The Hon. Ravi Karunanayake

¶ 01 Madam Presiding Member, thank you for the opportunity while you are in the Chair. We discuss the Central Bank’s 2025 Annual Economic Review. We must see what data is presented, whether it materializes, and how strong we will be in 2028 when paying debt, and how we navigate globally.

¶ 02 Before speaking about Sri Lanka, let me cite what India’s Prime Minister Modi said about not being complacent with USD 740 billion reserves, but focusing on protection and action—raising fuel prices, working from home, restricting internal travel—guided by foresight. Similarly, Singapore’s PM Lawrence Wong periodically conducts an Economic Strategy Review to face tough conditions. Malaysia’s PM Anwar Ibrahim too outlined how to act in difficult times. The key is to implement promises to people while carrying the country forward.

¶ 03 Rich becoming richer is not the issue; the poor must not become poorer. Do not tax the starving or those risking their lives to earn. I will focus on three parts: cyberattacks, the presented data, and the way forward.

¶ 04 We all know a major attack hit the banking system. The NDB reportedly suffered a Rs. 13,200 million fraud—appears linked to internal general ledger issues. There was a Rs. 248 million fraud in Aswesuma benefits; Rs. 656 million at People’s Bank; Rs. 9.832 million at Immigration; Rs. 6,000 million at Sri Lanka Insurance; Rs. 80 million in a Dubai payment of SriLankan Airlines; Rs. 110 million in SriLankan’s Chennai office; USD 2.59 million at the Finance Ministry; and the Minister revealed RDA-related fraud; and payments to the French Government were disclosed.

¶ 05 The CBSL report claims tourism recovered, remittances hit a record USD 8.1 billion, a primary surplus, and revenue up 14 per cent—about Rs. 530 billion increase; per capita USD 5,003; no money printing; unemployment down; reserves at USD 6.6 billion; growth 5 per cent in 2024 and 2025; CBSL profit Rs. 193 billion. If CBSL made Rs. 193 billion profit, how much was remitted to the Government?

¶ 06 IMF’s Julie Kozack said, “The Sri Lankan economy is performing well, the reform commitment is strong.” You are now seeking USD 700 million in two tranches of USD 350 million each. For that, you increase petrol, electricity, and devalue the rupee; soon you will raise interest rates. All this for Rs. 121 billion equivalent. With the rupee from 293 to 347, the devaluation adds Rs. 2.1 trillion to the debt stock (assuming total FX debt ~USD 38 billion), with an 8 per cent FX carrying cost versus 11 per cent local—Rs. 168 billion extra in interest. That alone equals more than the cost of the Pothuhera–Dambulla road (Rs. 122 billion). You dance to get USD 350 million but bear Rs. 168 billion extra—this is the problem.

¶ 07 A think tank says Sri Lanka’s trade, export and FDI push lacks ambition and urgency. The Japanese Ambassador said, “Kindly walk the talk, not talk the talk.” Conceptually we must change.

¶ 08 On 28 Feb the Iran war started; on 7 March CBSL/Finance-side messaging said Sri Lanka can absorb oil shocks with reserves. Later they admitted 5 per cent growth would be hard. Contradictions undermine credibility.

¶ 09 Total debt is now Rs. 34.2 trillion—up from Rs. 28.3 trillion in Sept 2024; in USD from 92.8 to 107 (Finance Ministry’s Public Debt Management Office figures). The devaluation wiped out gains: per capita USD 5,003 at LKR 302 became USD 4,497 at LKR 347. We must localize solutions, not blindly follow the IMF—revenues must rise, but expenditure cuts alone won’t work; we must also spend to grow. Under the Public Financial Management Act, expenditures are capped at 130 per cent, yet next year’s revenues grow only if we spend this year.

¶ 10 There are 1.4 million tax files; 1.2 million are individuals; 134,000 corporate files out of 256,000 companies. Workforce is 8.4 million, but only 540,000 pay PAYE. Corporate taxes at 30–45 per cent, PAYE at 30 per cent, effective government take 33 per cent; 1 per cent VAT gives Rs. 80 billion; SSCL yields Rs. 125 billion per point.

¶ 11 On the rupee slide, please verify whether 4,000 LCs were opened for vehicles and if 3,500 were at NTB. If mass LCs were opened just before policy moves, that’s insider trading—capture that benefit for the Government, not private hands.

¶ 12 Ahead of June’s mutual evaluation, focus beyond “normal/grey/black” lists—bring in dollars, build reserves first. Otherwise, rupee devaluation forces CBSL to hike rates; every 1 per cent rise adds about Rs. 170 billion in cost.

¶ 13 On cybercrimes and Port City visa misuse—rectify urgently. To the CBSL and bank supervision: do not play with the financial sector. A CBSL issue is one thing, but a banking sector issue is systemic. There are large problems in three banks—one in Kandy reported; another commercial bank has issues; a Negombo case where a cyber security manager reported to court. Attempts to hush up via PR won’t work—brave journalists exposed it. Stop bank fraud; restore supervision.

¶ 14 FIRA: about Rs. 140 billion is now “bad loans,” clogging credit. Consider a “bad bank” to resolve and free lending to private sector. In 2015 we proposed such mechanisms.

¶ 15 This government says there is no corruption but keeps alleging theft by officials. Let’s be truthful and take bold decisions—mistakes can happen if done in good faith. Also, Ministers’ attendance here is poor—decisions must be more direct.

¶ 16 The Prime Minister asked, “Did they ask us before starting a war?” Then I ask, “Did you ask us before devaluing the rupee?” The rupee at night is 320, by morning 345; import cost pass-through is yet to come.

¶ 17 Allow 30,000-car storage at Hambantota; bring in vehicles from Dubai; give space at Colombo Port. Remove the USD 15,000 fee to register offshore companies—let dollars come in. Loosen needless conditions. SriLankan Airlines cannot be fixed with Rs. 20 billion handouts; it currently lacks a Chairman and CEO—running on autopilot. Tourism says they need Rs. 17 billion to reach 2030 targets—give it; TDL is paid by tourists and us. The IMF programme ends by Dec 2026—do you have a plan beyond? What we see is patchwork, not a coherent economic plan. This is a fixable country—take bold decisions and enable enterprise. Thank you.