Hon. Anura Kumara Dissanayake – Prime Minister and Minister of Finance, Economic Stabilization and National Policies

¶ 01 country, especially the women, children, the disabled and the elderly people. Professionals were compelled to leave the country. People had to wait in long queues for days to access basic necessities and some died while waiting in the queues. The crisis of 2022 was not a mere economic crisis, it was a colossal failure in political administration up until that point. Even though the initial breakdown of the economy has been treated and largely contained, the economic crisis of 2022 has transformed into a humanitarian crisis, affecting the poorest and the most vulnerable sections of the society.

¶ 02 Going beyond the areas of economic and social, the crisis also triggered a political shift in the country. Unbearable economic hardships led to a social uprising against the corrupt rulers. People’s power forced them to step down from Government.

¶ 03 Thereafter, a temporary Government was formed, which was a distortion of the people’s mandate. However, the aspirations of the people for a socio, economic and political transformation remained unfulfilled, as the new temporary Government protected and continues to protect the corrupt, waste public money and suppress the people. Measures taken to postpone the Local Government Election in March 2023 shattered the expectations of the people for democracy.

¶ 04 Through the Presidential Election and the General Election at the end of 2024, with unshaken determination, dedication and leadership, people took a progressive decision to form a new Government with a strong mandate to direct the country towards a common prosperity by transforming the economic, social and political system of the country.

¶ 05 Hence, this Budget becomes historic as it lays the foundation for fulfilling those aspirations of the people for economic transformation of the country, by driving the economy towards sustainable growth and development.

¶ 06 One of the challenges we faced at the outset was dispelling the wrongful picture of us created by the myths and malicious political propaganda against our economic policy and vision by those who tried to stop this triumph. We have succeeded in that. There were misconceptions that the Sri Lankan Rupee against the Dollar will rise even to Rs. 400, that an era of fuel queues will return, international development partners and countries would isolate the new Government, investors would lose confidence and that private property would be completely nationalized. Despite such negative propaganda against us, we were able to emerge successfully to stabilize the economy and build strong relationships with international partners and create confidence among investors.

¶ 07 Accordingly, prices and the financial sector gradually stabilized with the benchmark annual Treasury Bill rate coming down to 8.8 per cent. Foreign currency reserves were at US Dollars 6.1 billion by the end of December 2024 even after the debt restructuring-related payments of US Dollars 570 million in December 2024, surpassing the predictions. Additionally, despite concerns over currency depreciation, the Sri Lankan Rupee has strengthened to approximately Rs. 300 per US Dollar. We expect an economic growth of around 5 per cent in 2025.

¶ 08 From mid-2022, Sri Lanka implemented economic reforms with the support of the International Monetary Fund (IMF) and other international partners in order to address the crisis. These remedial measures, in some cases, added to the pressures on the citizenry—particularly measures such as cost-reflective energy pricing, tax increases and interest rate hikes. While we recognize the role played by the IMF Extended Fund Facility Programme (IMF-EFF) in stabilizing the economy, we are also of the view that in order to design our economic agenda, achieving economic sovereignty is necessary.

¶ 09 Another key point in the economy was the conclusion of the debt restructuring process in December 2024. In fact, when we came into power, the debt restructuring process was ongoing, which we did not want to obstruct given the potential of destabilizing the economy, if such a drastic change took place. While taking this decision, we also considered the significant time already spent on the debt restructuring process and the additional costs the continuation of the process would incur.

¶ 10 This process has provided substantial debt relief, significantly reducing debt servicing costs. It is imperative that the country leverages this fiscal space to strengthen external and fiscal buffers and enhance non-debt generating inflows such as export income and foreign investment and ensure long-term financial stability to facilitate the smooth resumption of debt repayments in the future. As a result, Sri Lanka’s credit ratings were upgraded by leading global agencies, such as Fitch Ratings and Moody’s by several notches at once. These improvements have been gradually building investor confidence, fostering trade and investment opportunities and lowering international financial transaction costs, key factors in driving economic growth.

¶ 11 On the other hand, the created economic crisis continues to impact many, particularly the most vulnerable segments of society. The crisis led to a significant rise in the cost of living with inflation rising up to 70 per cent in 2022. Although inflation has since declined, price levels of many goods and services remain elevated and income growth has not kept pace accordingly, thereby reducing living standards of the people. Especially because of the fact that real wages have dropped significantly over the last couple of years, it is necessary to offer a fair pay hike. Further, the Government has increased cash transfers to targeted communities and extended the beneficiary time period through the Aswesuma Programme and offered other targeted social benefits to provide relief to those in need.

¶ 12 However, cash transfers of this nature are not a sustainable solution to eliminate the widespread poverty in the country. It is the obligation of a humane government to take care of the citizens who are unable to engage in economic activity due to various difficulties and challenges. We all know that there are inclusion and exclusion errors in the Aswesuma Programme. That’s why the Government is planning to select the most deserving people to the programme. At the same time, a sustainable solution to poverty alleviation is also necessary through enhancing opportunities for all people to engage in economic activity to their fullest potential.

¶ 13 Economic growth must take place in a manner that is inclusive, where all citizens have enhanced economic opportunities and the resultant benefits are reaped fairly by all strata of society. Growth for the sake of growth has little value to the society unless it is a means to uplifting the lives of all members of the society. For several decades, economic activity and economic benefits have been concentrated amongst a few. Take the concentration of income at household level. The top 20 per cent of households account for 47 per cent of household expenditure, according to the latest, the 2019 Household Income and Expenditure Survey. The Western Province accounts for 44 per cent of GDP in 2023. Accordingly, what is needed for going forward is, a greater democratization of the economy, where economic opportunity is more fairly distributed. Mass struggles and last year’s elections saw people asserting their political rights. What is necessary is for economic rights to be similarly asserted. This is the philosophy of this Budget.

¶ 14 This year’s Budget is prepared under significant constraints. We should not forget the severity of the economic crisis that we have been through since 2022. Most countries go through what is known as a “Lost Decade” following a sovereign default. However, we have achieved stability to a certain extent. Therefore, this Budget has been prepared with a focused sense of fiscal discipline, economic vision and guidance. We are ready to give the political leadership necessary to reach the objectives of this Budget.

¶ 15 The Public Financial Management Act sets the key fiscal rule, which is a limit of primary expenditure of 13 per cent of GDP. This year’s Budget is prepared in accordance with this requirement. Therefore, we have to be cautious in the way we spend limited tax funds to ensure that we get the best social return out of such spending.

¶ 16 In this year’s Budget, we have been able to allocate funds for many of our key priorities, although it may not be to the fullest extent that is desired. Whilst these focus areas are different to traditional budgets, we have also allocated funds for the continuity of ongoing initiatives, whilst making adjustments to align these with our mandate. This is evident in our increased expenditure on the Aswesuma Programme and other social welfare priorities. We have allocated funds for the senior citizens’ interest subsidy from July 2025, to the maximum extent that is feasible, given the tight fiscal constraints. We are also committed to implementing a robust mechanism to prevent abuse of this scheme. We have allocated 4 per cent of GDP for Capital Expenditure in this year’s Budget. This is a key contribution from the Government towards driving economic growth. We will take measures to invigorate the SME sector, public transport, rural development, agricultural rejuvenation, local entrepreneurship, incentivize research and remove barriers to growth and efficiency of domestic and export-oriented production. In all of these and other public expenditures, we will exercise a far greater degree of caution in terms of prioritization, targeting, effective implementation and ensuring value for money. Therefore, the economic and social return is expected to be higher from every rupee that is spent out of public finance.

¶ 17 As we continue on this journey of economic rebuilding, fiscal space will expand. As we unlock more savings through efficiency gains, elimination of corruption and waste, better prioritization and better tax administration, there will be more resources available for us to fulfill people’s priorities. Therefore, we, as a country, must be patient and collectively work with discipline and determination and the rewards will materialize as we go forward.

¶ 18 Principles of Budget 2025

¶ 19 A budget is not just a set of revenue and expenditure proposals for the upcoming year, but is also a reflection of the Government’s approach to building the economy and overall policy. This Budget will encapsulate three main facets of the supply side of economic policy objectives: i. Growth of production of industry, services and agriculture. ii. Production must take place with the active engagement and participation of people. iii. The benefits and gains from production must be equitably shared across the society.

