Business

Priorities in Focus: Will Budget 2025 address Sri Lanka’s agricultural challenges?

Published

1 month ago

2025/02/18

Manoj Thibbotuwawa is a Research Fellow at the Institute of Policy Studies of Sri Lanka (IPS) with

research interests in agriculture, agribusiness value chains, food security, climate change and environmental and natural resource economics. He has more than 19 years of research experience at IPS. . Dr Thibbotuwawa holds a BSc (Agriculture) with Honours from the University of Peradeniya, an MSc (Agricultural Economics) from the Post-Graduate Institute of Agriculture at the University of Peradeniya, and a PhD from the University of Western Australia. He has also obtained a Post-Graduate Diploma in Modelling and Accounting for Sustainable Development from the International Institute of Social Studies (ISS) in The Hague. Dr Thibbotuwawa is a recipient of the prestigious Nuffic Fellowship from the Government of the Netherlands and the Endeavour Award from the Government of Australia.

Lakmini Fernando is a Research Fellow at IPS with primary research interest in Development Economics, Public Finance and Climate Change. She has expertise in econometric data analysis, research design and causal methodologies. Dr Fernando holds a BSc in Agriculture from the University of Peradeniya, a Master of Development Economics (Advanced) from the University of Queensland, Australia and a PhD in Economics from the University of Adelaide, Australia. She was awarded the Dean’s Honour Roll from the University of Queensland for Outstanding Academic Excellence in 2015 and the Dean’s Commendation for Doctoral Thesis Excellence from the University of Adelaide in 2021.

By Dr Manoj Thibbotuwawa and Dr Lakmini Fernando

Public expenditure on agriculture as a share of total government spending has decreased from 6.4% to 2% between 2014 and 2023.

The irrigation subsector receives most of the agricultural spending (41%), with subsidies accounting for a high 26%.

Change to funding priorities necessary to address critical concerns.

The agricultural sector in Sri Lanka has long been a pillar of the nation’s economy, yet its decline reflects a complex interplay of economic shifts, policy decisions, and underutilised potential. Agriculture’s contribution to the overall economy in Sri Lanka has gradually diminished over time, while the agricultural labour force has shrunk at a slower rate. This disparity between a declining sector and a stagnant workforce, coupled with the failure to address structural changes by improving land and labour productivity, has led to poor sector performance, particularly in terms of food security and farm income.

Additionally, unproductive public spending in the form of inefficient allocation, short-term concentration, and neglect of crucial areas is an important contributory factor. In this context, it is crucial to assess whether public expenditure allocation in Sri Lanka has undergone significant shifts aimed at unlocking the agriculture sector’s potential while advancing food security and fostering rural development.

Tracking the Shift: Trends in Public Spending on Agriculture

Over the last decade, Sri Lanka has struggled to spend adequately on agriculture due to competing fiscal concerns. Before COVID-19, total agricultural investment was around LKR 112 billion in real terms between 2014 and 2020. However, due to the impact of COVID-19, it sharply declined to LKR 88 billion in 2021. Since then, agricultural investment has slightly increased, averaging LKR 97 billion in the past two years (2022-2023). Despite an increase in absolute public expenditure on agriculture (PEA), both the GDP share and the percentage of the total budget allocated to agriculture have been declining.

PEA as a percentage of GDP has fallen from 1.1% in 2014 to 0.8% by 2023. Similarly, PEA as a percentage of total government spending has decreased from 6.4% to 2% throughout the same period. Notably, the balance between capital and recurring expenditures has shifted dramatically in favour of more recurrent expenditures during institutional structure changes linked to changes of government, as shown in 2015, 2019, and 2020.

Guiding the Budget: Who Shapes Agricultural Investments?

The agriculture sector in Sri Lanka is primarily managed by the Ministry of Agriculture (MOA), the Ministry of Plantation Industries (MOP) and the Ministry of Fisheries (MOF), as outlined in the Public Investment Programme (PIP). While the land and irrigation sectors are closely linked to agriculture, they fall under the jurisdiction of separate ministries: the Ministry of Lands (MOL) and the Ministry of Irrigation (MOI), respectively. In terms of budgetary allocations, MOA historically receives the largest share, accounting for 51% of agriculture-related expenditures.

This is followed by the Ministry of Mahaweli Development and Environment (MOE) with 23%, and MOI with 13%. MOF and MOP receive smaller allocations, at 3% and 4% respectively. While the nominal PEA has been on the rise, real-term PEA has either declined or remained largely unchanged across all ministries.. However, this does not necessarily indicate whether agricultural expenditures are aligned with sectoral policies, making it challenging to evaluate the effectiveness of spending in addressing critical concerns within the sector.

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Business

Businesses urged to address environmental challenges

Published

4 hours ago

2025/03/21

Thilina Walpola

Dignitaries at an environment-linked awareness-raising event.

Central Environmental Authority (CEA) chairman Dr. Tilak Hewawasam urged businesses to take greater responsibility in addressing environmental challenges, warning that failure to act could have severe long-term economic consequences.

Speaking to journalists, Dr. Hewawasam emphasized that sustainability is no longer just a compliance issue but a core business strategy.

“Environmental responsibility is not just a regulatory obligation—it is a business imperative. Companies that integrate sustainable practices will lead the way in economic resilience and innovation, he said.

