Budget Speech - 2025

Budget Speech - 2025

 Preamble

Honourable Speaker, it is our pleasure to present the first National Budget of our Government to this House.

The country went through its deepest and most complex socio, economic and political crisis in 2022 since independence. Although the crisis erupted in the year 2022, the underlying causes of the crisis are historical and structural. Corrupt governance, failed economic policies and irresponsible public financial management are the root causes of this crisis. As a consequence, there was breakdown of normalcy in economic activities in the country which was experienced by all sectors and social groups from businesses to households. Shortages in goods and services including fuel, electricity, essential food and medicine caused severe hardship on the people of the country, especially the women, children, 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 society.

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

Thereafter, a temporary Government was formed which was a distortion of the people’s mandate. However, the aspirations of people for socio, economic and political transformation remained unfulfilled as the new temporary government protected and continued to project the corrupt, waste public money and suppressed the people. Measures taken to postpone the local Government election in March 2023, shattered the expectations of the people for democracy. 

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.

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.

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 Lanka Rupee against the Dollar will rise even to LKR 400, that an era of fuel queues will return, international development partners and countries would isolate the new Government, investors will lose confidence, and that private property will 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.

Accordingly, prices and the financial sector gradually stabilized with the benchmark annual Treasury bill rate coming down to 8.8 percent. Foreign currency reserves were at USD 6.1 billion by the end of December 2024 even after, the debt restructuring related payments of USD 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 percent in 2025.

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.

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 destabilising 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.

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.

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 percent 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 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 program and offered other targeted social benefits to provide relief to those in need.

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.

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 society unless it is a means to uplifting the lives of all members of society. For several decades, economic activity and economic benefits have been concentrated amongst the few. The concentration of income at a household level, with the top 20 percent of households accounting for 47 percent of household expenditure according to the latest (2019) Household Income and Expenditure Survey. Western Province accounts for 44 percent of GDP in 2023. Accordingly, what is needed going forward is for a greater democratisation of the economy, where economic opportunity is more fairly distributed. Mass struggles and last year’s election saw people asserting their political rights. What is necessary is for economic rights to be similarly asserted. This is the philosophy of this budget.

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.

The Public Financial Management Act sets the key fiscal rule, which is a limit of primary expenditure of 13 percent 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 we get the best social return out of such spending.

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 percent 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, incentivise 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 prioritisation, 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 the public finance.

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 prioritisation, and better tax administration, there will be more resources available to us to fulfill people’s priority. Therefore, we as a country must be patient, and collectively work with discipline and determination, and the rewards will materialise as we go forward.

Principles of Budget 2025

A budget is not just a set of revenue and expenditure proposals for the upcoming year, it 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;

1. Growth of production of industry, services and agriculture.
2. Production must take place with the active engagement and participation of people.

• The benefits and gains from production must be equitably shared across society.

Similarly, on the demand side for goods and services, the Government’s policy objectives are;

1. To ensure continuous supply of essential goods and services.
2. Such goods and services must be supplied at a fair and reasonable price.

• Goods and services must be of an acceptable level of quality.

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. Government must regulate and monitor the market through regulatory bodies.

• Active Government participation in supply and demand in certain areas.

1. Organizing production in certain areas.

This years’ budget is organised 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 their economic potential due to a disability, due to a lack of educational opportunity, due to a lack of basic infrastructure. This is not an easy process that 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. Providing infrastructure to enable people to access markets and engage with economic opportunities in Sri Lanka and overseas. The Government must ensure that competition is fair – where there isn’t 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 democratisation of the Sri Lankan economy.  

Growth must also be driven by continuous productivity growth – and digitalisation of the economy is an essential. Another critical foundation for economic advancement, but also social upliftment, and political reform, is the 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. 

Medium Term Macroeconomic Direction

Through the proposals presented in this budget, we are laying the foundation for a new paradigm in macroeconomic trajectory. We expect economic growth of over 5 percent real GDP growth over the medium term. Through our measures to improve supply capacity in the economy, we expect price shocks to be minimised, thereby providing further support to low 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 currency, which is based on market fundamentals, will no longer experience spells of substantial volatility. 

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

The country’s poverty rate reached 25.9 percent 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 society. 

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, digitalisation, entrepreneurship & 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.

I will now present the 2025 Budget proposals to this Parliament.

1. Expanding Exports of Goods and Services

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. MSMES will be facilitated to tap new export markets, expand existing markets or to connect in the value chains of large-scale exporters and global value chains.

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.  

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.

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

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

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

The new Customs Law will be introduced to enhance trade facilitation and revenue collection. 

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

2. Investment Promotion and Facilitation

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 Partnership (PPPs) and privately run zones.

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

Government will lease out under-utilised state-owned land for productive economic activities.

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

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

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

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

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

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

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

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.

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

The testing and calibration labs, referral centers, the referral Center 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.

3. Leveraging Sri Lanka’s Strategic Location

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

Logistics holds significant potential to serve as a premier driver of economic development in Sri Lanka, leveraging the country's strategic geographic location. Currently, logistics contributes approximately 2.5 percent of the nation’s GDP, 7 percent contribution to exports and provides direct full-time employment to an estimated 40,000–50,000 individuals.

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 is expected to expedite the performance of Sri Lanka’s ports. Therefore, we will call for Expression of Interest for these projects within a month.

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.

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

As a long-term measure to ease the container traffic congestion in and around the Colombo port and increasing foreign earning 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 Center (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.

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.

Modernizing infrastructure and incorporating cutting-edge technology is 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 establishments of advanced scanning systems for Port of Colombo and Bandaranayake International Airport.

4. Digital Economy Advancement 

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.  

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. 

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.  

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 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 in a carefully phased process with clear communication.

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 to attracting investments towards innovations in artificial intelligence, robotics, FinTech, and other emerging technologies. 

Our aim is to grow Sri Lanka’s Digital Economy to a level in excess of USD 15 Bn or 12 percent of the National Economy over the next 5 years. In achieving this ambition, the Government aims to facilitate an increase in the ICT industry’s annual export revenue to USD 5 billion.

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

 

5. Tourism Sector

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

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 2 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 year 2025.

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

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

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

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

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.    

6. SMEs as the Backbone of Economic Development

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.

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).

7. Fostering Innovation & Entrepreneurship

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).

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.

It is reported that 272 patent registrations were in 2020 and out of them, 223 patents were Non-Resident registrations and we ranked as the 61^st 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 the investment opportunities. For this purpose, we propose to allocate Rs. 1,000 million to create an Innovation Invention Fund for commercialization of Research Findings.

8. Expenditure Management

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 in far more productive uses.

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

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.

All luxury vehicles that require heavy running & maintenance expenses will be auctioned.

 

• Minimizing state expenditure on vehicles.

Vehicles assigned as official vehicles to Government officials have 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.

• Rationalisation 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, and which agencies need to be discontinued, which need to change their objectives. This exercise is expected to deliver substantial gains in terms of improved efficiency in delivery of public services. 

• 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.     

9. Supporting Women’s Economic Participation

Programs 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 mother, for which Rs. 7,500 million has been earmarked. Also, for the Triposha program for the nutrition of mothers and children, Rs. 5,000 million has been allocated.

For programs 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 programs aimed at women Rs. 720 million will be incurred.

10. Towards a Healthy Society
11. 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 National Medicines Regulatory Authority (NMRA), State Pharmaceuticals Corporation (SPC), and improvement and expansion of the “Swastha” system.