¶ 20 Similarly, on the demand side for goods and services, the Government’s policy objectives are: i. To ensure continuous supply of essential goods and services. ii. Such goods and services must be supplied at a fair and reasonable price. iii. Goods and services must be of an acceptable level of quality.

¶ 21 The mechanism by which these supply and demand objectives will be achieved would be a combination of the following: 1. Through the competitive market, where supply, demand and prices are determined through the forces of competition. 2. The Government must regulate and monitor the market through regulatory bodies. 3. Active Government participation in supply and demand in certain areas. 4. Organizing production in certain areas.

¶ 22 This year’s Budget is organized based on these principles, and we intend to set a foundation to create an economy where all citizens are active participants, active stakeholders and active beneficiaries. The Government’s role is to facilitate and remove the impediments for people to fulfil their economic potential. It is an injustice when a person is unable to fulfil their economic potential due to living in a remote area. It is an injustice when a person is unable to fulfil his economic potential due to a disability, due to a lack of educational opportunity, due to lack of basic infrastructure. This is not an easy process which can be resolved overnight. It requires a great deal of effort to empower citizens to fulfill their economic potential. It is important to invest in education and training to build the required skills and capacity of the people. It is important to invest in healthcare to ensure people have the opportunity to fulfil their capabilities. Infrastructure must be provided to enable people to access markets and engage with economic opportunities in Sri Lanka and overseas. The Government must ensure fair competition, where there is not excessive concentration of market power that creates an uneven playing field. The proposals in this Budget will begin economic empowerment of the people of this country. This would be the foundation for democratization of the Sri Lankan economy.

¶ 23 Growth must also be driven by continuous productivity growth, and digitalization of the economy is essential. Another critical foundation not only for economic advancement, but also for social upliftment and political reform is good governance and elimination of corruption. Governance reforms and anti-corruption initiatives are a top priority of the Government. The Government’s flagship Clean Sri Lanka initiative aims to give life to this aspiration of society.

¶ 24 Medium Term Macroeconomic Direction

¶ 25 Through the Proposals presented in this Budget, we are laying the foundation for a new paradigm in the macroeconomic trajectory. We expect an economic growth of over 5 per cent real GDP growth over the medium term. Through our measures to improve supply capacity in the economy, we expect price shocks to be minimized, thereby providing further support to lower and stable inflation. Macroeconomic policy path will also be supportive of a stable external Current Account balance, putting an end to the era of large Current Account deficits. Accordingly, we expect the exchange rate, which is based on market fundamentals, would no longer experience spells of substantial volatility.

¶ 26 Growth would be facilitated by a strong export sector, where we expect exports of goods and services to reach an all-time high of close to US Dollars 19 billion in 2025. This growth in non-debt creating inflows along with robust economic growth and a primary Budget surplus of 2.3 per cent of GDP will ensure Sri Lanka is well placed to meet the gradual increase in debt service payments from 2028 onwards.

¶ 27 The country’s poverty rate reached 25.9 per cent in 2023, according to World Bank estimates. Whilst most countries that have undergone a sovereign default experience a prolonged period of elevated poverty, we hope to see a reversal of this trend by 2025, followed by a persistent decline in poverty as the Proposals in this Budget take the first steps towards a comprehensive effort to empower the poorest and most vulnerable members of the society.

¶ 28 With sound financial management, responsible debt management, human capital investment, a robust social safety net, economic diversification, promotion of exports, improvement of investment climate, modernization of agriculture, green economy policies, innovation, digitalization, entrepreneurship and startup ecosystems, public-private partnerships (PPPs), strengthening of anti-corruption measures, improvement of governance and promotion of transparency and sustainable growth strategies, we expect to better use the post-crisis opportunities to create a transformative change in the Sri Lankan economy to achieve long-term economic stability and prosperity.

¶ 29 I will now present the 2025 Budget Proposals to this Parliament.

¶ 30 1. Expanding Exports of Goods and Services

¶ 31 Government will formulate the National Export Development Plan (2025-2029) with a view to increasing Sri Lanka’s export of goods and services on an ambitious scale by enhancing Sri Lanka’s ability to export into global markets. Micro, Small and Medium Enterprises (MSMEs) will be facilitated to tap new export markets, expand existing markets or to connect with the value chains of large-scale exporters and global value chains.

¶ 32 With the view of removing limitations in access to high quality, affordable raw materials, new tariff rates will be based on a National Tariff Policy to create a simple, transparent and predictable tariff framework.

¶ 33 Sri Lanka’s network of Free Trade Agreements (FTAs) with strategic partners, particularly with a view to greater economic ties with ASEAN nations, will be expanded through the Regional Comprehensive Economic Partnership (RCEP) and other agreements.

¶ 34 Enhanced focus will be placed on economic diplomacy with dedicated and more professionalized efforts by Sri Lanka’s diplomatic missions towards enhancement of Sri Lankan exports of goods and services.

¶ 35 Sri Lankan expatriates will be leveraged for enhanced access to overseas business networks, commercial opportunities and commercial collaboration with Sri Lankan exporters.

¶ 36 Key border agencies and exporter registration will be automated and integrated through implementation of the Trade National Single Window (TNSW).

¶ 37 A new Customs Law will be introduced to enhance trade facilitation and revenue collection.

¶ 38 Double Taxation Avoidance Agreements (DTAs) will be expanded beyond the existing 44 DTAs with priority given to countries with a high trade and investment potential.

¶ 39 2. Investment Promotion and Facilitation

¶ 40 Government will support expansion of export-oriented investment, sector-specific zones, establishing eco-industrial parks which focus on sustainable practices, resource management and green technology through public-private partnerships (PPPs) and privately run zones.

¶ 41 The Government will revisit the Economic Transformation Act with appropriate revisions to suit the emerging developments.

¶ 42 Government will lease out underutilized State-owned land for productive economic activities.

¶ 43 An Investment Protection Bill will be enacted to facilitate and protect investments.

¶ 44 Improvements in the country’s ease of doing business will be prioritized in key areas such as registering property, ease of paying taxes, trade facilitation, enforcement of contracts and obtaining credit to attract foreign direct investments (FDIs). Measures for digitization of public services will play an important role in enabling this objective.

¶ 45 Government will introduce laws to ensure effective implementation of the one-stop-shop concept which consolidates all necessary approvals.

¶ 46 Barriers for local firms to invest overseas will be reviewed and gradually rationalized by establishing appropriate safeguards to track repatriation of earnings and dividends.

¶ 47 A Public-Private Partnership (PPP) Bill will be introduced.

¶ 48 Bimsaviya Programme will be expedited to develop good quality land titles for small-scale land owners, which will increase the commercial usability of land.

¶ 49 A new Insolvency Law, already in the draft stages, will be expedited.

¶ 50 Government will call for foreign direct investments to optimize the utilization of Sri Lanka’s untapped potential in investment, industrial development and value-added exports of Sri Lanka’s mineral resources and marine economy.

¶ 51 Government will provide required technical and financial assistance for exporters and importers to obtain quality testing and certifications.

¶ 52 The testing and calibration labs, referral centres, the referral centre for health research on cancerous inputs, universities and other conformity assessment bodies inclusive of Industrial Technology Institute will also be developed with an effective coordination mechanism to have efficient service delivery for clients. In order to fulfill the desired outcome of the NQI system in the country, we propose to allocate Rs. 750 million for 2025.

¶ 53 3. Leveraging Sri Lanka’s Strategic Location

¶ 54 Sri Lanka has the potential to be a hub for trade, logistics, financial services and digital economy. This Budget will provide the fundamental steps towards fulfilling this potential.

¶ 55 Logistics hold significant potential to serve as a premier driver of economic development in Sri Lanka, leveraging the country’s strategic geographic location. Currently, logistics contribute approximately 2.5 per cent of the nation’s GDP, a 7 per cent contribution to exports and provide direct full-time employment to an estimated 40,000 to 50,000 individuals.

