Business
IPS Proposals for the Interim Budget
Ahead of the presentation of the Interim Budget, the Institute of Policy Studies of Sri Lanka (IPS) has recommended policy proposals for inclusion in the forthcoming Budget. Some key policy issues and recommendations follow.
Trade Policy
Despite strict import controls, Sri Lanka’s trade deficit in merchandise goods widened in 2021. The slight increase was mainly due to the sharp price movements in the world market, with the import reduction patterns across categories being consistent with the post-pandemic controls. As consumer goods imports are prioritised, including food imports, it generates two key undesirable impacts. First, it impacts food security and nutrition needs. Second, high food prices will incentivise a further resource shift – such as labour – to agriculture, raise wage costs for sectors like manufacturing and impact their competitiveness. In this context, two key recommendations are:
Prioritise imports for industrial expansion and food security needs: IPS research shows that about 88% of food imports are now subject to quantitative or price restrictions. The Special Commodity Levy (SCL) on items such as canned fish, green/black gram, cowpea, palm oil, and black gram flour should be removed to ensure that food security and caloric needs are met. Licensing restriction on maize imports which feeds poultry production costs must also be revisited. Sri Lanka must prioritise fertiliser imports and reintroduce fertiliser subsidies to paddy and vegetable farmers to raise productivity and prevent a resource shift that will impact overall economic efficiency.
Focus on increasing exports in sectors that use minimum foreign raw materials: There are certain products in which Sri Lanka enjoys a comparative advantage in global markets, requiring low imported raw materials in production such as tea, spices and mineral products like graphite. To meet immediate needs, bottlenecks such as fertiliser shortages should be addressed to raise productivity and export earnings whilst mineral resources can be auctioned to increase revenues.
Education Policy
The COVID-19 pandemic and the current economic crisis have severely affected the education sector. Health concerns, union action, social unrest and transport issues have resulted in frequent school closures. Inadequate budget allocations and improper recruitment of teachers have deteriorated the quality of education. Recent news items have highlighted difficulties faced by schools due to shortages of paper and other materials necessary for the functioning of schools. Further, deterioration of school facilities has affected the effective functioning of schools. Interruptions to school-based relief measures such as the school meal programmes can also increase school dropouts and malnutrition. Data from the Ministry of Finance reveals that public investment in education has remained just above 1%. Of this minuscule allocation, a large share is spent on teacher salaries. Frequent absorptions to the teaching cadre to provide jobs to unemployed graduates has worsened this situation crowding out funds from other necessary education inputs.
The government has recommended online lessons as a solution to difficulties in conducting on-site school classes. But IPS research shows that the access to online lessons is not equitable due to poor access to the internet, lack of necessary devices and high cost of data. In this context, two key recommendations are:
Increase public investment in education: Public investment in education should be increased and an adequate share of such investments should be dedicated to increasing the quality of education delivery such as the maintenance of school facilities, paper, and maintenance of school-centred relief programmes (e.g. school meals). This can be done by putting a cap on the share of government spending on salaries and wages of total expenditure in education. Given the lower enrolment rates for A-Levels, the government should consider introducing targeted financial assistance programmes for deserving children from poorer families to continue their studies.
Minimise school closures due to transport issues: Increase the existing fleet of school buses and provide adequate fuel for school buses to limit school closures due to transport issues. Measures should also be taken to ensure that children do not travel long distances to attend schools so that schools can function uninterrupted even in times of crisis.
Food Security and Nutrition Policy
IPS research shows that long-term environmental, social, and economic trends heightened by domestic and international challenges have eroded the resilience of Sri Lanka’s agri-food systems. On the global front, the COVID-19 pandemic and the Russia-Ukraine conflict are generating a global recession with high world market prices of food, oil, and fertiliser. At the local level, crop failures have resulted from poor government policies such as the chemical fertiliser import ban. Inflationary pressures arising from a combination of factors including excessive money printing and the sudden free float of the exchange rate have also taken a toll on domestic food prices and food supply. All these have resulted in low farm incomes, high food prices, food shortages and hunger and malnutrition. In this context, two key recommendations are:
Introduce a targeted food ration scheme for the poor and strengthen nutritional assistance: As an immediate measure to help the poor and marginalised who are the most vulnerable, introduce a targeted food ration scheme covering essentials like rice, wheat flour and dhal. Strengthen nutritional assistance programmes such as the School Meals programme, ‘Thriposha’ and ‘Poshana Malla’. Support from the World Food Programme (WFP), Food and Agriculture Organization (FAO) and regional (SAARC) and bilateral sources can be sought for this purpose.