1. Improving Rural-level Primary Health Care

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.

• Estate Health

Actions will be taken to expedite the process of strengthening estate level health care service through Public Private Partnership (PPP) with Regional Plantation Companies. Required human resources, necessary equipment and pharmaceuticals for estate hospitals will be provided by the Government.

1. 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.

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 skill development. It also promotes social stability, improve quality of life, and drive economic growth and stability. Accordingly, Government health budget for 2025 has significantly increased to an allocation of Rs. 604,000 million.

In order to ensure the supply of pharmaceuticals and medical supplies, Rs. 185,000 million is allocated in 2025 budget. 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.

1. 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.

To address these challenges, it is proposed to implement a 5-year national program 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 center 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 centers in every district with the necessary human resources within the next five years.

1. 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 preschool 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 daycare center.

11. Education Opportunities for Everyone

             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.

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

• 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 2025 budget estimates for this purpose.

An allocation of Rs. 80 million has been made in the 2025 budget estimates to construct a model early childhood education center laying a foundation for lifelong learning.

Recognizing pre- school teachers as key players in human resource development, in order to enhance the quality of preschool 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.

• Modernization of school Education

The Government's policy is to develop a primary school within 3 kilometers radius, where children’s residence or their parent’s place of work. At present, there are 10,126 Government schools island wide. 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, 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.

• Student Scholarships
  1. We propose to increase monthly scholarship amount from Rs. 750 to Rs. 1,500 to Students who qualified grade 5 scholarship examination in low-income families. Accordingly, we propose to allocate Rs. 1,000 million for this purpose.
  2. 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 estimate for this purpose.
  3. We propose to increase this stipend from 4,000 to Rs. 5,000 per month for students in vocational Education. Budgetary provision has already been made in 2025 budget estimate for this purpose, in addition to which we propose to allocate a further Rs. 200 million for the same.
  4. We propose to increase monthly Mahapola scholarship from Rs. 5,000 to Rs. 7,500 and monthly Bursary payments from 4,000 to Rs 6,500. A provision of Rs. 4,600 million has already been made in 2025 budget estimates.

All of these payments will be made from April, 2025.

• Scholarship for Pursuing Undergraduate Courses at High-ranking Universities

We propose to create a programme to offer scholarships for students who show outstanding performance in 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. 

• 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 in the local and international competitions. Accordingly, we propose to allocate Rs. 500 million for the development of sports schools in five provinces.

• 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.

12. Energy Sector

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.

We awarded a tender to a 50MW wind power project at USD 4.65 cents for a unit of electricity. In that context, awarding projects at an excessive tariff around USD 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. 

 When we exclude the oil tanks given 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.

13. Agriculture and Food Security

The agriculture sector provides employment to approximately 30 percent 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.

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 has been identified as priority areas and are expected to be supported by the budgetary allocation.

• 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.
• 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.
• 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.

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.

• Bringing Land into Production

Some of the  lands presently managed by LRC, RPCs, SLSPC, JEDB and under utilized 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.

• Youth Entrepreneurs and Producer Cooperatives

At present, there are many global examples of successful producer cooperative arrangements. Fonterra a New Zealand dairy cooperative, Amul, Indian Dairy Farmers Cooperative and Mondragon Workers Cooperative of Spain are a few of the best global examples.

We too propose to adopt an alternative production approach where the cooperative mechanism. The Government will support these cooperative 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.

• 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.

• Dairy Production

At present, the domestic milk production is sufficient only to cater to around 45 percent 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.

• Irrigation Sector Development

Sri Lanka’s agriculture-based economy is very significant with about 75 percent 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.

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.   

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

14. Plantations and other export crops

• Increasing Coconut Production

The global demand for coconut products is continuously increasing, and as predicted by the industry, 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.

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. 

• 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. 

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.

       15. Fisheries & Aquaculture

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 (PPP) arrangements, farmer cooperatives 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.

       16. Social Protection

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.

• “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 to enter the scheme, yet not included it is expected to finish enumeration in May 2025, providing another opportunity for them to enter the programme.

• 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.

• 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 the local funds. Accordingly, we propose to enhance the empowerment programme by Rs. 500 million.

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. 

• 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 repairs and the buildings in some districts do not have sufficient space. Therefore, we propose to improve the capacity of child care centers in the areas of physical and human resource development. For this purpose, we propose to allocate Rs. 500 million.

• 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.     

• 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.

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:

1. 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.
2.  Most of these children lack a family background or supportive system to help them to 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.
3. Ensuring opportunities for children in care homes and Government rehabilitation centers to enroll in the nearest national or Provincial Council school with proper educational facilities when providing school education.
4. Following rehabilitation methodologies that provide NVQ level 3 or 4 quality vocational/skills training for youth being rehabilitated in rehabilitation centers, enabling them to join 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 doesn't hinder those who have been rehabilitated and demonstrate good conduct from obtaining suitable employment.
5. 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).
6. 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 society, with the aim of preventing their abuse and exploitation by various persons.

• Database on People with Disabilities

A significant number of the population suffers with one or many disabilities. We observe that there is no reliable data base 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.

• 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 wildlife.

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

• Mental Health

We are experiencing many unfortunate incidents of suicides 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.

• Manufacturing of Assistive Devices Locally

Assistive devices are crucial for people with disabilities and they 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 center and regional manufacturing centers will be established as necessary.      

• Providing essential foods at a concessionary price during the New Year period

The Government has decided to provide a concessionary ‘Seasonal Food Package’ 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 Ltd, during the upcoming New Year season. We propose to allocate Rs. 1,000 million to finance these rations.

17. Sri Lankan Expatriates

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.

18. Special Interest Scheme for Senior Citizens

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 percent, 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 percent additional interest to be paid for the senior citizens.

This scheme will be implemented from July 2025.

19. Creating a Drug - Free Society

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 compressive program to create drug-free society.

20. Skills Development Programme for Convicted Prisoners

At present, there are around 30,000 prisoners in 37 prisons located island wide. 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.

Around 65 percent of the prisoners are in the peak of their working age; below 40. Accordingly, we propose to conduct employable and marketable skill 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.           

21. Public Transport Modernization

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

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.

• 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.

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

• Railway Sector Modernization

Rail based public transportation is highly important in long distance as well as the urban and sub-urban areas. However, the poor condition of the coaches negatively impacts 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.

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 the growing passenger demand.

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.

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.

The Government will implement a joint time table 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 spill-over effects in terms of regional development. 

• Rail Transport for Agricultural Products

 Transporting agricultural goods over the road network remains a major challenge due to high costs, post-harvest loses during transportation, road congestion, and environmental concerns. To address this, we propose to introduce a dedicated rail-based transportation of agriculture products from production centers to destinations.

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.

• 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.

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.

• Enhancing Road Infrastructure

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

As such, we propose an allocation of Rs. 3,000 million for improvement and rehabilitation of rural roads, giving priority to roads that 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 island wide. 

Aiming at ensure safe and reliable mobility to all users, we propose 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 island wide.

• 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.

• 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, Pudukkudiyiruppu, and Jaffna. This bridge is in a dilapidated condition which creates risks to commuters. Therefore, we propose to build  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.

  22. Regional Development

The Decentralize 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.

23. District Development Programme

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.

24. Eastern Province Development

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.

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

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 standards to have a dignified life. Accordingly, Rs. 7,583 million has already been allocated to support the following initiatives. 