¶ 56 The completion of the East and West Container Terminal projects will have a significant capacity enhancement of the Port of Colombo. Additionally, the proposed Colombo West Terminal 2 and Colombo North Port are expected to expedite the performance of Sri Lanka’s ports. Therefore, we will call for Expressions of Interest for these projects within a month.

¶ 57 The Port of Colombo is currently experiencing severe congestion as container volumes have surged significantly, exposing the need for critical development in infrastructure and systems and procedures.

¶ 58 Therefore, we propose to allocate Rs. 500 million from the Budget 2025 to support the land acquisition process and initial preparatory works on the Kerawalapitiya customs inspection yard and Bloemendhal Logistics Park.

¶ 59 As a long-term measure to ease the container traffic congestion in and around the Colombo Port and increasing foreign earnings through value addition, it is proposed to establish an Internal Container Dry Port (ICD) at Veyangoda as a rail-based Integrated Multimodal Cargo and Logistic Centre (IMCLC). We propose to allocate Rs. 500 million to review previous studies, identify an institutional mechanism, land acquisition and initial preparatory works on ICD at Veyangoda.

¶ 60 We propose to allocate Rs. 500 million to support the initial development of the National Single Window System, Truck Appointment System, E-Cargo Tracking System and Port Community System.

¶ 61 Modernizing infrastructure and incorporating cutting-edge technology are crucial for improving cargo movement. Outdated scanning systems are causing delays in the whole supply chain. Therefore, we propose to allocate Rs. 1,000 million to support the initial development and establishment of advanced scanning systems for Port of Colombo and Bandaranaike International Airport.

¶ 62 4. Digital Economy Advancement

¶ 63 Accelerating the development of Sri Lanka’s Digital Economy is one of the most important pillars of our Economic Development Strategy. Digital transformation will uplift economic growth through enhancing productivity across industrial and service sectors, advancing economic opportunity, improving public service delivery and improving transparency in governance and public finance.

¶ 64 Introduction of Sri Lanka Unique Digital Identification (SL-UDI) for all citizens is a key priority. SL-UDI is a foundational Digital Public Infrastructure (DPI) essential for the development of a digital economy. Steps have already begun towards this process and it is expected that this process will be expedited.

¶ 65 Public and institutional trust in the safety and integrity of digital services and systems is critical for the success and sustainability of digital transformation. Sri Lanka’s Digital Economy will be governed and protected through the creation of new legislation and the strengthening of existing legislation. We will also focus on strengthening the related institutional framework. We will enact new legislation to further accelerate the Digital Economy and to empower an apex Digital Economy Authority as well as other subject specific agencies in the Digital Eco-System. We will also strengthen legislation and institutions related to cyber security, data privacy and data protection.

¶ 66 Digital payment infrastructure is another foundational component of Sri Lanka’s Digital Economy Framework. The accelerated adoption of digital payments flowing between Government, business and citizens will be a key accelerator of the Digital Economy. The recently launched GovPay system is an example of one such digital payment channel. It is necessary to gradually shift away from a cash-based economy. It would be implemented with a carefully phased process with clear communication.

¶ 67 The Government will facilitate a conducive investment environment to attract private capital and partnerships across all segments of the Digital Economy. This will also support attracting investments towards innovations in artificial intelligence, robotics, FinTech and other emerging technologies.

¶ 68 Our aim is to grow Sri Lanka’s Digital Economy to a level in excess of US Dollars 15 billion or 12 per cent of the national economy over the next five years. In achieving this ambition, the Government aims to facilitate an increase in the ICT industry’s annual export revenue to US Dollars 5 billion.

¶ 69 Accordingly, we propose to allocate Rs. 3,000 million to bolster the acceleration of Digital Economy development through the initiatives described.

¶ 70 5. Tourism Sector

¶ 71 It is necessary to ensure that we focus on the value generated from tourism instead of simply focusing on the number of arrivals.

¶ 72 Towards this end, steps will be taken to develop local destinations so as to optimize value generation from each destination with local branding of destinations to reflect the unique cultural value proposition of that destination with required infrastructure facilities. After identification, the required critical infrastructure development activities will be carried out on a priority basis during the two-year period, 2025-2026. This infrastructure development will be supported by an integrated city branding and promotion campaign for these developed destinations. For this purpose, we propose to allocate Rs. 500 million for the year 2025.

¶ 73 The Government will facilitate training youth in communication and other skills in the tourism sector.

¶ 74 Developing and promoting new tourist destinations to expand the moving capacity of tourists will be a priority agenda of the Government.

¶ 75 In parallel, a digital ticketing system will be introduced to address issues of over-crowding and improve capacity of the sector.

¶ 76 The Bandaranaike International Airport Terminal 2 will be expanded with the support of Japanese investments.

¶ 77 The Government will improve tourist safety and facilities through a combination of technology-based solutions, linking the tourist police, Government agencies and civic organizations to provide information on tourist attractions, receive security alerts, feedback on tourist experience and monitor complaints to law enforcement authorities.

¶ 78 6. SMEs – the Backbone of Economic Development

¶ 79 The development of small and medium enterprises and entrepreneurship is a key objective of the Government. Access to finance has long been one of the biggest challenges facing the SME sector and rural entrepreneurs. The financial culture in this country has been one of collateral-based lending which has led to a great deal of financial exclusion. Whilst banks must protect the interests of depositors and ensure prudence in their lending practices, there also needs to be a solution for SMEs and new entrepreneurs as well.

¶ 80 Towards this end, the Government is working towards setting up a development bank. As a first step, the function of a development bank through a new administrative structure will be established through the existing State bank mechanism. The Government will support this task through the National Credit Guarantee Institution (NCGI).

¶ 81 7. Fostering Innovation and Entrepreneurship

¶ 82 R&D projects will be aligned with the industry needs in collaboration and consultation with diverse stakeholders including research institutions, universities, government agencies and private sector and National Intellectual Property Organization (NIPO).

¶ 83 Priority for R&D initiatives will be on following areas: 1. Providing co-financing for selected R&D initiatives. 2. Coordinate linkages between public R&D institutions and relevant universities with Sri Lanka’s diaspora engaged in similar fields globally. 3. Facilitate exporters to receive trademark protection globally through accession to the Madrid Protocol.

¶ 84 It is reported that 272 patent registrations were done in 2020 and out of them, 223 patents were non-resident registrations and we ranked as the 61st country in 2019 in terms of patent application submission. We observe that there are a number of research findings which have not been commercialized and utilized for the benefit of the economy and reaping investment opportunities. For this purpose, we propose to allocate Rs. 1,000 million to create an Innovation Invention Fund for commercialization of research findings.

¶ 85 8. Expenditure Management

¶ 86 The Government will continue efforts to streamline State expenditure. The entire ecosystem of allowances and benefits provided to public Representatives is being reviewed. Through such interventions, it would be possible to free up valuable resources that are tied up in depreciating assets and deploy them for far more productive uses.

¶ 87 To set an example on expenditure management on the side of the political leadership, the number of Ministers is limited to 21. Ministers’ and Deputy Ministers’ expenditure has been rationalized, reducing public expenditure for the Government.

¶ 88 Public resources such as mansions allocated for the President, Prime Minister and Ministers have been redirected to effective public use. A Committee is appointed to recommend the best use of such properties in economically viable projects and the public interest.

¶ 89 All luxury vehicles which require heavy running and maintenance expenses will be auctioned.

¶ 90 Minimizing State Expenditure on Vehicles. Vehicles assigned as official vehicles to government officials have a high fuel consumption and are of significant value. These vehicles incur high maintenance costs. Hence, the Government has decided to minimize heavy expenditure on vehicles by encouraging selected officers through an additional financial benefit.

¶ 91 Rationalization of State Agencies Over the years, the Government mechanism has enlarged into an unwieldy structure. Several agencies have been set up without appropriate study or reason. This has resulted in duplication, wastage and a hindrance to the effective delivery of Government services. In order to remedy this situation, a Committee under the Prime Minister’s Secretary has already been appointed to review the functions and utility of a plethora of government agencies. It would be possible to determine which agencies need to continue, which need to be amalgamated with other agencies, which agencies need to be discontinued and which need to change their objectives. This exercise is expected to deliver substantial gains in terms of improved efficiency in delivery of public services.

