President Anura Kumara Dissanayake, in a pivotal address presenting the National Budget for 2026 in parliament yesterday, announced reforms to dismantle hurdles for Foreign Direct Investments (FDI), highlighted by a firm commitment to evaluate state land for investor use.

“Sri Lanka’s land parcel will be properly evaluated, and the government will determine which lands could be made available for investors bringing in foreign direct investments as making lands available for FDIs has been an obstacle in bringing foreign direct investments,” President Dissanayake stated, emphasising a renewed focus on the investment climate. He pointed out that foreign investor confidence is currently being strengthened as Sri Lanka progresses on its economic stability and growth trajectory.

In tandem with the land policy, the President confirmed that the process of monitoring, regulation, and management of state assets is underway, alongside the crucial amendment of the Strategic Development Projects Act and the Port City Act. He further announced that the State Asset Management Act will be amended in 2026, and the State Commercial Enterprises Act is being introduced to Parliament, signaling a profound structural overhaul of state sector governance. The foundational Investment Protection Act will also be passed in the first half of 2026.

The President underscored the government’s success in achieving state fiscal stability, noting that the country is currently moving towards anchoring an economic growth of 7% in the medium term. Key economic indicators have demonstrated resilience, with the government taking maximum measures to maintain inflation below the 5% level, and the exchange rate being kept at a stable level despite global shocks.

He projected the fiscal strength to hit a historical high, with the highest primary surplus in history set to be marked next year. State revenue, which increased by 900 billion rupees compared to last year, is expected to drive the revenue-to-GDP ratio to 16% in 2025, with a long-term goal of bringing state revenue to the 20% level of Gross Domestic Product (GDP). The government also plans to increase state investments by 4%, stressing the need for capital expenditure to be increased while systematically reducing recurrent expenditure.

On the debt front, the President stated that the country’s debt percentage is already approaching the 95% target, and the government expects to reduce the overall state debt to 87% by the year 2030. Foreign creditors have agreed to provide relief based on the progress of debt restructuring. Out of a total debt servicing requirement of USD 2,435 million, USD 1,941 million has been settled, though foreign debt servicing is up by $760 million this year compared to last year. The national carrier, SriLankan Airlines, is also slated for comprehensive restructuring, with its debt – now around USD 210 million) – to be restructured by the end of this year.

The budget allocates substantial funds and policy initiatives to spur investment and trade as follows:

The country received $823 million in Foreign Direct Investment (FDI) in 2025.

An additional 1,000 million rupees is allocated for services related to Investment Zones.

A residential visa scheme is being introduced for foreign investors.

Rs. 2,500 million is allocated for investment facilitation, including the National Single Trade Window.

To boost competitiveness, an extra 250 million rupees is allocated for the National Export Development Plan, which aims to connect with global value chains and keep export income exceeding $2 billion per month.

Investment incentives include a five-year tax holiday for investors installing communication towers, Rs. 750 million allocated to encourage startups and innovation, and Rs. 21 billion for Research and Development.

The government has noted that the stock market experienced historical growth in 2025, while unemployment reduced to 3.8% in the first quarter of 2025.

The budget detailed key infrastructure projects to support future growth and social welfare measures.

Rs 1 billion is allocated to redevelop domestic airports in Trincomalee, Jaffna, Sigiriya, and Hingurakgoda, and work on the stalled Katunayake International Airport expansion will commence next year.

The government will establish two new IT parks in Digana and Nuwara Eliya under a PPP scheme, while Rs 1.5 billion is allocated to two state banks to settle contractor dues for the idling IT parks in Galle and Kurunegala.

For tourism, Rs 3 billion is allocated to develop domestic tourism hotspots and fund an international destination campaign, targeting USD 8 billion in revenue and 4 million tourist arrivals by 2030.

On the social front, Public sector employee salaries are being increased in 3 phases already. Social safety net expenditure will be maintained at a minimum of 4%, supported by a programme underway to eliminate rural poverty and ensure the benefits of development reach everyone. The President also announced that the government would provide broadband vouchers to children of Aswesuma beneficiary families.