Hewawasam’s remarks come as Sri Lanka faces mounting environmental concerns, including waste mismanagement, deforestation and rising carbon emissions. The CEA has been advocating for stronger corporate participation in tackling these issues, encouraging industries to adopt cleaner technologies, efficient waste disposal systems and renewable energy sources.

Hewawasam stressed that the government alone cannot drive sustainable change. “The private sector must step up, adopt green technologies and rethink supply chains to minimize environmental impact, he told journalists.

He also noted that businesses investing in sustainability are more likely to attract investor confidence and long-term profitability.

“With global markets increasingly rewarding eco-friendly brands, Sri Lankan companies risk being left behind if they fail to align with international environmental standards, he added.

“The CEA continues to push for stronger collaboration between businesses and policymakers to accelerate the country’s transition to a green economy.”Hewawasam stressed that businesses must view sustainability not as an obligation, but as an opportunity to drive innovation and long-term success.

By Ifham Nizam

Business

Sri Lankans Vote Dialog as the Telecommunication Brand and Service Brand of the Year

Published

4 hours ago

2025/03/21

Thilina Walpola

Dialog Axiata PLC, Sri Lanka’s #1 connectivity provider, has been honoured as the ‘Telecommunication Brand of the Year’ for the 14th consecutive year and the ‘Service Brand of the Year’ for the 4th time at the SLIM-KANTAR People’s Awards 2025, held on March 18, 2025. This recognition, awarded based on the voice of the people, reflects the strong relationship Dialog has built with Sri Lankans over the years and the trust they continue to place in the brand.

Since 2007, the SLIM-KANTAR People’s Awards have been a unique symbol of consumer-driven recognition in Sri Lanka. Unlike industry-judged awards, they are based on a comprehensive nationwide survey, providing a transparent reflection of public sentiment. These accolades honour brands and individuals who have earned the trust and admiration of Sri Lankans, forging strong emotional connections. For Dialog, this recognition underscores its deep-rooted relationship with the people and its commitment to delivering reliable connectivity and exceptional service.

“We are truly humbled and grateful to the people of Sri Lanka for this recognition,” said Supun Weerasinghe, Director / Group Chief Executive of Dialog Axiata PLC. “To be chosen as the Telecommunication Brand of the Year for 14 years and the Service Brand of the Year for 4 years is an honour we deeply appreciate. It reflects the trust and confidence placed in us by millions across the country, and we remain committed to strengthening this bond by delivering innovative, accessible, and reliable connectivity that enhances lives and enterprises.”

Dialog’s continued recognition at the SLIM-KANTAR People’s Awards is a testament to its dedication to serving Sri Lankans. As the nation’s #1 connectivity provider, Dialog will continue evolving to meet the changing needs of its customers, ensuring that every solution and service contributes to a more connected and empowered Sri Lanka.

Business

Sierra Cables’ share sale bolsters bourse; indices wax positive

Published

4 hours ago

2025/03/21

Thilina Walpola

The CSE yesterday was somewhat active because Sierra Cables contributed more than half of the turnover. The company sold its shares at a price 24 percent lower than the previous price level. Market sources revealed that an LOLC Group company purchased 146 million Sierra Cables shares at a market price of Rs 12.30 per share, amounting to Rs 1.8 billion.

This gave some impetus to the market and the All Share Price Index also became positive. Sierra Cable’s previous price was Rs 15.50. Consequently, the All Share Price Index went up by 256.7 points, while S and P SL20 rose by 98.3 points. Turnover stood at Rs 3.67 billion with four crossings.

Those crossings were reported in Citizens Developments Business Finance, where two million shares crossed to the tune of Rs 464 million; its shares traded at Rs 232, HNB 295,000 shares crossed for Rs 90 million; its shares traded at Rs 305, JKH, 4 million shares crossed to the tune of Rs 80.8 million; its shares traded at Rs 20.20 and TJ Lanka 900,000 shares crossed for Rs 44.6 million; its shares traded at Rs 49.50.

In the retail market top six companies that mainly contributed to the turnover were; Sierra Cables Rs 1.8 billion (146 million shares traded), CCS Rs 168 million (2.2 million shares traded), JKH Rs 79.5 million (3.9 million shares traded), Sampath Bank Rs 67.8 million (562,000 shares traded), TJ Lanka Rs 60 million (1.2 million shares traded) and Vallibel One Rs 58.4 million (one million shares traded). During the day 197 million share volumes changed hands in 11468 transactions.

It is said that manufacturing sector entities were the main contributors to the turnover, especially with Sierra Cables and JKH, while banking sector counters were the second highest contributor to the market turnover.

Yesterday, the rupee was quoted at Rs 296.45/65 to the US dollar in the spot market, weaker from 296.30/40 the previous day, dealers said, while bond yields were slightly down.

A bond maturing on 01.07.2028 was quoted at 9.75/85 percent, down from 9.84/90 percent. A bond maturing on 15.09.2029 was quoted at 10.08/15 percent, down from 10.14/20 percent. A bond maturing on 15.10.2030 was quoted at 10.25/34 percent, down from 10.25/38 percent. A bond maturing on 15.12.2032 was quoted at 10.75/85 percent, down from 10.85/97 percent.

By Hiran H. Senewiratne