¶ 92 Institutional Governance of State-owned Enterprises A key requirement to reduce future financial risk emanating from SOEs is to improve SOE governance. Towards this end, a holding company under the full control of the Government will be established, under which selected SOEs are held as subsidiaries with a view to improve governance, financial discipline and operational efficiency.

¶ 93 9. Supporting Women’s Economic Participation

¶ 94 Programmes for women’s affairs are implemented at the Line Ministry as well as the provincial council level. In that, a monthly assistance is given for providing nutritious food especially for pregnant mothers, for which Rs. 7,500 million has been earmarked. Also, for the Triposha programme for the nutrition of mothers and children, Rs. 5,000 million has been allocated.

¶ 95 For programmes to prevent child and women violence, empower women and save women, Rs. 120 million has also been allocated. In order to maintain the network spread across the Island for the implementation of programmes aimed at women, Rs. 720 million will be incurred.

¶ 96 10. Towards a Healthy Society

¶ 97 Digitalization of the Health System Digitalization within Sri Lanka’s health system has been minimal compared to the other countries in the region. Accordingly, new initiatives and interventions will be carried out from 2025 to enhance the digitalization of healthcare delivery. This will include digitalization of functions of the National Medicines Regulatory Authority (NMRA), State Pharmaceuticals Corporation (SPC) and improvement and expansion of the “Swastha” system.

¶ 98 Improving Rural-level Primary Healthcare Efforts are being made to improve the service delivery at over 1,000 Primary Medical Care Units (PMCUs) and divisional hospitals with the focus on non-communicable disease control and prevention. Furthermore, palliative and geriatric care services will be available at selected PMCUs in each district, especially considering the ageing population.

¶ 99 Estate Health Actions will be taken to expedite the process of strengthening estate level healthcare service through public-private partnerships (PPPs) with Regional Plantation Companies. Required human resources, necessary equipment and pharmaceuticals for estate hospitals will be provided by the Government.

¶ 100 Pandemic Preparedness National capacity for pandemic prevention, preparedness and response will be improved with the assistance of development partners over the next three years. Additionally, surveillance and early warning capacity against all potential health hazards will be strengthened.

¶ 101 A healthy population is also essential for human capital development, as it directly contributes to increased productivity, better educational outcomes, enhanced workforce participation, innovation and skills development. It also promotes social stability, improves quality of life and drives economic growth and stability. Accordingly, Government health budget for 2025 has significantly increased to an allocation of Rs. 604,000 million.

¶ 102 In order to ensure the supply of pharmaceuticals and medical supplies, Rs. 185,000 million is allocated in the Budget 2025. The Government will take necessary actions through the Ministry of Health to ensure the procurement and distribution of quality pharmaceuticals and medical supplies without any interruption and minimize wastages while optimizing procurement processes and full utilization of funds.

¶ 103 Provision of Healthcare Treatment for Children with Neurodevelopmental Disabilities, Including Autism Sri Lanka has seen a rise in the number of children diagnosed with neuro-developmental disabilities, including autism over the past decade.

¶ 104 To address these challenges, it is proposed to implement a five-year national programme to improve health, education and service facilities for children with neurodevelopmental disabilities, including autism across all 25 districts of Sri Lanka. As an initial step, we propose to allocate Rs. 200 million for 2025 to establish a treatment centre for children with neurodevelopmental disabilities with international standards at the Lady Ridgeway Children’s Hospital (LRH). Further, efforts will be made to establish similar kind of treatment centres in every district with the necessary human resources within the next five years.

¶ 105 Inclusive Early Childhood Development for Children with Neurodevelopmental Disabilities, Including Autism Currently, the pre-schools and day-care services are provided by the private sector. Pre-schools and day-care facilities for children with Autism are limited. This is mainly due to the lack of awareness and capacity among pre-school teachers and caregivers on inclusive education and early childhood development for children with neurodevelopmental disabilities, including autism. Accordingly, we propose allocating Rs. 250 million for developing a model day-care centre.

¶ 106 11. Education Opportunities for Everyone

¶ 107 Due to economic challenges that prevailed in the country, renovations of school infrastructure have not been done since 2019. Therefore, over Rs. 10,000 million has already been allocated from the 2025 Budget to upgrade school infrastructure.

¶ 108 Rs. 135,000 million has already been allocated to improve the quality of the university system.

¶ 109 Pre-school Nutrition Programme We propose to increase the payment per meal per student for pre-school morning meal programme from Rs. 60 to Rs. 100 and a provision of Rs. 1,000 million has already been made in the 2025 Budget Estimates for this purpose.

¶ 110 An allocation of Rs. 80 million has been made in the 2025 Budget Estimates to construct a model early childhood education centre, laying a foundation for lifelong learning.

¶ 111 Recognizing pre-school teachers as key players in human resource development, in order to enhance the quality of pre-school education and acknowledge their valuable contribution, we propose to increase their monthly allowance by Rs. 1,000 starting from June this year. Accordingly, we propose to allocate Rs. 100 million for this purpose.

¶ 112 Modernization of School Education The Government’s policy is to develop a primary school within a three-kilometre radius from where children’s residence or their parent’s place of work is. At present, there are 10,126 government schools Islandwide. Of them, 3,946 are primary schools and approximately 634,094 children enrolled in these schools. There are more than 3,000 schools having fewer than 100 students and 1,471 schools have fewer than 50 students. Most of these schools are in rural and remote areas. This has led to a great disparity between schools. Accordingly, it is proposed to review the school system to prepare a national plan to relocate schools. Accordingly, we propose to allocate Rs. 500 million to implement this programme.

¶ 113 Student Scholarships 8. We propose to increase monthly scholarship amount from Rs. 750 to Rs. 1,500 to students of low-income families who qualified at Grade 5 Scholarship Examination. Accordingly, we propose to allocate Rs. 1,000 million for this purpose. 9. Nutritious Food Allowance has been supported for students in sports schools to obtain a nutritious diet. Hence, we propose to double the monthly Nutritious Food Allowance from Rs. 5,000 to Rs. 10,000 per student. Budgetary provision has been already made in 2025 Budget Estimates for this purpose. 10. We propose to increase this stipend from Rs. 4,000 to Rs. 5,000 per month for students in vocational education. Budgetary provision has already been made in 2025 Budget Estimates for this purpose, in addition to which we propose to allocate a further Rs. 200 million for the same. 11. We propose to increase the monthly Mahapola Scholarship from Rs. 5,000 to Rs. 7,500 and monthly bursary payments from Rs. 4,000 to Rs. 6,500. A provision of Rs. 4,600 million has already been made in the 2025 Budget Estimates.

¶ 114 All of these payments will be made from April 2025.

¶ 115 Scholarship for Pursuing Undergraduate Courses at High-ranking Universities We propose to create a programme to offer scholarships for students who show outstanding performance at G.C.E. A/L Examination to study undergraduate degree programmes at high-ranking universities and return to Sri Lanka to apply their acquired knowledge and skills to the country. For this purpose, we propose to allocate Rs. 200 million to initiate this programme in 2025.

¶ 116 Development of Sports Schools In this regard, we propose to develop specialized sports schools in five provinces—Western, Northern, Central, Uva, and North Central—and the schools will be selected based on the records of the past or present students accomplished at the local and international competitions. Accordingly, we propose to allocate Rs. 500 million for the development of sports schools in five provinces.

¶ 117 Improvement of Jaffna and other Regional Libraries A large number of readers, including school students from Jaffna and nearby islands use the Jaffna Library. However, the infrastructure has not been adequately developed for the benefit of these readers. Therefore, we propose to allocate Rs. 100 million from this Budget to provide computers and other essential facilities for this library. In addition to that, we propose to allocate another Rs. 200 million under this Budget for the development of other regional libraries.

¶ 118 12. Energy Sector

¶ 119 The energy sector is vital for the country’s economic development. We will focus on diversifying energy sources with more weight on renewable energy and modernizing infrastructure. Government will continue to invest in the energy sector while welcoming local and foreign investors who could provide the best tariff advantage to Sri Lanka. Necessary reforms to the regulatory framework will be prioritized to facilitate internal restructuring with the new Act to be passed soon.

