. Jayaweera, Justice Nihal Jayawardena, PC, and architect Nalaka Jayaweera.
Responding to another query, Prof. Gunaruwan said his committee had recommended remedial measures following an in-depth study of the agreement. He acknowledged that the committee couldn’t ascertain the position taken by the Attorney General in that regard.
The Attorney General’s position has not been made public yet.
In response to The Island query as regards Sri Lanka being denied funding, the US embassy has sent us the following statement: “On December 15, the Millennium Challenge Corporation (MCC) board decided to discontinue the proposed Rs. 89 billion MCC development assistance grant to Sri Lanka due to lack of partner country engagement. The Rs. 89 billion approved for Sri Lanka will be made available to other eligible partner countries in need of grant funding to pursue their economic development priorities, reduce poverty, and grow their economies.
“Country ownership, transparency, and accountability for grant results are fundamental to MCC’s development model. MCC has successfully partnered with nearly 30 countries worldwide on 38 grant agreements, totaling nearly $13.5 billion. These grants have lifted millions of people from poverty by catalyzing local and domestic investment.
“The United States remains a friend and partner to Sri Lanka and will continue to assist Sri Lanka in responding to COVID and building its economy.”
Subsequently, The Island sought an explanation from the US mission with regard to the previous US embassy announcements pertaining to the funding made available to Sri Lanka to the tune of USD 10 mn on two occasions.
The US embassy spokesperson said the MCC grant monies had never been transferred to or spent by Sri Lanka in terms of the then proposed USD 480 mn funding. The official said that funds amounting to USD 10 mn for what the embassy called preparatory activities had been cancelled. The official said: “The government of Sri Lanka first submitted a proposal for MCC grant funding under former President Mahinda Rajapaksa in 2005. All activities in the most recent proposed grant were requested by Sri Lankan Government line ministries and departments, and the programme was negotiated in good faith after extensive consultations with Government officials, the private sector, and civil society. The MCC grant would have been the largest in Sri Lanka’s history and would have benefited more than 11 million Sri Lankans.”
During the previous administration, the US announced the disbursement of USD 7.4 mn (Rs. 1.1 bn) on July 27, 2017 and USD 2.6 mn (Rs.413) in June 13, 2018 grants for preparatory work namely (i) to develop a compact, including identification and analyzing of specific projects and (ii) to finalize compact development. The US embassy stated funds allocated to the tune of USD 10 mn were in addition to the total MCC compact funding amount.
Prof. Gunaruwan’s report has said that in spite of the US Compact being categorised as a development project, it could pose a threat along with ACSA (Acquisition and Cross Servicing Agreement) and SOFA (Status of Forces Agreement). The UNP-led government finalised ACSA in the first week of August 2017. President Maithripala Sirisena, in his capacity as the Defence Minister authorised the signing of the agreement. The US agreements dominated both 2019 presidential and 2020 parliamentary polls. The report says the three agreements could be part of the overall US Indo-Pacific strategy.
Well-informed sources said that the four-member committee had found fault with a decision to allow all procurement and related matters to take place. That decision clashed with a specific provision in the 19th Amendment, sources said. However, the 20th Amendment enacted by the incumbent government had done away with that provision, sources said.
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58,454 International aircraft movements in Sri Lanka in first 11months of 2025 – Ministry of Ports and Civil Aviation
According to figures released by the Ministry of Ports and Civil Aviation there have been 58,454 international aircraft movements in the first 11 months of 2025 in Sri Lanka. [An aircraft movement refers to the count of take offs and landings at an airport]
The figures also confirm that tourist arrivals via air stands at 2.1 million.
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Highest revenue in 93-year history of Inland Revenue Department collected in 2025
The Inland Revenue Department has succeeded in collecting Rs. 2,203 billion in revenue in 2025, the highest amount recorded in its 93-year history. This represents a surplus of Rs. 33 billion over the revenue target for the year and a 15 per cent increase compared with the revenue collected in the previous year, stated Commissioner-General of Inland Revenue Ms Rukdevi Fernando.
She made these remarks at a discussion held on Tuesday (30) morning at the Department’s auditorium under the patronage of President Anura Kumara Dissanayake.
Marking the first occasion in the 93-year history of the Inland Revenue Department that a President has visited the Department, the President attended a meeting with the staff to review the progress achieved in 2025 and the new plans for 2026.
The President expressed his appreciation to all officers and staff of the Inland Revenue Department for surpassing the revenue expected by the Government and urged everyone to continue working towards a common objective in order to realise the economic transformation required for the country.
