The Hon. (Dr.) Anil Jayantha - Minister of Labour and Deputy Minister of Finance and Planning

¶ 01 Hon. Presiding Member, today’s debate concerns the Central Bank’s review and the manner of Sri Lanka’s economic progress in 2025. At this moment, no Opposition Members are in the Chamber. Let me first summarise the progress. Faced with severe challenges, we stabilized the country and, in 2025, moved beyond stabilization to bring all key indicators to high levels. In many years under different administrations, some indicators improved and others did not, but in 2025, across the board, indicators were strong.

¶ 02 Economic growth was initially forecast at 3.5 percent due to recovery from crisis, yet we achieved 5 percent, with growth maintained across quarters. Per capita GDP surpassed USD 5,000. An Opposition Member argued that at the current exchange rate this would be lower; that is a conceptual error. One cannot retroactively re-compute 2025 GDP using a later exchange rate; if recalculating, one must also aggregate current-year GDP for the full period.

¶ 03 On monetary policy: from the outset we set a stable policy corridor—7.25 percent for deposits and 8.25 percent for lending—maintained through the year. As a result, average lending rates moved to below 10 percent.

¶ 04 On the external sector: we need dollars for imports, investment, and to service debt. Export growth in 2025 improved; tourist arrivals reached 2,360,000, raising dollar earnings; and workers’ remittances rose markedly to USD 8.1 billion. Consequently, 2025 recorded the largest-ever surplus in the external current account, with a current account surplus of USD 1.73 billion—the highest on record—giving us additional dollars to invest, import, and manage future debt service. This underpinned stability.

¶ 05 Private sector credit also indicates momentum. Government increased recurrent outlays, notably sustained wage enhancements—Rs. 110 billion per year added to the Budget in 2025, 2026 and 2027—providing a strong fiscal impulse. On capital expenditure, contrary to claims it would be as low as 10–15 percent, we achieved 17 percent. Private sector credit uptake increased versus 2024. Banks do not lend idly; they assess repayment capacity and economic activity. In 2025, over Rs. 2,056 billion—more than Rs. 2 trillion—was extended, with the trend strengthening over the last three months, showing strong private sector participation in growth.

¶ 06 On public finance, we raised revenue as planned, managed expenditure prudently, and reduced the budget deficit to the lowest in history, curbing additional borrowing. We entered 2026 with that stability, but then faced an unforeseen domestic shock—the “Ditva” cyclone. That was an exogenous factor, not a policy decision. We responded using fiscal discipline and reserves, allocating Rs. 500 billion for relief and recovery. Globally, war conditions also emerged, affecting our plans and the exchange rate—factors beyond our control.

¶ 07 I now respond to some Opposition claims made earlier. They stoke fear—saying the Government will collapse, the dollar cannot be managed, and debt has surged by Rs. 5 trillion. I asked Hon. Ravi Karunanayake for his source. Likely these figures are obtained through dubious channels. We rely on official data from the Public Debt Management Office. It shows: total debt at end-2024 was Rs. 29.8 trillion; by 31 December 2025 it was Rs. 31 trillion. By 30 April 2026, it had declined to Rs. 30.82 trillion. Over the entire period, the net increase is about Rs. 1.2 trillion, not Rs. 5 trillion.

¶ 08 Moreover, Parliament authorizes borrowing limits. Even if we took the maximum permissible new borrowing for 2025—Rs. 3,740 billion—no one can claim Rs. 5 trillion was borrowed without exceeding parliamentary authority. Such claims are willfully misleading.

¶ 09 Our debt strategy is to reduce the share of foreign currency debt. In dollar terms: external debt was USD 36.68 billion on 31 Dec 2024, rose to USD 37.46 billion in 2025, and fell to USD 35.64 billion by April 2026—overall, a reduction. Domestically, we are lengthening maturities: increasing longer-term Treasury bonds while reducing short-term Treasury bills. Bonds rose from Rs. 14.14 trillion (2024) to Rs. 15.57 trillion (2025) and Rs. 15.9 trillion (April 2026). Bills fell from Rs. 4.07 trillion (2024) to Rs. 3.214 trillion (2025) and Rs. 2.88 trillion (April 2026). This is sustainable debt management.

¶ 10 Under the programme, by 2032 debt should be 95 percent of GDP. We aim to reach about 94.5 percent already in 2026, and 86.4 percent by 2027–2030—well before 2032—demonstrating effective debt management.

¶ 11 On the exchange rate, misinformation abounds. One false claim is that 4,000 vehicles were imported on 15 May. Official records show 1,782 vehicles, not 4,000. In fact, prior to that date, around 7,000 vehicles had come in normal conditions; and after the tax increase, by 18 May, 9,429 vehicles were cleared—paying higher taxes. The 1,782 were routine clearances, not due to insider information. Perhaps the Opposition assumes we operate as they did, using insider information; we do not.

¶ 12 In 2025 we established stability, and in 2026 we continued it. The external shock affected the exchange rate, and we are taking measured steps to manage it. We must not panic; the exchange rate is not the sole determinant of the entire economy. With prudent market management and data-driven actions, we will continue steadily on this path.

¶ 13 Thank you very much.

¶ 14 It being past 5.30 p.m., the Hon. Presiding Member adjourned Parliament without Question put.

¶ 15 Parliament adjourned accordingly at 5.47 p.m. until 9.30 a.m. on Thursday, 21st May, 2026.