Business
Tax revenue rebound seen as reshaping SL’s sovereign risk outlook
Sri Lanka’s improving tax performance is reshaping its sovereign risk outlook. With the tax-to-GDP ratio rebounding to 15.4% from pre-crisis lows near 10%, markets are seeing early signs that fiscal consolidation is becoming structurally anchored—supporting debt sustainability, IMF programme credibility and a gradual return to capital markets.
Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando said on Monday that tax revenue is on track to reach 16% of GDP by the end of this year, marking one of the strongest fiscal reversals in the country’s recent history. Speaking at a ceremony at the Inland Revenue Department (IRD) to present appointment letters to 100 newly recruited Assistant Commissioners, he said all three main revenue-collecting agencies—the IRD, Sri Lanka Customs and the Excise Department—have exceeded their annual targets.
From a macroeconomic standpoint, the recovery in revenue mobilisation reduces Sri Lanka’s reliance on debt accumulation, monetary financing and ad hoc tax measures—key vulnerabilities highlighted during the economic crisis. Dr. Fernando said the Government’s medium-term objective of lifting the tax-to-GDP ratio to 20% is achievable if credibility in fiscal governance continues to improve.
He attributed the revenue surge primarily to the restoration of trust between the state and taxpayers rather than to technology or enforcement alone. Improved compliance, he said, reflects growing confidence that public funds are being managed transparently and directed towards development priorities, reversing years of entrenched tax evasion linked to weak governance.
Fernando also stressed the correlation between higher tax ratios and lower corruption, noting that Sri Lanka’s revenue base had eroded sharply during periods of institutional decay. The recent rebound, he said, signals renewed accountability and more disciplined public financial management.
On public sector reform, he rejected the narrative that the public service is inherently a fiscal burden, arguing that inefficiencies stemmed from decades of politically motivated recruitment. The government, he said, is now rebuilding the public service through merit-based, competitive recruitment, aligned with broader public sector transformation and fiscal capacity. The newly appointed officers, he added, will play a critical role in strengthening revenue administration and policy implementation.
Turning to structural growth constraints, Dr. Fernando highlighted low labour force participation—particularly among women—as a key drag on income expansion and future revenue potential. Despite women accounting for a majority of the population, female participation remains below 30%, limiting productivity growth and narrowing the tax base. Raising participation levels, he said, is essential to sustaining higher growth over the medium term.
He also stressed the importance of simplifying the tax system to improve predictability and compliance while ensuring all eligible taxpayers are captured. Sustainable revenue growth, he reiterated, must come from broadening the base rather than imposing excessive burdens on a narrow segment of taxpayers.
By Ifham Nizam
The inaugural Sri Lanka Fintech Summit 2025 concluded with industry leaders and regulators establishing two critical national priorities: a bold target to reduce physical cash usage and a push for consolidated regulatory oversight.
In a key decision, participants set a clear three-year goal to lower the ratio of cash in circulation to GDP from 4.5% to 3.5%. The strategy will focus on digitizing high-cash sectors like transport, utilities, and SME payments, while expanding digital access through post offices and cooperatives.
For the long-term health of the ecosystem, stakeholders agreed to lobby for the creation of a single, unified regulatory authority dedicated to fintech oversight. This aims to streamline approvals and provide clearer guidance for innovators.
“Our members needed to leave with concrete action points,” said Channa de Silva, Chairman of the Fintech Forum, Sri Lanka. The summit, designed as a series of closed-door roundtables with regulators including the Central Bank, produced actionable frameworks. “It was about defining KPIs, setting targets, and giving the industry a shared direction,” de Silva explained.
The outcomes signal a concerted shift from discussion to execution, aiming to build a more inclusive, efficient, and secure digital financial economy for Sri Lanka.
By Sanath Nanayakkare ✍️
A new force in Sri Lanka’s food industry, Kukus Group, is gaining momentum with a clear vision to deliver authentic cuisine, high hygiene standards, and affordability. Founded by young entrepreneurs Nadeera Senanayaka, Lakmini Gurusinghe, and Randila Gunasinghe, the group has successfully launched its pilot outlet and is now preparing for a significant nationwide expansion.
The inaugural in Kotte has served as a successful proof of concept. Operating for five months, this modern street-food outlet has garnered a strong customer response, confirming market demand and providing the confidence to fund the group’s ambitious growth strategy.
The inaugural in Kotte
“The positive reception has been overwhelming and has solidified our plans,” said Lakmini Gurusinghe and Randila Gunasinghe. “Our Kotte outlet is the operational model we will replicate – ensuring consistent quality, disciplined operations, and excellent service across all future locations.”
The group’s expansion strategy is built on three distinct thematic brands:
Kukus Street: Targeting young urban customers, these outlets offer a vibrant, casual dining experience with a menu of Sri Lankan rice and curry, kottu, snacks, and BBQ, with most meals priced under Rs. 1,500. Services include dine-in, takeaway, and delivery.
Kukus Beach: Planned for coastal areas, beginning in the South, this concept will feature an urban-style beach restaurant and pub designed for relaxed social dining.
Kukus Bioscope: Celebrating Sri Lanka’s cinematic heritage, this dedicated restaurant concept will create a nostalgic cultural space inspired by the golden eras of Sinhala cinema, with the first outlet slated for Colombo.
The immediate plan includes transforming the flagship Kotte location into Kukus Pub & Bar, pending regulatory approvals. The long-term vision is to develop 18 outlets nationwide: 10 Kukus Street locations, 5 Kukus Beach venues, and 3 Kukus Bioscope establishments.
“Kukus Group is more than a hospitality brand; it’s a celebration of Sri Lankan flavors and culture,” the founders concluded. “Our mission is to build trusted, recognizable brands that connect deeply with communities and offer lasting cultural value alongside authentic cuisine. We are dynamic and excited to proceed with this strategic expansion,” they said.
By Sanath Nanayakkare
Fcode Labs marked its seventh anniversary by hosting its annual Awards Night 2025 at Waters Edge, celebrating team achievements and reinforcing its organizational values.
The event featured keynote addresses from Co-Founders & CEOs Buddhishan Manamperi and Tharindu Malawaraarachchi, who reflected on the company’s annual progress and future strategy. Chief Operating Officer Pamaljith Harshapriya outlined operational priorities for the next phase of growth.
Awards were presented across three key categories. Prabhanu Gunaweera and Dushan Pramod received Customer Excellence awards for partner collaboration. Performance Excellence awards were granted to Munsira Mansoor, Thusara Wanigathunga, Thushan De Silva, Adithya Narasinghe, Avantha Dissanayake, Amanda Janmaweera, Sithika Guruge, and Sandali Gunawardena. The Value-Based Behaviour awards were given to Thilina Hewagama, Udara Sembukuttiarachchi, and Kavindu Dhananjaya for exemplifying company values.
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