The Hon. Anura Kumara Dissanayaka - President

¶ 01 Not only in appearance, but in reality too, we inherited a bankrupt state. Let me also speak about the gap between our revenues and expenditures. According to the 2025 Budget, while we expect total revenue of Rs. 4,999 billion, interest payments require Rs. 2,950 billion, public sector salaries Rs. 1,352 billion, and pensions Rs. 442 billion. In other words, against total revenue of roughly Rs. 4,999 billion, the amounts required for interest, salaries, and pensions total Rs. 4,744 billion, leaving only Rs. 256 billion. This is our economy. It cannot be turned around by gimmicks or panic moves. Remember this: with three major expenditure heads nearly matching revenue, only a marginal surplus remains. That is the character of the economy before us.

¶ 02 State enterprises are also in distress. For example, Sri Lanka Rupavahini Corporation’s loss last year was Rs. 256 million with debts of Rs. 1,837 million. Sri Lanka Broadcasting Corporation lost Rs. 152 million with Rs. 1,603 million in debt. ITN carries debt of Rs. 1,476 million. Lanka Sugar Company (Pvt) Ltd. has Rs. 11,165 million in debt. The State Plantations Corporation has Rs. 3,216 million in debt. MILCO has Rs. 15,090 million in debt. SriLankan Airlines has debt close to Rs. 340 billion. What do we have? A cluster of state entities burdened by heavy debts and recurrent losses. Meanwhile, our income is barely sufficient for the top expenditure lines I mentioned. Revenue is highly concentrated. A small group drives most of the economy: about 10 percent of exporters generate 90 percent of export earnings, and roughly 600 large files account for around 60 percent of Inland Revenue collections. Ours is an economy concentrated in very few hands.

¶ 03 Externally, we were a bankrupt state, unable to raise debt, with shattered confidence in the banking system and public finances. The first priority, therefore, was to establish macroeconomic stability. We were already in a four-year Extended Fund Facility programme with the IMF. We had two paths: continue the programme or abandon it. Some expected us to walk away. We did not fall into that trap. In an economy like ours, even small missteps have destructive consequences. Our responsibility was to avoid further errors while stabilizing the economy.

¶ 04 Our first objective was macroeconomic stabilization. Since November 21, when we formed a complete government with the Presidency, Parliamentary majority, and Cabinet, four months have passed. Within these four months we have built enough stability to create confidence in a better future.

¶ 05 First, on December 21, we formally exited unilateral default. Before that date, we were a state that had ceased paying debt without agreement. Post–December 21, we remain in a standstill, but now under agreement with creditors—“We will not service your debt until 2028”—rather than a unilateral suspension. That is stability.

¶ 06 Default had real costs. The Central Expressway section Kadawatha–Meerigama funded by China Exim Bank stalled when disbursements stopped due to default. The contractor’s claim for delay now stands at Rs. 46 billion—this is a default cost. Likewise, the Bandaranaike International Airport expansion halted; it should have finished in 2023, and restarting now will cost an additional USD 50–100 million.

¶ 07 Japan had paused 11 projects; after our formal move to agreed standstill on December 21, Japan decided to restart all 11. With China, we reached understandings to restart stalled projects and begin 76 new projects—another signal of stability.

¶ 08 Since 2022, there were virtually no new projects begun. We have now agreed with India and the CEB on a 120 MW Sampur power plant via a 50–50 joint venture; the CEB will purchase the power at USD cents 5.97 per kWh—among the lowest recent solar tariffs. We expect to launch it with Prime Minister Modi’s visit on April 5. Within about two months, we will also launch a new solar plant in Siyambalanduwa and a 50 MW wind plant in Mannar.

¶ 09 The rupee has stabilized around 300 to the dollar for four consecutive months—the first such sustained stability in three years. International rating agencies have upgraded Sri Lanka from “very high risk” to lower risk categories. Confidence in our banking system has improved; international financial institutions have re-engaged. Interest rates are back to single digits and we intend to keep them there. Inflation, which once hit 70 percent—the highest in our history—has decelerated; we expect modest positive inflation by mid-year.

¶ 10 Worker remittances are rising. In the last two months, remittances reached USD 1,121 million—the highest for that period in recent times—reflecting confidence replacing uncertainty about the rupee. Tourist arrivals are strong; by March 17, they exceeded one million. This year will record the highest tourist arrivals in our history.

¶ 11 On revenues, historically there were 20–25 percent gaps between estimates and actuals. In 2024, Sri Lanka Customs met estimates; Inland Revenue was short by about Rs. 35 billion, i.e., conversion near 99 percent. As of March 17 this year, IRD’s expected Rs. 356 billion has been exceeded with Rs. 438 billion collected. Customs also exceeded January targets. This is what a stabilized, well-managed economy looks like.