1. Rs. 4,267 million is allocated for development of estate housing and infrastructure development. 
2. Rs. 2,450 million is allocated for Vocational training, Livelihood development and Infrastructure Development of Malayagam Tamil youth
3. Rs. 866 million is allocated for smart class rooms for schools in Malayagam Tamil community.

             26. Industrial Development

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.

• 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 5 Industrial parks such as KKS, Maankulam, Iranawila, Galle and Tincomalee. We propose to allocate Rs. 500 million for this purpose.

• 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.

With 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.

27. Clean Sri Lanka

The Clean Sri Lanka Program is a massive program 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, 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, are being planned and implemented with the support of all.

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 Sri Lankan society, mutual understanding and cooperation,  create facilities for the differently-abled people of our country which constitute a significant percentage of the population, promote the ethics and capacity building of facilitators such as three-wheelers, 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.

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.      

28. Solid Waste Management

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.

     29. Mitigating Elephant-Human Conflict and Conservation of Forests

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 refurbishment. 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.

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.

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.

30.  Sustainable Financing

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.

 

 

31. Developing Financial Markets

As Sri Lanka emerges from the economic crisis, the financial sector is also recovering from a period of stress. It is not appropriate to focus on developing the financial market of the country in order to position them 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.

As bank interest rates decline, it becomes all the more important for retail investors to have access to well-regulated financial products that 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.

32. Governance Reforms

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, it is not only the Government officials but also the 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 and 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.

 33. Sri Lanka Day

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 which 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.

34. Housing for Internally Displaced People

 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 resettle families are yet to be fulfilled.

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 and speed up the housing programme and provide essential relief to the families remaining homeless based on the current requirement.

     35. Essential Maintenance of Housing Schemes Constructed by Government

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.

36. Housing for Artists/Journalists

With the assistance of the Government of the People’s Republic of China, 1996 housing units are being constructed. Within this, an apartment complex comprising 108 housing units will be reserved from the Kottawa, Palathuruwatta area for artists and journalists who make special contributions to the cultural enrichment of our society.

         37. Drinking Water Sector

• 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 percent 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 Pothuhara integrated water supply project and Thabutthegama 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.

• 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.

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 to commence new community water supply schemes.

• Re-initiating of Giribawa- Eppawala Water Supply Scheme

Giribawa and Eppawala areas being in a dry zone under North Central province face difficulties in terms of access to quality drinking water, creating various risks to the population of that region. We recognize the importance of providing drinking water from surface water sources to the area of Giribawa and Eppawala preferably by Rajanganaya Tank which is fed by Kalawewa through Kala Oya. For this purpose, we proposed to allocate Rs. 1,000 million for re- initiating of initial works in Giribawa- Eppawala Water Supply Scheme to provide pipe-borne water to the area.    

           38. Filling Essential Vacancies in the Public Service

We have stopped the past practice of filling the public service with the supporters of politicians. Aligned with the Government’s vision, recruitment, promotions, and transfers in the public service will be based on qualifications and skills, free from political influence.

Due to the challenges posed by the COVID-19 pandemic, economic downturn, and political instability, there is a large number of unemployed graduates and youth. We will implement a strategic recruitment plan to hire 30,000 individuals in essential public service roles, strictly according to cadre vacancies starting from this year. Accordingly, we propose to allocate Rs 10,000 million for this purpose in 2025.

39. Public Service Salary Increase

Given that nearly a decade has passed since the last basic salary revision, it is now time to revise the salary structure having evaluated all factors in a holistic manner. It is necessary to provide a decent living standard for public sector employees, enabling the Government to attract talent and skilled workers, whilst at the same time avoiding an excessive burden on the budget.

Accordingly, we propose to increase the minimum monthly basic salary from Rs.24,250 to Rs.40,000 by Rs.15,750. The current ad-hoc interim allowance and special allowance will be integrated into the basic salary giving a net increase of Rs.8,250 in the minimum salary.

The proposed minimum monthly basic salary increase of Rs. 15,750 will also be applicable to judicial services, public corporations, statutory boards, university staff, and officers of tri-forces on the same basis in line with the minimum basic salary increase for public sector employees.

In addition to a minimum monthly basic salary increase of Rs.15,750, it is proposed to raise the value of the annual salary increment by 80 percent. Consequently, the minimum annual salary increment of Rs. 250 will be increased to Rs. 450. It is also proposed to adjust annual salary increments for all public sector employees to the same percentage.

The total estimated cost of this salary increase is expected to be Rs.325 billion. Considering present fiscal constraints, it is proposed that this salary increase be implemented in phases. Of the total net salary increase, Rs.5,000 and 30 percent of the balance amount will be paid starting from April 2025, with the remaining 70 percent being paid in equal portions beginning in January 2026 and January 2027.

Therefore, it is proposed that Rs.110 billion be allocated for the proposed salary increase in 2025.

As part of this salary increase, it is proposed that the retirement benefits for officers retiring on or after 01.01. 2025 be calculated based on the new salary structure, ensuring that they receive retirement benefits under the proposed 2025 salary scheme.

Considering the increase in the minimum basic salary of state employees, the limit on distress loans for public servants which is currently set at Rs. 250,000 will also be increased to Rs. 400,000. Further details of the salary increase are given in the Technical Note in Annexure V.    

40. Private Sector Minimum Wage Increase

The Employers' Associations have already agreed to increase the monthly Minimum Wage to the Private Sector workers from Rs. 21,000 to Rs. 27,000 in April 2025 and to Rs. 30,000 from 2026.

41. Reconsideration of the Wage of Plantation Workers

There are nearly 1.5 million plantation workers engaged in the sector, mainly in tea, rubber and coconut. The Government is of the view that their living standards need to be improved. In addition to the programmes focused on the development of plantation sector, the Government will intervene to increase the daily wages of the workers to Rs. 1,700.

42. Public Sector Pensions

Further, by considering salaries and benefits entitled to them, a monthly increase of Rs. 3,000 was implemented immediately after the Presidential election thus resolving the Pension Anomalies of Pensioners who retired before 01^st January 2020.

We observe that there will be a pension anomaly created by revising the pensions of the Government employees who retired from 2016 - 2020 only, based on the salary scale of the fifth phase related to the year 2020, since all the pensioners who retired till 31.12.2017 are on the same salary scale.

As this issue remains unresolved for a long time, we believe that it has to be resolved in a phased manner within the existing limited fiscal space. Therefore, we propose to revise the pensions of all pensioners who retired before 01.01.2020 in three phases, corresponding to the salary scales applicable to the year 2020 as per the Public Administration Circular No. 03/2016.    

As the first phase, the pensions of all pensioners who retired before 01.01.2018 will be revised in line with the third stage salary scales relevant to the year 2018 in the Public Administration Circular No. 03/2016 and to be implemented from July 2025. For this phase, we propose to allocate Rs. 10,000 million through the Budget 2025.

Furthermore, we also propose to implement the pension conversions related to the fourth and fifth stages of the salary conversion from July 2026 and July 2027, respectively.

              43. Legal Reforms         

The Government will introduce a number of legal reforms in the coming year to establish sound legal provisions aimed at fostering rapid economic development, good governance, and effective public service delivery. These laws include legislation to improve governance of state owned enterprises, creating a legal framework for public-private partnerships, enhancing governance around procurement, public asset management, statistics, data exchange, valuation, asset management, microfinance and credit and anti-money laundering and terrorist financing.  More details on these laws are available in the Annexure VIII of the budget.      