¶ 120 We awarded a tender to a 50 MW wind power project at US Dollars 4.65 cents for a unit of electricity. In that context, awarding projects at an excessive tariff around US Dollars 8.26 cents cannot be justified. To provide energy at a competitive cost to industries, exporters and consumers, we will welcome energy investments based on the lowest tariffs and we will not provide preferential treatment purely on the company or the country of origin.

¶ 121 When we exclude the oil tanks given to CPC and IOC, there are 61 more oil tanks in the Trincomalee oil tank complex, which has 99 tanks of 10,000 metric ton capacity. Considering the strategic location of these tanks, there is high potential to access international markets. We expect to develop these tanks, collaborating with internationally recognized companies.

¶ 122 13. Agriculture and Food Security

¶ 123 The agriculture sector provides employment to approximately 30 per cent of the country’s labour force and is the backbone of the rural economy. Therefore, enhancing the potential of the agriculture sector is a key requirement in terms of improving economic opportunities for the vast majority of Sri Lankans.

¶ 124 The Government policy on agriculture sector is aimed at increasing its productivity, competitiveness and resilience. The fertilizer subsidy for paddy farmers will be continued, for which the Government has already allocated Rs. 35,000 million for 2025. The development of quality seeds, cascade management, efficient use of water in agriculture have been identified as priority areas and are expected to be supported by the Budgetary allocation.

¶ 125 Maintaining a Healthy Buffer Stock: A sufficient buffer stock starting from this Maha 2024/25 is proposed to be maintained as a resilience measure to bridge the demand and supply of rice in the market while avoiding haphazard price volatility. We propose to allocate Rs. 5,000 million for this purpose for Maha 2024/25.

¶ 126 Information System: The agriculture sector lacks a sound data and information system for timely decision-making. Therefore, action will be taken to establish a sound data and information system, covering the entire value chain from the point of production up to the point of consumption under the ongoing Asian Development Bank funded “Food Security Livelihood Emergency Assistance Project” and will be expanded with the funds coming from the new World Bank Project; Integrated Rurban Development and Climate Resilience Project.

¶ 127 Production Increase of Other Field Crops (OFCs): In addition to paddy, the production of green gram, black gram, chillie, red-onion, cowpea, soya, maize, potatoes and other selected cereals as well as tuber crops will be increased through an accelerated programme over the medium term 2025-2027. For this purpose, we propose to allocate Rs. 500 million for 2025, in addition to the funds given for the Ministry of Agriculture for 2025.

¶ 128 It is appropriate to develop a regulatory framework to regulate the collection and storage of paddy and rice stock in the market. Accordingly, it is proposed to amend the Paddy Marketing Board Act for vesting the powers with them to regulate the collection and storage of paddy and rice.

¶ 129 Bringing Land into Production Some of the lands presently managed by LRC, RPCs, SLSPC, JEDB and underutilized will be identified and brought in for private investment including SMEs, taking the suitability of the land into consideration. We propose to allocate Rs. 250 million to undertake initial activities in this regard.

¶ 130 Youth Entrepreneurs and Producer Co-operatives At present, there are many global examples of successful producer co-operative arrangements. Fonterra, a New Zealand dairy co-operative, Amul, Indian Dairy Farmers Co-operative and Mondragon Workers Co-Operative of Spain are a few of the best global examples.

¶ 131 We, too, propose to adopt an alternative production approach to develop the co-operative mechanism. The Government will support these co-operative mechanisms through provision of land, agricultural extension services and other support. To further strengthen the legal empowerment and to provide the necessary infrastructure facilities and financial incentives, we propose to allocate Rs. 100 million for this initiative for 2025.

¶ 132 Youth Entrepreneurship Development in Agriculture The youth entrepreneurs in agro-based SMEs, particularly for those who expect to scale-up or willing to engage in startups, will be targeted through this initiative. We propose to allocate Rs. 500 million for this purpose.

¶ 133 Dairy Production At present, the domestic milk production is sufficient only to cater to around 45 per cent of the local demand. In order to increase the dairy production, Rs. 2,500 million is proposed to be invested during 2025-26 for the improvement of Dairy Value Chains and to enhance dairy farming productivity through the ongoing Inclusive Connectivity Development Project.

¶ 134 Irrigation Sector Development Sri Lanka’s agriculture-based economy is very significant with about 75 per cent of the population living and working in the rural sector. The total public sector investment for irrigation sector development for 2025 is estimated at Rs. 78,000 million.

¶ 135 The new water resources development projects, including Malwathu Oya, Gin, Nilwala, Maduru Oya Right Bank development, Mundeni Aru project will gradually be brought into implementation over the medium term, considering the priority within the available fiscal space.

¶ 136 In order to rehabilitate down-stream development of Gal Oya, Rajanganaya, Minneriya and Hurulu Wewa schemes, an allocation of Rs. 2,000 million is proposed to be provided in 2025.

¶ 137 14. Plantations and Other Export Crops

¶ 138 Increasing Coconut Production The global demand for coconut products is continuously increasing and as predicted by the industry, the total nut requirement of the country would be 4,500 million nuts in 2030, where 1,800 million nuts are expected to be used for home consumption and the balance 2,700 million nuts can be absorbed for industry purposes.

¶ 139 Therefore, we propose to allocate Rs. 500 million for high-yielding coconut seedlings to the growers in the northern region for planting 16,000 acres of new coconut land in established Northern Coconut Triangle based on CRI recommendation.

¶ 140 Other Export Crops – Spices Measures will be taken to expand value addition in traditional exports such as cinnamon. Marketing and promotion of these products will be enhanced through Sri Lanka’s embassies. The Government will provide technical assistance to farmers in order to improve supply quality and facilitate linkage with value-added exporters, including through international joint ventures.

¶ 141 In order to link to the global value chain, we propose to allocate Rs. 250 million to implement an integrated product development and trade promotion programme on Ceylon cinnamon and other export crops.

¶ 142 15. Fisheries and Aquaculture

¶ 143 Limited availability of freshwater prawn seeds is identified as a major constraint to further develop the freshwater prawn farming industry in Sri Lanka. In order to promote the stocking of freshwater prawn in tanks and non-traditional aquaculture and enhance the future production towards export economy, we propose to empower farming community/fisheries societies and local communities and establishment of freshwater prawn hatcheries under public-private partnership (PPPs) arrangements, farmer co-operatives and marketing networks and facilitate farmer societies to link with such marketing networks as well. For this purpose, we propose to allocate Rs. 200 million.

¶ 144 16. Social Protection

¶ 145 Increasing ageing population, low female labour force participation and shrinking labour market have created a challenging situation in the country. Furthermore, it is observed that inequality and vulnerability persist particularly among certain segments, including children, disadvantaged women, the elderly, the poor and the differently-abled. Therefore, the Government’s responsibility is to protect and to empower them to integrate into society as productive and equal partners.

¶ 146 “Aswesuma” benefit enhancement In order to ease the burden of vulnerable communities, the Government will take necessary steps to safeguard them by enhancing the cash grants for those in the social registry. Accordingly, the Government has increased social protection programme net spending to Rs. 232.5 billion in 2025. The increase in the monthly benefit allowance paid to the two social groups—the poor and the extremely poor—from Rs. 8,500 to Rs. 10,000 and from Rs. 15,000 to Rs. 17,500, respectively, has already been implemented with effect from January 2025. We propose to extend the benefit payment period for transitional social groups whose payments were set to end on March 31, 2025, until April 30, 2025. Further, for those eligible for Aswesuma and not yet included, to enter the scheme, it is expected to finish enumeration in May 2025, providing another opportunity for them to enter the programme.

¶ 147 Increase of the Kidney Patients / Disability / Elderly Allowance We propose to increase the monthly allowances for kidney patients and people with disabilities from Rs. 7,500 to Rs. 10,000 and monthly allowances for elderly persons from Rs. 3,000 to Rs. 5,000 with effect from April 2025.

¶ 148 Empowering the “Aswesuma” Beneficiaries for Sustainable Change According to Government policy, 1.2 million “Aswesuma” beneficiaries will be empowered using Government funds and foreign funds. Around 25,000 families have been selected to be empowered under the pilot programme with the assistance of the Asian Development Bank and the World Bank funded projects. The remaining number of potential/eligible families are expected to be empowered gradually, using local funds. Accordingly, we propose to enhance the empowerment programme by Rs. 500 million.

