The Hon. Lieutenant Commander (Rtd.) Prageeth Madhuranga

¶ 01 Madam Deputy Chairperson of Committees, thank you for the opportunity to speak on the 2026 Appropriation.

¶ 02 First, I must correct a statement by two Opposition MPs who implied that at times the Police and Tri-Forces are involved in spreading narcotics. As someone from that field, I state: our Tri-Forces and Police are highly disciplined, professional, and work tirelessly through “Rataama Ekata” to lawfully eradicate the drug menace. If there are isolated cases, inform us; we will act without regard to rank. But do not cast aspersions on the entire Forces and Police.

¶ 03 The NPP Government took over at a very difficult time: a collapsed economic base, persistent macro instability, fiscal imbalances, structural imbalances, and governance weaknesses had placed the whole economy at risk. As per Fitch, Sri Lanka’s long-term foreign currency issuer rating had fallen to restricted default; Moody’s and S&P had also placed us at the bottom. After we took office, we improved ratings to CCC+ territory, and Moody’s recognized a stable outlook. This allowed us to re-enter global markets and regain some access, achieved through macro stabilization, fiscal discipline, State enterprise strengthening, anti-corruption and transparency, accountability to the people, and broad reforms.

¶ 04 Within a short period, we strengthened public finances, restored macro and social stability, and set all sectors on a growth path, with GDP expanding by about 4.8 percent. Exports, tourism, and remittances increased, and gross official reserves exceeded USD 6 billion. We did this while reopening the economy, including vehicles: LCs amounting to around USD 2.5 billion have been opened, yet we maintained reserves above USD 6 billion—without suppressing activity.

¶ 05 For the first time since about 2006, revenue reached 16 percent of GDP, supported by strong public financial management, domestic revenue mobilization, digitization, and expenditure management, delivering a rising primary surplus. Government debt fell from 114.2 percent of GDP in 2022 to a projected 96.82 percent in 2026, thanks to reforms and commitment.

¶ 06 The 2026 Budget is framed around six strategic pillars: - Inclusive, sustainable growth: targeting over 7 percent growth and ensuring benefits reach all communities and regions. - Higher income through export diversification: strengthening the AML/CFT framework in 2026, implementing the National Export Development Plan 2025, and establishing a Trade National Single Window to ensure a level playing field—ending the previous era’s favoritism. - Ensuring debt sustainability: the IMF flagged Sri Lanka as unsustainable in 2022 due to irresponsible, non-priority projects and delays. We now have a clear plan via the Institute of Public Financial Management. For 2024, we serviced USD 1,674 million of external debt; in 2025, the requirement is USD 2,435 million, of which USD 1,948 million was paid by September 30, with USD 487 million to be completed by December 31. In 2028, external service is about USD 3,259 million—only USD 824 million more than in 2025—manageable. - Strengthening the productive economy: targeted support, technology, and market access for MSMEs; catalyzing private participation in large-scale production; focusing on value addition in domestic production. - Eradicating rural poverty: special protection for vulnerable persons; taking growth to villages in 2026 through more opportunities, infrastructure, productive economy promotion, planned urbanization, and better education and health services. - Advancing digitization: as a strategic driver of growth and social well-being, improving transparent and efficient public service delivery, and building a substantial digital economy.

¶ 07 Debt treatment terms, once finalized and codified in the medium-term fiscal framework, are expected to reduce the average interest rate by 0.75 percentage points for 2028–2035, saving about USD 790 million annually, supporting targets as we raise revenue to 15.3–15.4 percent of GDP and beyond.

¶ 08 Thank you.