          44.  Revenue Measures

Sri Lanka’s economic reform programme is based on a foundation of revenue based fiscal consolidation. This is reflective of the fact that leading up to the economic crisis, Sri Lanka had one of the world’s lowest Government tax revenue levels of 7.3 percent of GDP in 2022.

For the year 2025, the bulk of revenue gains is expected to be delivered by the liberalisation of motor vehicle imports that took place on 1^st February 2025. This process is being carefully monitored to ensure that import of vehicles does not result in undue negative impacts on external sector stability. Other key revenue measures which have already been announced in Parliament previously in December 2024 include the increase of tax-free threshold for personal income tax, further adjustments to the second income tax slab, removal of VAT on fresh milk and yoghurt. The Government also decided to not pursue this year the Imputed Rental Income Tax that had been agreed by the previous administration. To compensate for any revenue losses, the Government already presented in

Parliament measures including the introduction of VAT on digital services, the imposition of corporate income tax on export of services, and an increase in the corporate tax on cigarettes/liquor, and gaming.

The tax policy measures outlined here are expected to deliver the required revenue to enable Sri Lanka to meet the revenue targets of 15.1 percent of GDP in 2025. Nonetheless, in parallel, the Government is taking concerted efforts to improve tax administration and compliance. In fact, Sri Lanka's revenue strategy for the upcoming budget aims to enhance fiscal sustainability by strengthening tax administration, improving compliance, improve institutional strength through enhanced digitalization and rigorous monitoring mechanisms; while providing relief to the most vulnerable groups of the society. Efforts will be directed toward digitalizing tax systems to reduce leakages and enhance transparency while minimizing human interactions in tax administration.

Sri Lanka is moving towards a cashless economy as a part of its broader digitalization agenda to formalize the economy and improve revenue collection. The use of Point-of-Sale (POS) machines across businesses, especially in VAT-registered enterprises, will be implemented as a key initiative to facilitate digital transactions and reduce cash dependency. A cashless economy will not only curb tax evasion and illicit financial activities but also enhance fiscal efficiency, contributing to Sri Lanka’s economic stability and growth.

Digitalisation of revenue agencies and the overall digital economy drive is expected to provide significant impetus to the revenue enhancing efforts. However, it is not just the tax collection authorities that have a responsibility in this regard. Several other stakeholders, including audit firms and tax accountants, have a responsibility to discharge their duties in a socially responsible manner such that the Government is not deprived of due tax revenue. Appropriate measures will be taken to ensure compliance with the regulatory and legal framework in this regard as well.  

We are confident that these tax administration and tax compliance enhancement measures will enable Sri Lanka to surpass revenue targets beyond 2025. At that point, it will be possible to provide further relief to the public in a manner that does not jeopardize the achievement of revenue targets and ensure the country’s fiscal and economic stability.     

45. Borrowing Limit

The Borrowing Limit for the Appropriation Bill for the financial year 2025 is presented in Annexure II. In addition, the Technical Note on expenditure and revenue measures is given in Annexure III and Annexure IV, respectively. Further, the documents, which have to be submitted along with the Second Reading of the Budget under the Public Financial Management Act, No. 44 of 2024, are also tabled.

Conclusion

While the policies that I outlined today reflect the vision upon which I was elected to this office, I did not come up with them alone. These policies are the result of an incredible effort, born out of the dedication and collective action of a Cabinet, most of whom have never served in a Parliament but have vast experience and practical knowledge. They were born from the experience of many dedicated and devoted civil servants and policymakers who finally have a voice in shaping the destiny of our country. And they were born from the confidence and courage of the many renowned, patriotic professionals who have distinguished themselves in their careers, and for the first time had the confidence that they could contribute to a truly clean, truly functional and truly compassionate Government.

If you look in the ranks of this Government, you will see a mix of some of the most passionate and disciplined politicians, and some of the most accomplished academics and professionals who have sacrificed their careers, time with their families and even their business legacies to put their country before profit. Together, we have begun a monumental effort. We have brought down costs of living. We have begun restoring confidence in our justice system. And we have for the first time banished not just corruption but even the appearance of corruption from the highest echelons of power.

For many years now, those who felt moved to invest in Sri Lanka found that in order to get anything done, they would first have to invest in middlemen. That era is over. I can assure you that no elected or appointed official in this Government will seek bribes or favours in return for doing or not doing their jobs. However, in the very unlikely event that anyone among us does bend or break the law, I can promise that whoever is responsible will be investigated and prosecuted to the full extent of the law. This Government will never, ever, tolerate corruption among its ranks. From here on, those who attempt to receive bribes should be afraid.  One should not be afraid of not paying the bribe.

Our judiciary has never been more free or independent. Our police force has never been more empowered or independent. They will enforce the law without fear or favour. However, many who have left Sri Lanka and live overseas know that elimination of corruption is about more than just enforcing the law. It is about modernizing the way Government functions, making the state machinery function more efficiently, and function more transparently. This will address the root cause of corruption by making it harder to take bribes, and less attractive to pay them. 

Never has Sri Lanka had a chance like this to catch up with the modern world. I see a chance for united Sri Lanka, for a clean Sri Lanka, for a prosperous Sri Lanka, to surpass everyone’s expectations.

To the Sri Lankan Expatriates, those with Sri Lankan roots, whether you were born in Sri Lanka or heard of your motherland from your parents, know that to us, you are all Sri Lankans.

 Your country is proud of your success. We understand why you may have lost faith in our motherland. Know that I am grateful for every effort that any of you take, even from afar, to help our country.

We invite you, one and all, to come back and see for yourself how much Sri Lanka has changed. We invite you to contribute your expertise, your talent and your perspective to our island nation, whether in the private, public or non-profit sectors. Join us, and work with us to accomplish a level of success that we can only all achieve together.

Majority of our citizens voted last year to chart a new course, to unite to rebuild our country and reach the full potential of our citizenry. For the first time in history, all of Sri Lanka, from north to south, and east to west, have united behind a common purpose. Religion, race, gender, class and age no longer divide us. That is one thing I can promise about the people of Sri Lanka: The people will never again be divided against each other. The people will never again be fooled by those who seek to turn us against each other for their own political or personal gain.

Public Representatives and officials of our Government all have a common objective. Similarly the thousands of hardworking, dedicated, and patriotic public servants who have joined us to make a difference also have a collective objective.  We will never tire. We will never waver. We will not compromise on our principles. We will never ever let you down. We will lead by example, and raise all Sri Lankans up together. Together we will all prosper. We will all be proud of each other and of the beautiful, sacred island we call home.

Finally, I want to express my gratitude to the officials at the Ministry of Finance, especially the Secretary to the Treasury Mahinda Siriwardana, who worked tirelessly for weeks to finalize the budget. I expect further cooperation from the officials at the Treasury to successfully implement the budget proposals in time to take forward the economic programme of the Government.

Thank you!