¶ 12 Private sector confidence is essential. We will manage by data and analysis, not by sentiment. On vehicle imports, we faced a high-risk decision. In 2018, vehicle imports were USD 1,950 million; for five years imports were shut. Reopening too quickly could have overwhelmed our dollar capacity. We proceeded carefully. As of yesterday, LCs of about USD 207 million have been opened. We will keep total vehicle import dollars within a planned envelope while meeting our revenue expectations, with daily monitoring and steering.

¶ 13 I urge all not to circulate untruths that can destabilize markets—especially from those portrayed as “economic experts.” Reckless statements can unsettle equities, banking confidence, and investor sentiment. If you have doubts, meet us first. If unresolved, then speak publicly. But do not amplify speculation that harms national stability.

¶ 14 While stabilizing the economy, we must protect livelihoods. We raised the fertilizer subsidy per hectare from Rs. 15,000 to Rs. 25,000. We extended fertilizer support to additional crops grown in paddy fields. We enhanced the Aswesuma social benefits: the Rs. 8,500 tier was raised to Rs. 10,000, and the Rs. 15,000 tier to Rs. 17,500 from January. About 800,000 families were due to exit Aswesuma by December 31, 2024; we extended benefits by four months for 400,000 families and by 12 months for another 400,000, recognizing that conditions remain difficult.

¶ 15 Given parents’ difficulty in buying school supplies, we granted Rs. 6,000 per child to 1.6 million schoolchildren for books and materials—targeted to those who need it. For chronic kidney patients, the monthly allowance rises from Rs. 7,500 to Rs. 10,000 from April. The elderly allowance increases from Rs. 3,000 to Rs. 5,000. We earlier raised public sector retirees’ pensions by Rs. 3,000. The Mahapola scholarship rises from Rs. 5,000 to Rs. 7,500; the general student stipend rises from Rs. 4,000 to Rs. 6,500. For children in institutions and orphans, we introduce a Rs. 5,000 monthly grant with Rs. 3,000 deposited monthly into a fixed account; upon marriage—especially for girls—we will grant Rs. 1 million for housing.

¶ 16 We also raised the preschool meal allowance per child per meal from Rs. 60 to Rs. 100.

¶ 17 On public sector salaries, we identified two issues: skilled professionals leaving the service and difficulty attracting skilled talent. A ministry secretary oversees vast responsibilities but earns far less than private-sector CEOs. We decided to deliver a significant increase in basic salary even amid difficulties. Many unions acknowledged an unexpected basic pay rise: for example, a basic salary of Rs. 53,000 increasing to about Rs. 94,000. Instead of adding flat allowances, we adopted a scientific structure to enhance basic pay, to help recruit and retain needed capacities—especially in accounting and IT, for which we will consider dedicated packages.

¶ 18 We also increased compensation for work on holidays and for overtime. From April, the hourly overtime rate will be higher than before. We raised annual increments by 80 percent: a Rs. 250 increment becomes Rs. 450, and Rs. 500 becomes Rs. 900. We raised the personal income tax threshold from Rs. 1 million annual taxable limit to Rs. 1.5 million, and simplified the rate bands: the first Rs. 1.8 million is tax free; the next Rs. 500,000 at 6 percent; the following Rs. 500,000 also at 6 percent; and the next Rs. 500,000 at 18 percent. As an example, a person earning Rs. 200,000 monthly has 72 percent of prior tax relieved; those above that band will see tax cuts up to about Rs. 20,500 per month from April. This returns an estimated Rs. 50–60 billion to taxpayers, which we expect will circulate back into the economy.

¶ 19 On overtime formulas in health and elsewhere, the divisor changes (80→120→160→200→240) raised concerns about rights. We are open to adjust so that: where O/T was formerly computed by dividing basic by 80, we keep 80 but pay 2/3 of the amount now; where it moved 120→160, we keep 120 but pay 3/4; where 160→200, keep 160 but pay 4/5; where 200→240, keep 200 but pay 5/6—preserving the underlying right while phasing benefits as stability strengthens.

¶ 20 University probationary lecturers had lower pay than comparable professions by about Rs. 3,000. We will increase their salary by Rs. 3,035 to eliminate the anomaly, and we will ensure their basic is appropriately positioned relative to similar professions.

¶ 21 We must also reform political privileges. As President, I discovered that a President who is or was an MP draws a parliamentary pension in addition to the presidential salary. I have formally declined the MP pension. Similarly, when an MP becomes a Minister, they have been drawing both MP and Minister salaries. We will stop that. Ministers and State Ministers will draw only the Ministerial/State Minister package, and where fuel is provided by the state for ministers, there will be no separate MP fuel allowance on top—no double-dipping. We will also bring legislation to abolish MPs’ pensions and to amend laws on presidential perks—soon, and I ask all Members to support these. We will reduce the MPs’ insurance cover from Rs. 10 million back to Rs. 2.5 million when it is renewed in August. There will be no vehicle permits; while our policy statement allows a vehicle for official use during tenure, the 2025 appropriation cannot support purchases this year.

¶ 22 We cut the number of Cabinet Ministers to 21 and aligned State Ministers accordingly. Official residences for Ministers have been withdrawn. This is to set a standard that if political authorities make sacrifices, public officials will also support national rebuilding.