¶ 149 The Government has already announced and implemented several other relief measures such as the Rs. 6,000 payment for each student from low-income groups to support purchase of education-related stationary and books. The Government has also already provided a kerosene subsidy amounting to a total of Rs. 3 billion during the period October 2024 up to March 2025 to support the livelihoods of the fishing community, particularly to help them withstand the lingering impacts of the economic crisis.

¶ 150 Enhancing the Welfare of Children Placed in Probation – Renovation of Certified Schools/Remand Homes and Childcare Institutions At present, 379 certified schools/detention homes/children’s homes are being operated. Out of these, 47 institutions are operated by the Government. The facilities in these homes are at a very low level and it is observed that security is not adequate in some places. Some buildings need repair and the buildings in some districts do not have sufficient space. Therefore, we propose to improve the capacity of childcare centres in the areas of physical and human resource development. For this purpose, we propose to allocate Rs. 500 million.

¶ 151 Establishing a Child-friendly Transport System for Institutionalized Children to and from Courts – Transportation of Child Convicts We observe that children in institutionalized homes are most vulnerable for many reasons including due to inadequate transport facilities. Accordingly, we propose to allocate Rs. 250 million in 2025 to purchase the necessary vehicles for this purpose.

¶ 152 Enhanced Social Security for Orphaned Children and Youth In line with our Manifesto and the Government’s commitment to ensuring that every citizen is given the opportunity to lead a dignified and secure life, we propose social security and housing to orphaned children. This initiative will provide them with long-term support, skills development and financial security, ensuring their well-being and integration into society as empowered individuals who can positively contribute to the economy.

¶ 153 The 2025 Budget has presented Proposals for the welfare of children in government institutions and detention homes. When implementing these Proposals, relevant institutions should prioritize the following matters: i. A monthly allowance of Rs. 5,000 for institutionalized children and orphans will be provided. We propose that Rs. 2,000 be deposited into a minor’s account and the remaining Rs. 3,000 be given to their legal guardians under Government supervision for the children’s expenses. We propose to allocate Rs. 1,000 million from the 2025 Budget for this purpose. ii. Most of these children lack a family background or supportive system to help them start their lives with housing and security. Therefore, these vulnerable communities are postponing marriage due to the inability to afford housing, which leads to social stress and economic disparities. While their bank savings provide a foundation, it is often insufficient to cover the cost of building a house. Considering this reality, we propose a Rs. 1 million housing grant, to build a stable and secure house. To implement this, the Government proposes to allocate Rs. 1,000 million in the 2025 Budget. iii. Ensuring opportunities for children in care homes and Government rehabilitation centres to enroll in the nearest National or provincial council school with proper educational facilities when providing school education. iv. Following rehabilitation methodologies that provide NVQ level 3 or 4 quality vocational/skills training for youth being rehabilitated in rehabilitation centres, enabling them to join the society as good and productive citizens with a profession or livelihood upon release. Developing a methodology for issuing Police/Grama Seva certificates in a way that does not hinder those who have been rehabilitated and demonstrate good conduct from obtaining suitable employment. v. Giving priority based on qualifications for Government housing assistance, training, and employment recruitment when institutionalized children are reintegrated into society after turning 18 and when such children marry (especially for females). vi. Amending relevant laws to allow individuals to continue residing in these institutions under certain conditions when institutionalized children who turn 18 are not in a suitable position to reintegrate into the society, with the aim of preventing their abuse and exploitation by various persons.

¶ 154 Database on People with Disabilities A significant number of the population suffers with one or many disabilities. We observe that there is no reliable database about their distribution, difficulties, educational level, abilities to engage in economic activities and employment. Therefore, we propose to allocate Rs. 100 million to establish a comprehensive database on the people with disabilities under the Secretariat for Persons with Disabilities in collaboration with the Department of Census and Statistics in the year 2025.

¶ 155 Disaster Relief A compensation of Rs. 250,000 is currently being paid to the people who lose their lives and those who get permanently disabled due to disasters. Accordingly, actions have been taken to increase this compensation to Rs. 1,000,000 for death or permanent disabilities caused by all factors, including natural disasters and damages caused due to wild animals.

¶ 156 Further, the payment of compensation of Rs. 2.5 million has already been introduced for property damages that were not yet compensated, particularly for children’s homes, elderly homes and residential centres for persons with disabilities, which are affected by disasters.

¶ 157 Mental Health We are experiencing many unfortunate incidents of suicide among adolescents. The Government has recognized the severity of this issue as a social problem. Therefore, we propose to allocate Rs. 250 million for 2025 to implement a medium-term programme to expand the awareness and counselling services for students and adolescents by the Ministry of Health in collaboration with the Ministry of Education.

¶ 158 Manufacturing of Assistive Devices Locally Assistive devices are crucial for people with disabilities and those are considered as a part of their body. I observe that a comprehensive programme is required to expand locally manufacturing facilities of these devices in all provinces. Therefore, we propose to allocate Rs. 500 million for this purpose in 2025. Initially, the assistive device manufacturing facility at the Rheumatology and Rehabilitation Hospital, Ragama will be expanded as the national centre and regional manufacturing centres will be established, as necessary.

¶ 159 Providing Essential Foods at a Concessionary Price During the New Year Period The Government has decided to provide a concessionary “Seasonal Food Package” to people by allowing them to purchase essential food items at affordable prices, as a supportive measure to reduce the increased cost of living. Accordingly, it is proposed to provide a dry food ration including rice, canned fish, dhal, onions, potatoes and dried fish at a concessionary rate through Lanka Sathosa Limited during the upcoming New Year season. We propose to allocate Rs. 1,000 million to finance these rations.

¶ 160 17. Sri Lankan Expatriates

¶ 161 Sri Lanka’s migrant workers play an important role in the country’s development, both in terms of foreign exchange remittances and skills they bring back to the homeland, following their work overseas. We are exploring ways of encouraging and rewarding this important community of Sri Lankans. As a first step, we propose to enable a more generous duty-free allowance for Sri Lanka’s migrant workers as they return to the country. The criteria and basis for the allowance will be determined and publicized following a detailed study of options.

¶ 162 18. Special Interest Scheme for Senior Citizens

¶ 163 We propose to implement a special interest scheme for senior citizens. Under this scheme, individuals above 60 years of age will be eligible for one-year fixed deposits of up to Rs. 1 million with an annual additional interest rate of 3 per cent above the prevailing interest rates in the market for ensuring their financial stability. To implement the scheme, we propose to allocate Rs. 15,000 million to subsidize the 3 per cent additional interest to be paid for the senior citizens.

¶ 164 This scheme will be implemented from July 2025.

¶ 165 19. Creating a Drug-free Society

¶ 166 Drug addiction is a significant concern in Sri Lanka, affecting various segments of society. Therefore, the Government has recognized the importance of creating a drug-free society through multifaceted approaches that go beyond punishment. Accordingly, we propose to prepare a comprehensive programme incorporating awareness campaigns, rehabilitation including counseling, social empowerment and integration and law enforcement. Accordingly, we propose to allocate Rs. 500 million to implement a comprehensive programme to create a drug-free society.

¶ 167 20. Skills Development Programme for Convicted Prisoners

¶ 168 At present, there are around 30,000 prisoners in 37 prisons located Islandwide. One-third of them are convicted prisoners and others are remand prisoners. Overcrowding of prisons results in degraded living conditions in the prison, which violates the notion that prisoners are also human beings.

¶ 169 Around 65 per cent of the prisoners are in the peak of their working age, below 40. Accordingly, we propose to conduct employable and marketable skills development courses together with vocational training institutions and award relevant vocational qualifications. For this purpose, we propose to increase existing allocation by Rs. 100 million to implement this programme.

¶ 170 21. Public Transport Modernization

¶ 171 An efficient public transport system is a crucial element of enhancing people’s access to meaningful economic engagement and mobility.

¶ 172 Therefore, it is essential to enhance existing public transport systems with new technologies and introduce new transport modes to meet the increasing passenger demand, especially in urban and suburban areas. Accordingly, it is a timely requirement to upgrade and modernize both road and rail transportation systems.