The President concluded by reaffirming an assurance that the public’s tax revenue is being managed with accountability, moving toward an economic system based on equity instead of privilege.

by Sanath Nanayakkare

The Emirates Group announced a new record half-year financial performance, posting a profit before tax of AED 12.2 billion (US$ 3.3 billion) for the first six months of 2025-26, making this the fourth consecutive year of record profitability for the half-year reporting period.

Ahmed bin Saeed Al Maktoum

After accounting for income tax charges, the Group’s profit after tax is AED 10.6 billion (US$ 2.9 billion), up 13% from last year.

Illustrating its strong operating performance, the Group maintained a robust EBITDA of AED 21.1 billion (US$ 5.7 billion), 3% higher than the AED 20.4 billion (US$ 5.6 billion) reported for the same period last year.

Group revenue was AED 75.4 billion (US$ 20.6 billion) for the first six months of 2025-26, up 4% from AED 70.8 billion (US$ 19.3 billion) last year.

The Group closed the first half year of 2025-26 with a record cash position of AED 56.0 billion (US$ 15.2 billion) on 30 September 2025, compared to AED 53.4 billion (US$ 14.6 billion) on 31 March 2025. The Group has been able to tap on its own strong cash reserves to support business needs, including funding for new aircraft deliveries and servicing existing debt obligations.

As Sri Lanka navigates its IMF-led reforms and seeks to rebuild fiscal stability, the United Nations Population Fund (UNFPA) has warned that the country’s demographic slowdown — marked by falling birth rates and an ageing population — could emerge as a major long-term constraint on economic growth and labour productivity.

Releasing the preliminary findings of the 2024 Census of Population and Housing in Colombo, UNFPA Officer-in-Charge Phuntsho Wangyel said Sri Lanka’s population now stands at 21.76 million, reflecting an increase of just 1.4 million since 2012. The country’s annual growth rate has fallen to 0.5 percent, underscoring a demographic transition with profound fiscal and economic implications.

“The message is clear — fewer babies are being born. This slowdown, combined with low fertility and rapid ageing, signals a significant shift in Sri Lanka’s age structure, Wangyel said.

He warned that the demographic changes could affect the labour market, productivity and public finances, urging policymakers to plan ahead to ensure long-term economic resilience.

“When fertility rates decline, the focus of policy must shift from managing population numbers to investing in people, advancing gender equality and strengthening systems that can support an ageing population, Wangyel stressed.

Wangyel said the implications of the census data go beyond population statistics, directly influencing Sri Lanka’s growth trajectory. A shrinking working-age population, he explained, could lead to slower output growth, rising fiscal pressure on pensions and healthcare and increased dependency on a smaller tax base.

“The economic implications are clear. A smaller workforce means slower growth unless productivity rises. This is why investing in education, technology and gender equality is no longer optional — it’s essential, he said.

He added that the transition demands policy reorientation — from expanding the labour supply to improving workforce productivity, innovation and social safety nets.

“Population data is not just a set of statistics — it’s an economic tool. It helps governments, investors and the private sector anticipate changes in labour supply, consumer demand and public expenditure, Wangyel said.

Wangyel praised the Department of Census and Statistics (DCS) for conducting Sri Lanka’s first-ever digital census, describing it as a “crucial stride” toward modernising data collection and strengthening national planning.

“This digital census is a landmark for Sri Lanka’s economic governance. With accurate, timely data, policymakers can better allocate resources, target subsidies and design programmes that reflect real needs, he said.

He stressed that responsible use of the newly released data will be key to shaping future development strategies and aligning them with the Sustainable Development Goals (SDGs).

“We must ensure no one is left behind. Granular data — disaggregated by age, gender and location — must be used to make inequities visible and actionable, Wangyel said.

While the findings highlight clear risks, Wangyel said Sri Lanka can also turn the shift into a strategic advantage by building a “silver economy” — industries and services designed to meet the needs of an ageing population, such as healthcare, elderly care, wellness and technology-driven services.

“With the right investments and policies, Sri Lanka can turn its demographic transition into an opportunity for innovation and inclusive growth, he said.

By Ifham Nizam