¶ 23 On public recruitment, we reject bulk hiring into the state without posts, duties, or objectives. We will fill genuine vacancies, especially in critical middle layers and skilled cadres. A committee chaired by the Prime Minister and the Secretary to the Prime Minister will assess departmental needs and approve justified recruitments. Already, 15,300 vacancies are cleared to be filled; we expect total government vacancies filled to reach around 30,000, via proper competitive exams and procedures—not through lists.

¶ 24 We will also rationalize state institutions. A committee led by the Prime Minister’s office has recommended closures, mergers, and mandate changes where entities have outlived their original purpose. Reports have been tabled and approved in principle; stakeholders can make representations where necessary. This is the “system change” we promised—reconfiguring the machinery of government to serve the people efficiently.

¶ 25 We will make the tax system fair and firm. Everyone must pay due taxes; those evading or seeking special deals will face stronger enforcement. In return, we pledge that every rupee collected will be protected and used prudently. We are also designing service packages recognizing large taxpayers at points such as the airport. Confidence grows when taxpayers see governance that protects their contribution.

¶ 26 We will eliminate bribery and corruption that paralyzes the state and distorts investment. Officials are paid by taxpayers; citizens must not be forced to pay extra to receive services. We have already interdicted and removed some staff where necessary. Political leadership will set the tone; for example, on the Mannar wind tender: after appeal, we opened all bids and awarded to the lowest, achieving a tariff of USD cents 4.57 per kWh—down from prior levels like 8.22—delivering savings to the country. We will not tolerate corruption in any project.

¶ 27 We are building a government that can face any investor without seeking personal gain. Recent state insurance procurement was awarded to the lowest bidder, George Steuart, regardless of political background. We are establishing norms: stability in the macroeconomy, a capable public service, political integrity, and the rule of law applied equally.

¶ 28 On digitalization, we will implement the national digital ID within two and a half years, bringing all transactions onto that backbone and progressively reducing cash usage. The Treasury, Presidential Secretariat, and Central Bank are preparing decisions to reduce cash transactions and move government payments onto GovPay, expanding institution by institution. We have decentralized Presidential Fund applications online through Divisional Secretariats; approvals and payments will go directly to accounts. Overseas Sri Lankans can now request birth, marriage, and death certificates online instead of through manual consular channels. Reducing face-to-face counters reduces rent-seeking; applications and approvals will move in the virtual space.

¶ 29 On energy, we will stabilize tariffs over a multi-year horizon. Current tariffs swing with rain and sun rather than cost structures. Our present average cost per kWh is around USD cents 13; we aim to bring it to cents 8, cutting generation cost by about cents 5 through more renewables and efficiency. The Energy Minister and the Sustainable Energy Authority are mapping wind and solar lands and will run least-cost, competitive tenders.

¶ 30 We will increase FDI by ensuring an investor-friendly environment and by reforming the Strategic Development Projects Act to move away from discretionary, relationship-based concessions to criteria-based incentives aligned with investment size and national needs. We will bring a new investment protection law and updated incentive framework to Parliament soon.

¶ 31 We will launch major education reforms. There is severe imbalance in the school system: about 18 percent of schools have fewer than 50 students, and many received zero Grade 1 applications last year. We will rationalize schools so each has a viable student body for academic work and extracurriculars, and reflects a mix of social backgrounds. The Education Minister will overhaul curricula and introduce multiple pathways from Grade 9—moving away from a narrow, linear funnel to medical/engineering for a tiny number, to diversified pathways including strong vocational streams, each with social value. We will brief Parliament in a special session soon.

¶ 32 We will revive SMEs. The Industry Ministry identifies about 40,000 SMEs with viable operations stalled by debt and lack of working capital. Banks’ lending is skewed—about 80 percent to corporates; at least 40 percent should reach SMEs. We are discussing regulatory measures and credit lines, including ADB facilities, to extend relief and working capital to restart these 40,000 enterprises quickly.

¶ 33 We will also push agricultural transformation and the port-led logistics economy. Cabinet has freed land at Kerawalapitiya for a container logistics hub; feasibility is underway.

¶ 34 To the Opposition: if you seek to derail or cast doubt on this programme, your politics will be rejected day by day. This programme cannot be broken. There is no better path on offer—support it and align with it.

¶ 35 Old media-driven politics ended in 2019. Today, politics is built in constant dialogue with people, not through TV theatrics. We will continue to set standards for politicians and public officials. Those who stand behind these signposts have a future; those who do not, will not.

¶ 36 This is the first time in many years that government and opposition remain as sent by the people—no crossovers, no hotel hideouts, no Singapore escapes to save budgets. Let us build on this culture. I thank the Treasury Secretary Mr. Mahinda Siriwardana and his officers, the Central Bank Governor, and all officials working tirelessly. We proceed through collective decisions, not one-man rule. Let us seize this opportunity together.