¶ 173 Bus Sector Modernization As an initial step towards enhancing public sector transportation, a modern and comfortable fleet of technologically advanced buses will be introduced on a pilot basis. Accordingly, 100 air-suspension, low-floor, comfortable buses will be deployed along three main road corridors within Colombo City. We propose to allocate Rs. 3,000 million for the procurement of 100 low-floor buses. In addition to that, SLTB will add 200 low-bed passenger buses for its fleet through its own funds.

¶ 174 These buses will be operated under newly established companies collectively known as Metro Bus Companies (MBCs). Proposed bus companies will operate on a fully digitized platform.

¶ 175 Railway Sector Modernization Rail-based public transportation is highly important in long distance as well as the urban and suburban areas. However, the poor condition of the coaches negatively impacts on passenger safety, comfort and train speed. Further, it is important to establish the railway system as an industry while focusing on repairing and building new coaches within the country.

¶ 176 Accordingly, as a first step, we propose to allocate Rs. 500 million to rehabilitate old railway passenger coaches targeting to rehabilitate passenger coaches to enhance the efficiency of services and cater to the growing passenger demand.

¶ 177 We propose to allocate Rs. 250 million for 2025 to the Department of Railways to initiate building new coaches aiming at fulfilling new passenger coach requirements within the country.

¶ 178 In order to provide an efficient railway service and improve public transportation facilities, we propose to extend the Kelani Valley Railway Line, which currently operates up to Avissawella, beyond Avissawella in phases. An allocation of Rs. 250 million will be made through the 2025 Budget to begin the initial work related to this.

¶ 179 The Government will implement a joint timetable in all bus routes after discussing with CTB and private bus operators. The Government will continue to invest in the Kandy Multi-modal Transport Terminal Development Project, which would have important spillover effects in terms of regional development.

¶ 180 Rail Transport for Agricultural Products Transporting agricultural goods over the road network remains a major challenge due to high costs, post-harvest losses during transportation, road congestion and environmental concerns. To address this, we propose to introduce a dedicated rail-based transportation of agriculture products from production centres to destinations.

¶ 181 We plan to upgrade the Thambuththegama Railway Station by incorporating loading docks with storage facilities upon the recommendation of the study. To support this initiative, we propose an allocation of Rs. 100 million for the feasibility study as the initial step.

¶ 182 SriLankan Airlines Legacy Debt Settlement SriLankan Airlines (SLA) performs a leading service in the transportation of passengers and cargo by air. Furthermore, previous Governments’ attempts to divest State ownership and attract private investment have also been unsuccessful.

¶ 183 In light of this, the Government would sign an agreement with those banks and set aside Rs. 10,000 million for loan capital repayment in 2025 as well as Rs. 10,000 million for interest payments. The Airline would be fully responsible for ensuring operating profitability once these legacy debt service costs are settled by the Government. A new medium-term strategic plan is being devised by the company towards this end. Accordingly, we propose to allocate Rs. 20,000 million for this purpose.

¶ 184 Enhancing Road Infrastructure A robust road network is a critical component of the infrastructure necessary to connect citizens with markets and public spaces.

¶ 185 As such, we propose an allocation of Rs. 3,000 million for improvement and rehabilitation of rural roads, giving priority to roads which connect less developed rural villages, tourist destinations, industrial estates and economically significant places/areas in addition to the already allocated amount of Rs. 26,680 million for the development of the rural roads Islandwide.

¶ 186 Aiming at ensuring safe and reliable mobility to all users, we propose a Rs. 1,000 million allocation to rehabilitation of rural bridges in addition to the already allocated amount of Rs. 1,000 million for the development of the rural bridges Islandwide.

¶ 187 Rural Roads and Bridges in Northern Province It has been observed that the Northern Province has been largely isolated from mainstream development. However, it holds tremendous potential to contribute significantly to our economy. As such, focusing at the rehabilitation of basic infrastructure needs, we propose to allocate Rs. 5,000 million for the rehabilitation and improvement of rural roads and bridges in the Northern Province.

¶ 188 Construction of Vadduvakal Bridge in Mullaitivu The Vadduvakal causeway is a narrow bridge over the mouth of the Nandikadal Lagoon in Mullaitivu, which is the main artery connecting Mullaitivu, Puthukkudiyiruppu and Jaffna. This bridge is in a dilapidated condition, which creates risks to commuters. Therefore, we propose to build the Vadduvakal Bridge aligned with the developmental needs of the Mullaitivu District. We propose to allocate Rs. 1,000 million under this Budget to commence work accordingly.

¶ 189 22. Regional Development

¶ 190 The Decentralized Budget Programme 2025 is being implemented, focusing on building a production economy. For this purpose, we propose that each MP is to be allocated Rs. 10 million for 2025, utilizing Rs. 2,250 million from the already allocated budgetary provisions of Rs. 11,250 million to minimize the regional disparities. The remaining Rs. 9,000 million will be allocated for the essential development activities.

¶ 191 23. District Development Programme

¶ 192 As we understand, there are unanswered issues in many districts in spite of the huge investment made by the Government annually through the Budget on various programmes. The particular issues may be related to infrastructure development, enhancing localized production, effective service delivery, trade and marketing, institutional improvements etc. In order to reach at an inclusive and sustainable development, those untouched gaps and emerging needs in districts are required to be addressed. This will catalyse the private sector to bring investment for economic development and also will enable the local community to enhance their decent living. In this context, we propose to allocate Rs. 2,000 million in the Budget 2025 to address these emerging issues at district level.

¶ 193 24. Eastern Province Development

¶ 194 The Eastern Province is one of the provinces with a huge potential for economic development. Therefore, we propose to implement a comprehensive development programme in the Eastern Province with the Indian Multi-sectoral Grant Assistance to support infrastructure and livelihood development, focusing mainly on education, health, agriculture, fisheries, tourism and community empowerment sectors.

¶ 195 25. Programmes to Uplift the Living Standards of Malayagam Tamil People

¶ 196 The Malayagam people are a part of the Sri Lankan nation and have been living with significant difficulties over a long period of time. However, the livelihoods of this community still remain below the standards to have a dignified life. Accordingly, Rs. 7,583 million has already been allocated to support the following initiatives. i. Rs. 4,267 million is allocated for development of estate housing and infrastructure development. ii. Rs. 2,450 million is allocated for vocational training and livelihood development of Malayagam Tamil youth and necessary infrastructure development. iii. Rs. 866 million is allocated for smart classrooms for schools of Malayagam Tamil community.

¶ 197 26. Industrial Development

¶ 198 The industrial sector in Sri Lanka plays a crucial role in its economy predominantly in providing employment opportunities, increasing income, fostering innovation and driving exports. Accordingly, the following Proposals are to be introduced.

¶ 199 Industrial Zone Dedicated for Chemical Manufacturing With the aim of improving value addition to Sri Lanka’s extensive mineral resources and providing essential industrial inputs for domestic manufacturing, it is proposed to establish an Industrial Estate in Paranthan, Northern Province dedicated for chemical product manufacturing including acids and alkalis. There will be five Industrial parks such as KKS, Mankulam, Iranawila, Galle and Trincomalee. We propose to allocate Rs. 500 million for this purpose.

¶ 200 Industrial Zone Dedicated for Automobile and Rubber Products Manufacturing A significant level of investment in the domestically value-added automobile manufacturing/assembly industry and rubber product manufacturing is an important factor to cater to the demand required by the components manufacturing industry to become competitive in the export market.

¶ 201 For this purpose, it is proposed to establish an Industrial Estate dedicated for automobile components and rubber manufacturing. We propose to manage the requirement for this purpose within the already allocated Budgetary provisions of Rs. 1,500 million under the Ministry of Industry for this purpose.

¶ 202 27. Clean Sri Lanka

¶ 203 The Clean Sri Lanka Programme is a massive programme implemented through the three main pillars of social development, environmental development and ethical development to sustainably elevate Sri Lanka and the entire Sri Lankan society to a higher level. For this, it is planned to get the support of the entire public, the State sector, entrepreneurs, businessmen including the private sector, national and international non-governmental organizations, the Sri Lankan community abroad, international donor agencies, various professionals and experts.