 

Annexure I
Summary of the Budget Estimates 2025
Rs. Billion
Item		2023		2024 Provisional			2025 Budget
Total Revenue and Grants		3,074		4,091			4,990
Total Revenue		3,049		4,031			4,960
Tax Revenue		2,721		3,705			4,590
Income Tax		911		1,026			1,167
Taxes on Goods and Services		1,420		2,201			2,772
Taxes on External Trade		389		477			651
Non Tax Revenue		328		326			370
Grants		26		60			30
Total Expenditure		5,357		6,131			7,190
Recurrent		4,700		5,340			5,886
Salaries and Wages		939		1,096			1,230
Other Goods and Services		300		392			416
Interest		2,456		2,690			2,950
Subsidies and Transfers		1,005		1,162			1,290
Public Investment		933		817			1,315
Other		(276)		(26)			(11)
Revenue Surplus (+)/ Deficit(-)		(1,651)		(1,309)			(926)
Primary Surplus (+)/ Deficit(-)		173		650			750
Budget Surplus (+)/ Deficit(-)		(2,282)		(2,040)			(2,200)
Total Financing		2,282		2,040			2,200
Total Foreign Financing		495		(3,044)			375
Foreign Borrowings-Gross		832		590			700
Debt Repayment		(337)		(3,634)			(625)
Total Domestic Financing		1,788		5,084			2,125
Non - Bank Borrowings		3,295		2,144			2,125
Sri Lanka Development Bonds		(351)					-
Bank Borrowings and Other		(1,157)		2,940			-
Revenue and Grants/GDP (%)		11.1		13.6			15.1
Total Revenue/GDP (%)		11.0		13.4			15.0
Tax Revenue/GDP (%)		9.8		12.3			13.9
Non Tax Revenue/GDP (%)		1.2		1.1			1.1
Grants/GDP (%)		0.09		0.20			0.09
Total Expenditure/GDP (%)		19.4		20.4			21.8
Recurrent Expenditure/GDP (%)		17.0		17.8			17.8
Non Interest/ GDP (%)		8.1		8.8			8.9
Interest/ GDP (%)		8.9		9.0			8.9
Public Investment/ GDP (%)		3.4		2.7			4.0
Revenue Surplus (+)/Deficit (-) GDP (%)		(6.0)		(4.4)			(2.8)
Primary Surplus (+)/Deficit (-) GDP(%)		0.6		2.2			2.3
Budget Surplus (+)/Deficit (-) GDP(%)		(8.3)		(6.8)			(6.7)
Compiled by Department of Fiscal Policy
						Annexure II
	Gross Borrowings Requirement - 2025
	(Provisioning for Accounting Transactions)
	Item					Rs. Billion
	Total Receipts other than Government Borrowings					5,042
	Total Primary Expenditure					4,285
	Recurrent					2,970
	Capital					1,315
	Debt Service Payments					4,550
	Interest Payments					2,950
	Debt Repayments					1,600
	Provision for Advanced Accounts					7
	Adjustments for book/cash Value of Government Securities					200
	Total Gross Borrowing Requirement to be recorded in Government Accounts					4,000
	Compiled by the Ministry of Finance, Planning and Economic Development

 

Annexure III

 Expenditure Proposals - 2025

No	Proposal	Rs. Million
1	Salary increase	110,000
2	Sri Lanka Airlines (SLA) legacy debts settlement	20,000
3	Senior Citizens interest subsidy programme	15,000
4	Pension revisions	10,000
5	New staff recruitments	10,000
6	Improvement of road network in Northern area	5,000
7	Clean Sri Lanka programme	5,000
8	Food security (for Maintaining paddy buffer stocks)	5,000
9	Renovate rural roads & bridges	4,000
10	Digital economy advancement	3,000
11	Public transport modernization	3,000
12	Leveraging Sri Lanka's strategic location	2,500
13	Rehabilitation of key Irrigation systems including, Galoya, Rajanganaya, Huruluwewa, Minneriya	2,000
14	District development programme	2,000
15	Grade 5 Scholarship allowance increase	1,000
16	Construction of Vadduvakal bridge in Mullativu	1,000
17	Financial support for orphaned, low income young married couples for housing	1,000
18	Essential maintenance of government housing schemes	1,000
19	Commercialization of research findings-innovation & invention	1,000
20	Initiating Giribawa-Eppawala water supply scheme	1,000
21	Social security allowance to orphaned children	1,000
22	Providing essential foods at a concessionary price during new year period	1,000
23	Refurbishment of railway passenger coaches and manufacturing new coaches	750
24	Strengthening of the National Quality Infrastructure (NQI) systems	750
25	Implementing solid waste disposal mechanism in "Anuradhapura" MC area	750
26	Modernization of primary education	500
27	Establishment of sports culture	500
28	Improvement of certified schools/remand homes and child care institutions	500
29	Coconut production improvement & Northern coconut triangle programme	500
30	Tourism promotion and city branding	500
31	Improvement of rehabilitation process of drug addicted people	500
32	Providing assistive devices for differently able people	500
33	Production enhancement of other field crops	500
34	Aswesuma  empowerment programme	500
35	Industrial zone dedicated for chemical manufacturing	500
36	Youth entrepreneurs engaging in agriculture and industries	500
37	A national cultural event for all communities while depicting their unique identities	300
38	Transport facilities to child convicts	250
39	Establishing day care centers for children with Autism	250
40	Mental health education improvement	250
41	Providing underutilized land for investments	250
42	Construction of Kelaniveli railway line from Avissawella onwards	250
43	Promotion of export agriculture crops	250
44	Scholarships for pursuing undergraduate courses at high-ranking universities	200
45	Improving health, education and service facilities for children with Autism	200
46	Allowance for low income vocational trainees	200
47	Fresh water prawn farming and non-traditional aquaculture	200
48	Modernization of regional libraries	200
49	Pre school teacher allowance	100
50	Jaffna library improvement	100
51	Identification system for differently able people	100
52	Skills Development programme for convicted Prisoners	100
53	Producer cooperative society for youth entrepreneurs	100
54	Rail transport for agriculture products	100

                              

 Annexure IV

Technical Notes

 Taxation

 