Promote community gardens in the short term: Promote community gardens that include neighbourhood community gardens and school gardens. The way a community garden is set up and maintained can vary greatly from one to the other. These can be established in an empty land and the neighbours can look after it. It can be even in private land where the neighbours can share the harvest in exchange for labour. Some examples of community gardens include Virginia Avenue Community Garden, Washington, D.C., and Community Gardens Australia.
Health Policy
Sri Lanka’s health system is recognised as an efficient, low-cost model. However, changing demographic and disease patterns along with domestic finance issues threaten the sustainability of the health sector. Inadequate service provision in the public sector and shortages of medicine and equipment are driving people towards the private sector causing inequities in access to healthcare, as not all can afford private sector healthcare. Over half of the existing budget is allocated for wages leaving very little resources for all other health inputs. As a result, investments in this vital sector have been curtailed over the past few years. Further, changing lifestyles have exacerbated the risk factors for non-communicable diseases (NCDs). Four major behavioural risk factors directly contribute to the escalating NCDs in the country: tobacco use, physical inactivity, alcohol misuse, and unhealthy dietary patterns. In this context, two key recommendations are:
(To be continued)
The Maldives extends an open hand; will Sri Lanka take it??
At a recent press conference in Colombo announcing the Hotel Asia Exhibition & International Culinary Challenge 2025, Maldives’ High Commissioner to Sri Lanka, Masood Imad, delivered a poignant message: Sri Lanka must rekindle its historic bond with the Maldives, one rooted in mutual trust, economic partnership, and cultural kinship. His remarks struck a chord, urging policymakers and business leaders to reflect on why the once-flourishing relationship has frayed and how it can be restored.
“Many Sri Lankans don’t even understand Maldivian tourists,” he lamented, highlighting how Maldivians often feel unwelcome in Sri Lanka despite their long-standing ties. He reminisced about the 1950s and 1960s, when the two nations operated in seamless harmony when Maldive fish was a cherished export to Sri Lanka, and Ceylon Tours pioneered Maldivian tourism before the archipelago became a luxury hotspot.
“We didn’t see any difference between Sri Lanka and the Maldives back then,” he said. “Today, it’s a problem.”
The High Commissioner pointed to four decades of misunderstandings that led the Maldives to turn elsewhere – toward Dubai and other markets – despite its geographic and cultural proximity to Sri Lanka. Yet, he acknowledged the resilience of private-sector players like Ceylon Tours and the Sri Lanka–Maldives Business Council (SLMBC) which comes under the purview of the Ceylon Chamber of Commerce, who have kept the connection alive.
Suren Ediriweera, Managing Director of Ceylon Tours, echoed this sentiment, emphasising the untapped synergies in tourism. “World tourism is a huge market. Why shouldn’t Sri Lanka and the Maldives collaborate instead of compete?” he asked.
A key issue highlighted by Sudesh Mendis, President of SLMBC, is Sri Lanka’s outdated perception of the Maldives. “Male is still viewed by many Sri Lankans as a country that only dries fish. But the Maldives has transformed into a global tourism and logistics hub, with only a fraction of its economy still tied to traditional industries, “he said.
High Commissioner Imad urged Sri Lankans to see the Maldives as a leisure destination, and Maldivians coming to Sri Lanka as respectable guests, and urged to drop the so-called security concern as Maldivian tourists in Sri Lanka are not brandishing guns. And why do Sri Lankans look for holidays in Australia and Canada, but not the Maldives?” he asked, listing pristine beaches, luxury resorts, and water sports that remain unexplored by Sri Lankan travellers.
“It’s time to reset relations in tourism collaboration as joint travel packages, dual-destination promotions, and a more welcoming visa process by the authorities could attract more Maldivian tourists to Sri Lanka. We don’t have to look at each other as competitors,” the High Commissioner stressed. “We must look at each other as brothers.”
As the Hotel Asia Exhibition 2025 approaches where Sri Lanka will showcase its brands, the hope is that this event becomes a catalyst for renewed ties. The Maldives has extended an open hand; will Sri Lanka take it?
The answer lies in whether Sri Lanka’s policymakers and business leaders heed this call and whether the two nations can rewrite their shared history for a brighter, more collaborative future.