¶ 204 Under this, it is expected to conduct a cultural festival where all sections of the community can enjoy together promoting inter-ethnic, inter-religious and inter-communal ties in the Sri Lankan society, mutual understanding and cooperation, create facilities for the differently-abled people of our country, who constitute a significant percentage of the population, promote the ethics and capacity-building of facilitators such as three-wheeler and taxi drivers and tour guides for the tourism industry, renovate several selected cities with ancient heritage with their ancient identity, renovating buildings, repairing school equipment and improving sanitation facilities for selected provincial schools with less facilities, building a high-quality learning environment with the participation of the private sector for early childhood development, promoting sanitation facilities in urban areas, promoting road safety, drug prevention, managing stray animals, assisting relevant agencies on managing solid waste, making the coastline attractive and environmentally sustainable, carry out conservation of watersheds and promotion of water quality in rivers, making Public Service efficient, creating high resource utilization and building a corruption-free Public Service and promotion and dissemination of the Clean Sri Lanka concept.

¶ 205 For this, we propose to allocate Rs. 5,000 million from the State Budget for the year 2025, in addition to the financial contribution of the donors.

¶ 206 28. Solid Waste Management

¶ 207 There is a growing issue of solid waste management in many areas of the country. Anuradhapura, a city with significant historical and cultural value, is one such example. With the Anuradhapura Teaching Hospital and a growing population, managing both general and hospital waste has become a challenge, threatening public health and the environment. To tackle this, we propose to allocate Rs. 750 million for a waste disposal facility. This initiative will improve cleanliness, protect the environment and promote sustainable development in Anuradhapura municipal area.

¶ 208 29. Mitigating Human-Elephant Conflict and Conservation of Forests

¶ 209 To minimize crop damage, property destruction and loss of life caused by wild elephants, several measures have been implemented. These include the improvement of approximately 5,611 km of electric fencing, with 1,456 km identified for reconstruction. Additionally, guard posts along the fence will be constructed, necessary equipment will be procured and elephant habitats will be improved through invasive plant removal, better grassland management and enhanced water sources. A budget of Rs. 300 million has been allocated for these efforts.

¶ 210 Furthermore, Rs. 100 million has been allocated to enhance the capacity of 270 offices, including wildlife zonal offices, guard offices, and Bittu officers. These funds will support electric fence maintenance, vehicle and boat maintenance, wildlife crime prevention and overall efforts to reduce the human-elephant conflict. An additional Rs. 240 million has been allocated as compensation for victims of such conflicts, bringing the total budget for mitigating the elephant-human conflict to Rs. 640 million.

¶ 211 Moreover, Rs. 1,050 million has been allocated to promote natural regeneration and address deforestation. This funding will support reforestation efforts, forest conservation initiatives, commercial forestry expansion, environmental protection and mangrove management. It will also facilitate eco-friendly tourism, increase forest cover, minimize forest fires and prevent forest-related crimes.

¶ 212 30. Sustainable Financing

¶ 213 The Government will leverage opportunities in sustainable financing to foster a vibrant ecosystem of Environmental Social and Governance (ESG) based financing. The Ministry of Environment will work in coordination with the Ministry of Finance and Central Bank, to access globally available pools of sustainable financing linked to climate change initiatives and related endeavours.

¶ 214 31. Developing Financial Markets

¶ 215 As Sri Lanka emerges from the economic crisis, the financial sector is also recovering from a period of stress. It is appropriate to focus on developing the financial market of the country in order to position it to support growth of the real economy. Capital markets need to be deepened and evolved in terms of sophistication. The Government will actively encourage private and appropriate State entities to raise funds through listed equity and debt capital markets.

¶ 216 As bank interest rates decline, it becomes all the more important for retail investors to have access to well-regulated financial products which provide a reasonable return. Unit Trusts, investment funds and other collective investment schemes will be important in filling this gap in the market. It is important for the sector to explore innovations and more complex transitions whilst ensuring due diligence and all necessary safeguards, amidst an effective regulatory environment.

¶ 217 32. Governance Reforms

¶ 218 Corruption has been identified as a major impediment to economic progress. Hence, there is an urgent need in addressing the rampant corruption that hinders the country’s sustainable economic development as a collective effort. In this context, not only the Government officials, but also private actors and the entire citizenry should acknowledge their role in perpetuating corruption. In this regard, the necessary legal framework will be strengthened further. The enactment of the Proceeds of Crime Bill and further strengthening of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) will be expedited with the increased financial and other support with the assistance of the international institutions to drive anti-corruption initiatives towards strengthening governance, transparency and accountability in Sri Lanka. Moreover, the Government will review and implement proceeds of crime legislation, which is now in draft stage following a collaborative drafting process.

¶ 219 33. Sri Lanka Day

¶ 220 The Government policy framework, “A Thriving Nation – A Beautiful Life” articulates a vision for a reconciled Sri Lanka, committed to bridging gaps between communities. Therefore, I propose to hold a “National Cultural Festival”. This festival will be initiated in November and launched in December, during which time we have the highest number of tourist arrivals to our country. This festival will be organized with the participation of the private sector. Accordingly, we propose to allocate Rs. 300 million for this purpose.

¶ 221 34. Housing for Internally Displaced People

¶ 222 With the reconciliation initiatives and release of lands, the internally displaced people (IDPs) are being resettled and refugees are returning to the Northern and Eastern Provinces for resettlement after the conflict. However, the basic infrastructure facilities and utilities of the resettled families are yet to be fulfilled.

¶ 223 Accordingly, we propose to initiate a multi-pronged strategy to address the key issues faced by people in the North and the East. In the 2025 Budget, Rs. 1,500 million has been allocated to meet the needs of resettling these people, speed up the housing programme and provide essential relief to the families remaining homeless based on the current requirement.

¶ 224 35. Essential Maintenance of Housing Schemes Constructed by Government

¶ 225 The physical condition of the public housing schemes provided by the Government has been poor due to lack of maintenance and deficiencies in usage. Many physical defects such as cracking, spalling, corrosion and water seepage were observed at the external side of all these buildings. Accordingly, we propose to allocate Rs. 1,000 million for essential maintenance of the apartment complexes constructed by the Central Government.

¶ 226 36. Housing for Artistes/Journalists

¶ 227 With the assistance of the Government of the People’s Republic of China, 1,996 housing units are being constructed. Within this, an apartment complex comprising 108 housing units from the Kottawa, Palathuruwatta area will be reserved for artistes and journalists who make special contributions to the cultural enrichment of our society.

¶ 228 37. Drinking Water Sector

¶ 229 Expeditious Completion of Ongoing Large-scale Water Schemes and Community Water Projects The pipe-borne drinking water coverage by the National Water Supply and Drainage Board and the Community Water Supply Department is around 62 per cent of the country’s population. Identifying the national importance of ensuring safe water delivery, the Government has committed to provide Budgetary support to expedite the completion of Gampaha, Attanagalle and Minuwangoda Integrated Water Supply Project, Aluthgama, Mathugama and Agalawatta Integrated Water Supply Project, Polgahawela, Allawwa and Pothuhera Integrated Water Supply Project and Thambuththegama Water Supply Project, where the completion has been delayed due to the economic crisis and the suspension of credit facilities by the respective lenders. The Government will provide the funding requirement of Rs. 41,234 million in a span of two years with available fiscal space. Accordingly, Rs. 20,000 million is included in the National Budget for the year 2025 to facilitate the completion of the above priority projects as “equity” contribution of the Government.

¶ 230 Extension of Community Water Supply Scheme We have realized the necessity of implementing the community-based water supply schemes specifically in rural areas where the pipe-borne water coverage is limited. To enhance the quality of rural life by eradicating vulnerabilities in water stressed areas, including the northern region and CKDu-affected areas, we recognize the importance of extending the community-based rural water supply schemes in such areas to deliver fully treated drinking water.

¶ 231 Accordingly, we propose to utilize the already allocated Rs. 2,000 million in the Budget Estimates under the Department of Community Water Supply for the year 2025 to complete the community water supply schemes which have already been started and also to commence new community water supply schemes.