1.	Income Tax (Amendments to the Inland Revenue Act, No.24 of 2017)
	1.1	The requirement of filing the Statement of Estimated Tax payable (SET) will be removed with effect from the Year of Assessment 2025/2026.
	1.2	Provisions will be introduced to calculate the amount of each instalment of tax payable by any person for a year of assessment, based on the income tax payable by such person for the immediately preceding year of assessment.
	1.3	Any amount derived, by any non-resident person as any payment for air craft, software licenses or as for other related services from the Sri Lanka Air Force, will be exempted.
	1.4	i.	Withholding tax will not be deducted by a financial institution from the interest paid on deposit made with that financial institution by any senior citizen, whose assessable income from all sources does not exceed Rs.1,800,000/- for any year of assessment and if such individual tenders a declaration to the financial institution confirming his assessable income.
		ii.	Any Individual, other than senior citizen, whose assessable income from all sources does not exceed Rs.1,800,000/- for any year of assessment, will be entitled to a refund of WHT deducted on interest under the refund scheme presently applicable for senior citizens.
		iii	Relevant guidelines including the format of the declaration, will be issued by the Commissioner General of Inland Revenue (CGIR).
	1.5	Senior citizens will be allowed to file their income tax returns manually, starting from the year of assessment 2024/2025.
	1.6	Provisions will be introduced in the Act clarifying the chargeability of income tax on the life insurance proceeds and other amounts received by policy holders.
	1.7	The current tax treatment provided under Section 46 of the Inland Revenue Act, which applies to the transfer of ownership of an asset to an associate of an individual or a charitable institution, will be expanded to include the transfer of assets to the Sri Lankan Government or to a university established or deemed to be established under the Universities Act, No. 16 of 1978.
	1.8	The Capital Gain Tax (CGT) rate applicable for individuals and partnerships will be increased to 15%.  The CGT rate applicable for all other entities will be raised to 30% in par with the corporate capital gains tax rate.
	1.9	The CGIR will be authorized to waive interest imposed under the provisions of the Inland Revenue Act, No. 24 of 2017, and the Surcharge Tax Act, No.14 of 2022, if; the tax liability has arisen for the year of assessment 2022/2023 or any previous Y/A, and, the total amount of tax should be paid within six months of the statutory amendment.
	1.10	The tax resident rules will be re-visited to provide for the followings: - i.     A holder of Golden Paradise Resident visa will be treated as a non-resident for income tax purposes; ii.   Any individual who is deemed to be a resident for income tax purpose only due to the reason of he is being employed in a Sri Lanka flagged vessel, will be treated as a resident in Sri Lanka during the period he is so employed; and iii. Any individual who is a citizen or subject of any country other than Sri Lanka, but deemed to be a resident in Sri Lanka due to the reason of he is being employed in a Sri Lanka flagged vessel, will not be liable to income tax as a resident in respect of any income that has no source in Sri Lanka, other than his income from employment in such ship
2.	Value Added Tax (VAT) [Amendments to the Value Added Tax Act, No.14 of 2002]
	2.1	Import of packing materials for the use of packing of pharmaceuticals or ayurvedic medicines manufactured in Sri Lanka and which are imported by the manufacturer of such pharmaceuticals or ayurvedic medicines, so far as such packing materials are not manufactured in Sri Lanka as approved by the Secretary to the Ministry of the Minister to whom the subject of Health is assigned or the Commissioner of the Department of Ayurveda, will be exempted from VAT.
	2.2	Provisions will be introduced permitting the issuance of regulations prescribing the manner of registration, charging, collection, filing return, etc. relating to the imposition of VAT on the services provided through digital platforms.
	2.3	Amendments consequential to the removal of SVAT and facilitate the refunding process will be incorporated in the VAT Act.
	2.4	Simplified Value Added Tax (SVAT) system will be replaced by a risk-based refund system. To ensure the smooth operation of the new system, a pilot project will be implemented,  to issue refunds through the RAMIS, subject to the conditions specified in the Risk Based Refund Scheme as may be specified by the CGIR, by an order published in the gazette.
	2.5	Entertainment tax charged by the local authorities will be allowed to deduct in ascertaining the value of supply of film exhibition service.
	2.6	Supply of goods or services by/to any a business identified and approved as a “Business of Strategic Importance” in terms of Section 52 of the Colombo Port City Economic Commission Act, No.11 of 2021 subject to the Colombo Port City (guidelines on the grant of exemptions or incentives to Businesses of Strategic Importance) regulations, No. 2 of 2023, as specified in the Extraordinary Gazette Notification No.2343/60 dated 04.08.2023, with effect from 01.01.2024.
	2.7	Value Added Tax Arrears as per records of Commissioner General of Inland Revenue in respect of projects carried out by construction contractors of Tsunami projects, will be written off.
	2.8	Input tax deduction on the capital goods such as machinery, equipment or vehicles imported for projects where the value added tax at the time of import is differed, will be disallowed.
	2.9	Use of Point of Sale (POS) Machines by the VAT registered persons will be made mandatory and operationalized.
3.	Social Security Contribution Levy (SSCL) [Amendments to the Social Security Contribution Levy Act, No.25 of 2022]
	3.1	The term “transportation of Goods and passengers” will be defined to include the services provided in relation to international transportation by container terminal operators.
	3.2	Exemption applicable for the articles specified under Item 4 of Part 1B of the First Schedule of the SSCL Act, will be clarified to include the wholesale or retail sale of such articles.
	3.3	Exemption provided under Item 24 of Part 1A of the first Schedule to the SSCL Act, will be granted for machinery or equipment imported or purchased locally for the purpose of generating electricity by any institution which has entered in to an agreement with the CEB prior to February 18, 2025.
4.	Stamp Duty
	4.1	Stamp Duty applicable on any instrument relating to the lease or hire of any property will be increased from Rs.10 to Rs.20, for every Rs. 1,000 or part thereof of the aggregate lease or hire including any premium, payable for the whole term comprised in the lease or hire Agreement (other than a hire purchase agreement), with effect from 01.03.2025. That is, current Stamp Duty rate of 1% will be increased to 2%.
5.	Betting and Gaming Levy (Amendments to the Betting and gaming Levy Act, No. 40 of 1988
	5.1	The Gross Collection Levy will be increased to 18%.
	5.2	Casino Entrance Levy will be increased from USD 50 to USD 100.
6.	Tax Appeals Commission Act, No.23 of 2011
	6.1	The fee levied to state a case on a question of law for the opinion of the Court of Appeal will be increased to Rs.10,000/-.
	6.2	The fee levied to make an appeal to the Commission will be increased to Rs.15,000/- by issuing a Gazette Notification under Section 8 of the TAC Act.
	6.3	Provisions will be incorporated to make it mandatory to transfer the bank guarantee to the Commissioner General of Inland Revenue irrespective of the appellant’s decision to appeal to the Court of Appeal.
	6.4	An appeal to the TAC will not be permitted unless, a cash deposit of a sum equivalent to 25% of the disputed amount of assessment of tax, penalty and interest, is deposited in a special account opened by the CGIR.
	6.5	An appeal to the TAC will not be allowed unless a request for administrative review has first been made and a decision thereon has been received from the CGRIR or a request for administrative review is deemed to have been disallowed.
	6.6	Necessary legal provisions will be introduced to mediate settlements between the CGIR and the Appellant, subject to the supervision of the Commission in appropriate cases during the course of hearing the Appeal.
	6.8	Submission of any evidence that was not previously submitted to the CGIR during the assessment or the administrative review process and taking up new issues which were not taken/disputed during the assessment or the administrative review process, during hearing of Appeal, will not be allowed.
	6.7	The term of office of the members of the panel of Legal Advisers of the Commission will be made equal to the term of office of the members of the Commission and the panel members will be made eligible for re-appointment.
	6.8	The term of office of the members of the Commission will be increased from 3 years to 5 years from the date of appointment.

 

 Annexure V

 Government Sector Employees’ Salary Revision -2025

 

1. Basic salary revisions

• Minimum basic salary

Minimum monthly basic salary is increased by Rs.15,750 with effect from 01/04/2025

With this increase, minimum monthly basic salary of government sector employees is revised as follows:

Rs. Per month

Category	Present basic salary	Increase	New basic salary
Public sector	24,250	15,750	40,000
Universities	27,025	15,750	42,775
Other SOEs	24,750	15,750	40,500

 

• Annual salary increments

Minimum annual salary increment of Rs.250 is increased to Rs.450 by 80% with effect from 01/04/2025

All government sector annual salary increments are similarly increased in line with this increase with effect from 01/04/2025

2. Cancellation of Public Administration (PA) circulars

 With the implementation of this salary revisions following PA circulars are rescinded with effect from 01/04/2025

1. PA circular No.09/2019 dated 22/04/2019 for the payment of monthly interim allowance of Rs.2,500
2. Payment of monthly allowance of Rs.5,000 for public sector employees in PA circular No. 03/2022 dated 13/01/2022
3. Salary revisions of State Owned Enterprises (SOEs) and Universities

Salaries of Public Corporation, State Owned Enterprises (SOEs) and Universities are revised on the same basis of public sector salary revisions with effect from 01/04/2025