By Sanath Nanayakkare
In a significant diplomatic engagement underscoring the growing emphasis on environmental sustainability, the Japanese ambassador to Sri Lanka, Mizukoshi Hideaki, paid an official visit to the Ministry of Environment on Monday. The discussions centered around bolstering bilateral cooperation on climate-friendly initiatives, aligning with global carbon reduction targets and supporting Sri Lanka’s transition to cleaner energy systems.
Welcoming the ambassador, Minister of Environment Dr. Dhammika Patabendi expressed Sri Lanka’s commitment to deepening its environmental policy frameworks in line with international best practices. “This is not merely about funding or infrastructure, Patabendi said. “It’s about forging long-term partnerships that support our national objectives on renewable energy, biodiversity conservation and carbon neutrality.”
A major highlight of the discussion was the implementation of key environmental projects supported by the Japan International Cooperation Agency (JICA). These include the proposed Matara and Chilaw Solar Power Projects, which are expected to significantly augment Sri Lanka’s renewable energy capacity and a biomass project that fall under the Paris Agreement’s guidelines.
“These initiatives are not only technical solutions—they are symbolic of Japan’s confidence in Sri Lanka’s green transformation, said ambassador Mizukoshi. “Through the Joint Crediting Mechanism (JCM), we can mutually benefit by reducing emissions and sharing carbon credits, while setting an example for regional collaboration.”
Under the JCM framework, participating countries implement low-carbon technologies with Japanese support and share the resulting emissions reductions. Sri Lanka has been a signatory to the mechanism since 2013, but the government has now pledged to reinvigorate its engagement under the current administration.
The proposed biomass project, to be implemented under the Paris Agreement, aims to reduce the country’s dependency on fossil fuels and promote sustainable energy in rural areas. The initiative is expected to involve local communities in the management of biomass resources, creating green jobs and reducing deforestation pressure.
Patabendi emphasized that such projects must be carefully planned and community-centered. “We must ensure that the biomass project is not just about reducing carbon—it must uplift rural livelihoods and align with our biodiversity conservation goals, he noted.
Deputy Environment Minister Anton Jayakody, who was also present at the meeting, echoed the importance of multi-stakeholder support. “We are taking these discussions to parliament, so there is a unified national approach to environmental diplomacy, he said. “As we welcome support from international partners like Japan, it is vital that these projects resonate with the grassroots. Our goal is not just renewable energy, but an equitable green transition.”
Jayakody added that Sri Lanka has already submitted project proposals through the JCM that include waste-to-energy plants and micro-grid systems in underserved regions.
Another key item on the agenda was Japan’s candidacy for the upcoming IUCN World Conservation Congress to be held in Abu Dhabi. Japan is seeking Sri Lanka’s formal support for its bid and officials from both countries discussed the strategic importance of this engagement.
“This is a time for solidarity among Asia-Pacific nations, Patabendi commented. “We believe Japan’s leadership at the IUCN Congress can steer the global conservation agenda in a more inclusive and scientifically grounded direction.”
Sri Lanka is expected to issue an official statement of support ahead of the Congress, with ministry officials currently coordinating with the Department of Wildlife Conservation and the Ministry of Foreign Affairs.
The meeting was also attended by Rohitha Uduwawala, Secretary to the Ministry of Environment; Kenji Ohashi, Head of Economic Development Cooperation at the Japanese embassy and Ms. Sachi Tanaka, JCM Officer in Charge.
By Ifham Nizam
The Colombo Stock Exchange announces the appointment of Ms. Nilupa Perera as the Chief Regulatory Officer (CRO), effective 9th July 2025 succeeding Mr. Renuke Wijayawardhane, who retires after an outstanding 31-year career at the CSE.
Ms. Perera, previously served as Senior Vice President – Broker Supervision and Listed Entity Compliance among several other roles at the CSE, and has completed a structured period of understudy in preparation for this role.
With over 17 years of experience at the CSE, Ms. Perera brings deep regulatory expertise and a strong understanding of capital market operations. Her appointment ensures continuity and strategic focus in the Exchange’s regulatory function.
Mr. Wijayawardhane will continue to support the transition in a non-executive capacity, ensuring a smooth and seamless handover.
The CSE expresses its sincere appreciation to Mr. Wijayawardhane for his exceptional and dedicated service and looks forward to Ms. Perera’s stewardship as it continues to uphold the highest standards of market integrity and stakeholder trust.
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