Emphasising that no individual is entitled to the privilege of evading taxes, the President stated that the era in which a tax culture prevailed based on personal or political affiliations has come to an end. He further stressed that the law will be enforced without hesitation, irrespective of status, against those who attempt to evade taxes.
The President also pointed out that tax collection is neither repression nor coercion but a legitimate right of the State, adding that necessary changes will be made to laws, regulations, designations and staffing in order to secure this contribution.
He further emphasised that the Government’s objective is to ensure that the benefits of these economic achievements flow to the people of the country. The Government is focusing on improving essential public services to enhance the quality of life, undertaking a new transformation of the transport system and providing adequate allocations for the development of the education and health sectors.
The President also highlighted the need for a targeted programme to properly collect the taxes due to the Government by addressing issues such as improving tax literacy, simplifying the tax system and filling staff shortages.
Ms Rukdevi Fernando stated that the professional competence and dedication of the Department’s officers were the key factors behind this success.
She further noted that a revenue target of Rs. 2,401 billion has been set for 2026 and that the Department expects to achieve this through programmes aimed at enhancing tax compliance and broadening the tax base.
In addition, she said that the Department plans to expand third-party data sharing, strengthen investigations into domestic and overseas assets, take over the RAMIS system, reinforce risk-based auditing, introduce e-invoicing, adopt modern technology for tax administration and enhance tax ethics in 2026.
Minister of Labour and Deputy Minister of Finance and Planning Dr Anil Jayantha Fernando, Deputy Minister of Economic Development Nishantha Jayaweera, Secretary to the President Dr Nandika Sanath Kumanayake, Commissioner-General of Inland Revenue Ms Rukdevi Fernando and senior officials and staff of the Department were present at the occasion.
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Sri Lanka Customs exceeds revenue targets to enters 2026 with a surplus of Rs. 300 billion – Director General
The year 2025 has been recorded as the highest revenue-earning year in the history of Sri Lanka Customs, stated Director General of Sri Lanka Customs, Mr. S.P. Arukgoda, noting that the Department had surpassed its expected revenue target of Rs. 2,115 billion, enabling it to enter 2026 with an additional surplus of approximately Rs. 300 billion.
The Director General made these remarks at a discussion held on Tuesday (30) morning at the Sri Lanka Customs Auditorium, chaired by President Anura Kumara Dissanayake.
The President visited the Sri Lanka Customs Department this to review the performance achieved in 2025 and to scrutinize the new plans proposed for 2026. During the visit, the President engaged in extensive discussions with the Director General, Directors and senior officials of the Department.
Commending the vital role played by Sri Lanka Customs in generating much-needed state revenue and contributing to economic and social stability, the President expressed his appreciation to the entire Customs employees for their commitment and service.
Emphasizing that Sri Lanka Customs is one of the country’s key revenue-generating institutions, the President highlighted the importance of maintaining operations in an efficient, transparent and accountable manner. The President also called upon all officers to work collectively, with renewed plans and strategies, to lead the country towards economic success in 2026.
The President further stressed that the economic collapse in 2022 was largely due to the government’s inability at the time to generate sufficient rupee revenue and secure adequate foreign exchange. He pointed out that the government has successfully restored economic stability by achieving revenue targets, a capability that has also been vital in addressing recent disaster situations.
A comprehensive discussion was also held on the overall performance and progress of Sri Lanka Customs in 2025, as well as the new strategic plans for 2026, with several new ideas and proposals being presented.
Sri Lanka Customs currently operates under four main pillars, revenue collection, trade facilitation, social protection and institutional development. The President inquired into the progress achieved under each of these areas.
It was revealed that the Internal Affairs Unit, established to prevent corruption and promote an ethical institutional culture, is functioning effectively.
The President also sought updates on measures taken to address long-standing allegations related to congestion, delays and corruption in Customs operations, as well as on plans to modernize cargo inspection systems.
The discussion further covered Sri Lanka Customs’ digitalization programme planned for 2026, along with issues related to recruitment, promotions, training and salaries and allowances of the staff.
Highlighting the strategic importance of airports in preventing attempts to create instability within the country, the President underscored the necessity for Sri Lanka Customs to operate with a comprehensive awareness of its duty to uphold the stability of the State, while also being ready to face upcoming challenges.
The discussion was attended by Minister of Labour and Deputy Minister of Finance and Planning, Dr. Anil Jayanta Fernando, Deputy Minister of Economic Development, Nishantha Jayaweera, Secretary to the President, Dr. Nandika Sanath Kumanayake, Deputy Secretary to the Treasury, A.N.Hapugala, Director General of Sri Lanka Customs, S.P.Arukgoda, members of the Board of Directors and senior officials of the Department.
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