4. Revisions of Allowances/Overtime
   • Payment of allowances as a percentage of basic salary
5. Any payment of monthly allowances which is paid as a percentage of basic salary should be revised not exceeding the net salary increase as given in para 7. The revised such monthly allowance/s of public sector and Universities are given in Table 02. These revised rates are effective from 01/04/2025
6. Any monthly allowance/s, other than allowances specified in Table 02, which is paid with approval of proper approving authority based on a percentage of basic salary until obtaining the approval from the General Treasury for the revised rate/s, must be paid based on the basic salary as at 31/03/ 2025
   • Backlog allowance of the University Staff

University staff has been paid Backlog allowance of 20% of basic salary since 2016 for the double students’ intake in 2016. Those students have completed their university studies in 2019, therefor payment of such allowance is terminated with effect from 01/04/2025

• Extra Duty Allowance of Medical Doctors

Hourly rate for Extra Duty Allowance of Medical Doctors is revised from 1/80 of monthly basic salary to 1/120 of monthly basic salary with effect from 01/04/2025

• Over- Time (OT) rate for Nurses, Para medical and Allied staff

Hourly OT rate for Nurses, Para medical and Allied staff is revised from 1/160 of monthly basic salary to 1/200 of monthly basic salary with effect from 01/04/2025

• Hourly overtime (OT) rate calculation

Hourly rate for the payment of OT must be calculated based on monthly basic salary of the employee under the basic salary structure-2025 referred in para 9.

Any institution, deviating from the hourly rate for OT at 1/240 of monthly basic salary with the approval of proper authority until obtaining Treasury approval for the revised rate/s based on basic salary structure -2025, must pay such OT based on the basic salary as at 31/03/2025

• Day’s pay allowance/Holiday pay allowance

The day’s pay allowance of 1/20 of monthly basic salary is revised to 1/30 of monthly basic salary with effect from 01/04/2025

5. Minimum gross salary increase of government sector employees

Due to this salary revisions minimum gross salary increase of government sector employees are as follows: 

Rs. per month

	Public Sector		Universities		SOEs
	Present	New	Present	New	Present	New
Basic salary	24,250	40,000	27,025	42,775	24,750	40,500
Interim allowance as per PA circular No.09/2019	2,500	-	-	-	-	-
Monthly allowance as per PA circular No.03/2022	5,000	-	5,000	-	5,000	-
Cost of Living Allowance (COLA)	17,800	17,800	17,800	17,800	17,800	17,800
Monthly Compensation Allowance (MCA)	-	-	12,161	15,399	-	-
Monthly Compensation Allowance (MCA)(fixed)				(330)
Backlog allowance	-	-	5,405	-	-	-
Total gross salary	49,550	57,800	67,391	75,644	47,550	58,300
Net salary increase	8,250		8,253		10,750

 

6. Payment procedure

• Net salary increases are calculated as per the para 7 (the employee salary difference between gross salary as at 31/03/2025 excluding any annual increment amount earned during the period 01/01/2025-31/03/2025 as described in para 7.1 and the basic salary under the 2025 new salary structure excluding any annual increment earned during the period 01/01/2025-31/03/2025 as described in para 7.2) will be paid on staggered basis from April 2025.

• Out of total monthly net salary increase calculated as per para 6.1 a sum of Rs.5,000 and 30% of net salary increase over and above Rs.5,000, will be paid from April 2025. Balance 70% of net salary increase in excess of Rs.5,000 will be paid on equal proportional basis from January 2026 and January 2027 as follows:

Starting	Monthly payment of net salary increase
April 2025	Rs.5,000 + 30% of the balance after deducting Rs.5,000
	(i.e.  Rs.5,000 +(Net salary increase – Rs.5,000)*30%)
January 2026	Rs.5,000 + 65% of the balance after deducting Rs.5,000
	(i.e.  Rs.5,000 +(Net  salary increase – Rs.5,000)*65%)
January 2027	Full amount (i.e.100%) of net  salary increase

• Examples of calculation of salary increase payments

Monthly Net Salary Increase	Monthly Payments
	From April 2025	From January 2026	From January 2027
Rs.8,250	Rs.5,975        (i.e.5,000+975) (Rs.5,000 +(8250-5,000) *30%)	Rs.7,113         (i.e.5,000+2,113) (Rs.5,000 +(8,250-5,000) *65%)	Rs.8,250
Rs.10,000	Rs.6,500         (i.e.5,000+1,500) (Rs.5,000+(10,000-5,000) *30%)	Rs.8,250        (i.e. 5,000+3,250) (Rs.5,000+(10,000-5,000) *65%)	Rs.10,000
Rs.15,000	Rs.8,000        (i.e.5,000+3,000) (Rs.5,000+(15,000-5,000) *30%)	Rs.11,500       (i.e.5,000+6,500) (Rs.5,000+(15,000-5,000) *65%)	Rs.15,000
Rs.25,000	Rs.11,000    (i.e.5,000+6,000) (Rs.5,000+(25,000-5,000) *30%)	Rs.18,000     (i.e.5,000+13,000) (Rs.5,000+(25,000-5,000) *65%)	Rs.25,000
Rs.40,000	Rs.15,500    (i.e.5,000+10,500) (Rs.5,000+(40,000-5,000) *30%)	Rs.27,750     (i.e.5,000+22,750) (Rs.5,000+(40,000-5,000) *65%)	Rs.40,000
Rs.50,000	Rs.18,500     (i.e.5,000+13,500) (Rs.5,000+(50,000-5,000) *30%)	Rs.34,250      (i.e.5,000+29,250) (Rs.5,000+(50,000-5,000) *65%)	Rs.50,000

• For the recruitments and promotions during the period from 01/04/2025 to 31/12/2026, the increased salary will be paid applying same basis describe in para 6.1 and 6.2 above. The net salary increase is calculated as the difference between the basic salary under the new salary structure at the date of recruitment or, promotion and assumed gross salary of those recruitment/promotion if made in previous salary structure as described in para 7.1

• Annual salary increment earned on or after 01/01/2025

Total amount of the annual salary increments, earned during the years 2025 and 2026 will be paid as the full annual salary increment given in salary structure -2025 referred in para 9 without applying the formula for percentage of net salary increase payment described in para 6.2 above

7. Calculation of net salary increase

 For the payment of net monthly salary increase under this salary revision for the period 01/04/2025-31/12/2026, is calculated as follows based on the monthly salary difference of the basic salary under the 2025 new salary structure given in para 9 and the gross salary of the sum of basic salary and allowances which are described in para 6.1 and 6.2 above as at 31/03/2025.

• Gross monthly salary as at 31/03/2025 is the sum of the following.
  1. Basic salary as at 31/03/2025 excluding any annual increment earned during the period 01/01/2025-31/03/2025
  2. Payment of monthly interim allowance of Rs.2,500 as per the PA circular No.09/2019 dated 22/04/2019 if paid as of 31/03/2025.
  3. Payment of monthly allowance of Rs.5,000 as per the PA circular No. 03/2022 dated 13/01/2022
• Basic salary as at 01/04/2025

Basic salary under the salary structure -2025 given in para 9 excluding annual increment amount earned during the period 01/01/2025-31/03/2025

8. W&OP deduction from the salary for the period 01/04/2025 to 31/12/2026

Increased salary is paid as a percentage of net increase between the basic salary under the salary structure -2025,  and the sum of basic salary and allowances described in para 7.1. In view employee contribution to widow's & orphan's pension scheme (W&OP) is deducted from the employee’s full monthly basic salary of the basic salary structure – 2025 referred in para 9.

