By Ifham Nizam

Sri Lanka’s economy, hit by a series of crises, including a foreign currency shortage, fuel and food scarcities and a sharp decline in government revenues, is struggling to emerge from the turmoil. Besides, it has very limited policy tools to provide relief and boost output recovery, Institute of Policy Studies (IPS) Executive Director, Dr. Dushni Weerakoon said.

Speaking at the recent launch of the IPS report, ‘Sri Lanka: State of the Economy 2024’, on the theme, “Economic Scars of Multiple Crises: From Data to Policy,” Weerakoon said the report provides a deep analysis of the country’s recovery efforts and the policy choices that will shape its future.

Some100 representatives of the government, private sector and civil society gathered at the launch to discuss Sri Lanka’s fragile economic recovery, dissect the root causes of its persistent challenges and to debate potential solutions.

While the country is on a path to recovery, it is a delicate one, Weerakoon said.

Weerakoon stressed the need for “marginal changes” in tax and spending policies to address deep-rooted inequalities. These adjustments, she suggested, are the most prudent means to improve living standards in a nation that continues to reel from economic shocks. ‘The State of the Economy 2024’ report underscores the importance of refining policy strategies to ensure that they are both effective and equitable, without derailing the country’s fragile recovery process, she said.

‘The IPS report brought attention to one of the most controversial issues in Sri Lanka’s post-crisis economic recovery: taxation. VAT hikes and the removal of exemptions have disproportionately impacted the country’s poorest, further widening the socio-economic divide, the IPS head explained.

IPS Research Economist, Priyanka Jayawardena said that households in the lowest income decile spend about 10% of their income on VAT, compared to only 6% among higher-income groups.

The findings also show that while direct taxes, such as PAYE and PIT, are progressive—meaning they tax the wealthy more heavily—Sri Lanka is still plagued by high levels of tax evasion. In 2023, less than one-third of the estimated Rs. 131 billion payable in personal income tax was actually collected.

According to Dr. Pulasthi Amerasinghe, Research Economist at IPS, the Aswesuma welfare program adopts more stringent eligibility criteria, making it a more targeted approach to social welfare. Around 54% of former Samurdhi beneficiaries qualify for Aswesuma, reflecting the programme’s improved focus on deprivation indicators across 22 criteria.

However, despite the programme’s refined targeting mechanisms, there remain serious concerns about those left behind. As Dr. Amerasinghe noted, nearly 40% of food-insecure households, a group particularly vulnerable in times of economic crisis, were found to be ineligible under the Aswesuma criteria.

IPS Director of Research, Dr. Nisha Arunatilake, revealed troubling statistics from the Labour Force Survey: 65% of young Sri Lankans aged 20-24 not being engaged in any form of education. This means that a significant portion of the country’s youth is entering the labour market with low or outdated skills, which undermines their ability to compete in an increasingly digital global economy.

Adding to this is the decline in high-skilled employment, which dropped from 23% in 2018 to 20% in 2023. Emigration of skilled workers, drawn by better wages abroad, has resulted in a shortage of professionals in critical sectors, such as, engineering, IT and management.

Suresh Ranasinghe, IPS Research Officer, highlighted this “brain drain” as a significant factor driving down managerial positions in Sri Lanka, which have halved over the past five years. The consequences of this are far-reaching: as skilled talent leaves, the country’s labor market struggles to meet the demands of modern industries, thereby stifling productivity and innovation.

In a world where every act of kindness can spark hope, HelpAge Sri Lanka (HASL) is inviting both corporates and individuals to support its “Gift of Sight” campaign. This initiative presents a unique opportunity to transform the lives of disadvantaged senior citizens across the country through the invaluable gift of restored vision.

“Every act of kindness, every gesture of compassion, can make a profound difference in the lives of our elderly. Our mission is not just about restoring sight; it’s about restoring dignity and independence to those who have given so much to our society,” said Tilak de Zoysa, Chairman of HelpAge Sri Lanka. “We invite everyone to join us in this mission and give the extraordinary gift of sight.”

The “Gift of Sight” campaign aims to raise funds for 2,000 cataract surgeries, a crucial need as over 500,000 seniors in Sri Lanka are at risk of vision loss due to cataracts. Samantha Liyanawaduge, Executive Director of HASL, emphasized the importance of this campaign: “A single cataract surgery costs Rs. 20,000 and a contribution of Rs. 400,000 can fund 20 surgeries in just one day, transforming lives in profound ways. “

Tharika Goonathilake, Head of Community Relations at HelpAge Sri Lanka, expressed gratitude for the generosity of past sponsors and extended an invitation to new partners. “. Your contribution can be a meaningful gift—whether for a birthday, anniversary, or in memory of a loved one—that changes a life forever. In a world where we celebrate milestones and honour memories, why not give the gift of vision?”

She added that by participating in the ‘Gift of Sight’ campaign, corporates and individuals not only restore sight but also bring joy and hope to elderly individuals. “This initiative allows donors to meet beneficiaries at the HelpAge Eye Hospital, witness the profound impact of their contributions, and celebrate the gift of compassion together.”

For those looking to make a meaningful impact, whether as a corporate partner or in Honor of a loved one, the “Gift of Sight” campaign offers an opportunity to spread compassion and kindness. For partnership opportunities or to contribute to this transformative cause, please contact Tharika Goonathilake at +94773130280 or via email at tharika@helpage.lk.