9. Basic salary structure -2025

Basic salary structure-2025 for government sector employees effective from 01/04/2025 is given in Table 01 are as follows

1. Public sector - Table 01 -(a)
2. Armed Forces - Table 01 -(b)

• Parliament staff - Table 01-(c)          

1. University staff - Table 01 -(d)
2. State Owned Enterprises - Table 01 -(e)
3. Judicial services - Table 01 -(f)

• Attorney General’s Department - Table 01 -(g)
• Legal Draftsman’s Department - Table 01- (h)

 

10. Pension payment for pensioner’s who retired on or after 01/01/2025

For pensioners who retired on or after 01/01/2025, their pension is paid on following basis.

• Pensioners who retire on or after 01/04/2025

Monthly pension will be paid based on full monthly basic salary entitlement under the basic salary structure referred in para 9

• Pensioners who retire during the period 01/01/2025 -31/03/2025

Monthly pension will be adjusted based on basic salary structure referred in para 9 with effect from 01/07/2025. The gratuity payment for those retirees will not be adjusted based on basic salary structure of 2025.

• Payment of pension allowances

Following allowances are not paid for retirees who retire on or after 01/04/2025

1. PA Circular No. 03/2022 dated 13/01/2022 for the payment of monthly allowance of Rs.5,000
2. PA Circular No. 14/2024 dated 07/08/2024 for the payment of Rs.3,000 monthly Special Interim Allowance

                                                                                        

Table 01: New Salary Structure 2025

Table 01(a): Public Sector

Service Category	Salary Code	Initial step	Years	1st Slab	Years	2nd Slab	Years	3rd Slab	Years	4th Slab	Maximum
Primary Level Unskilled	PL 1 - 2025	40,000	10	450	10	490	10	540	12	590	61,880
Primary Level Semi-skilled	PL 2 - 2025	41,800	10	490	10	540	10	590	12	630	65,560
Primary Level Skilled	PL 3 - 2025	42,780	10	490	10	540	10	590	12	630	66,540
Management Assistants Seg 2	MN 1 - 2025	45,230	10	540	11	630	10	890	10	1,190	78,360
Management Assistants Seg 1	MN 2 - 2025	48,470	10	540	11	630	10	1,010	10	1,190	82,800
MA Supervisory Non-Tech/Tech	MN 3 -2025	52,250	10	800	11	1,190	10	1,320	10	1,350	100,040
Associate Officer	MN 4 - 2025	53,060	10	800	11	1,190	10	1,320	5	1,350	94,100
Field/ Office based Officer Seg 2	MN 5 - 2025	58,660	10	1,190	11	1,360	15	1,670	-	-	110,570
Field/ Office based Officer Seg 1	MN 6 - 2025	62,230	10	1,190	11	1,360	15	1,670	-	-	114,140
Management Assistants Supra	MN 7 - 2025	71,240	11	1,360	18	1,850	-		-	-	119,500
MA Technical Seg 3	MT 1 - 2025	50,090	10	540	11	630	10	1,010	10	1,190	84,420
MA Technical Seg 2	MT 2 - 2025	50,630	10	630	11	670	10	1,010	10	1,190	86,300
MA Technical Seg 1	MT 3 - 2025	51,890	10	630	11	670	10	1,010	10	1,190	87,560
Para Medical Services Seg 3	MT 4 - 2025	52,520	10	800	11	1,190	10	1,320	10	1,350	100,310
Para Medical Services Seg 2	MT 5 - 2025	53,320	10	800	11	1,190	10	1,320	10	1,350	101,110
PSM/ Para Medical Services Seg 1	MT 6 - 2025	54,120	10	800	11	1,190	10	1,320	10	1,350	101,910
Nurses	MT 7 - 2025	54,920	10	800	11	1,190	10	1,320	10	1,350	102,710
Nurses, PSM, PMS Spl.Grade	MT 8 - 2025	86,800	10	2,420	8	2,940	-	-	-	-	134,520
Executive	SL 1 - 2025	82,150	10	2,400	8	2,940	17	3,900	-		195,970
Medical Officers	SL 2 - 2025	91,750	3	2,400	7	2,420	2	2,940	16	3,900	184,170
Senior executive/ MO Specialists	SL 3 - 2025	156,000	12	4,850	-	-	-	-	-	-	214,200
Secretaries	SL 4 - 2025	175,000	12	5,300	-	-	-	-	-	-	238,600
Law Officers	SL 5 - 2025	101,350	5	2,400	5	2,940	15	3,900	-	-	186,550
Sri Lanka Teachers Service	GE 1 - 2025	53,060	6	800	7	940	2	1,080	-	-	66,600
Sri Lanka Teachers Service	GE 2 - 2025	66,880	10	1,490	7	2,400	20	2,940	-	-	157,380
Sri Lanka Teachers Advisors Service	GE 3 - 2025	70,870	3	1,670	7	2,400	20	2,520	-	-	143,080
Sri Lanka Principals Service	GE 4 - 2025	72,280	7	1,670	6	2,400	25	2,970	-	-	172,620
Medical Practitioners	MP 1 - 2025	59,720	12	1,190	13	1,340	10	2,040	-	-	111,820
Medical Practitioners Spl. Gr.	MP 2 - 2025	97,540	9	2,420	9	2,940	-	-	-	-	145,780
Police/Regulatory Services	RS 1 - 2025	49,550	7	540	27	670	-	-	-	-	71,420
Police/Regulatory Services	RS 2 - 2025	54,000	9	670	17	890	-	-	-	-	75,160
Police/Regulatory Services	RS 3 - 2025	55,410	7	670	2	890	25	1,190	-	-	91,630
Police/Regulatory Services	RS 4 - 2025	63,070	24	1,190	-	-	-	-	-	-	91,630
Police/Regulatory Service	RS 5 - 2025	72,800	17	1,400	-	-	-	-	-	-	96,600
Postal Service	PPL 1 - 2025	40,000	10	450	10	490	-	-	-	-
Postal Service	PPL 2 - 2025	40,900	10	470	10	500	-	-	-	-
Postal Service	PPL 3 - 2025	41,800	10	500	10	540	-	-	-	-
Postal Service	PPL 4 - 2025	43,800	10	540	10	630	-	-	-	-
Postal Service	PSO 1 - 2025	45,420	10	540	10	630	-	-	-	-
Postal Service	PSO 2 - 2025	54,650	10	800	10	1,190	-	-	-	-
Postal Service	PSO 3 - 2025	74,660	9	1,320	11	1,340	-	-	-	-
Sri Lanka State Audit Service	AS 1 - 2025	64,610	10	1,190	11	1,360	15	1,670	-	-	116,520
Sri Lanka State Audit Service	AS 2 - 2025	78,040	11	1,360	18	1,850	-	-	-	-	126,300
Sri Lanka State Audit Service	AS 3 - 2025	86,950	10	2,400	8	2,940	17	3,900	-	-	200,770
Sri Lanka State Audit Service	AS 4 - 2025	165,700	12	4,850	-		-	-	-	-	223,900
Grama Niladari Service	GN 1 - 2025	50,630	10	540	11	630	10	1,010	10	1,190	84,960
Grama Niladari Service	GN 2 - 2025	72,600	11	1,360	18	1,850	-	-	-	-	120,860
Railway	Railway -2025	57,810	5	890	5	1,030	10	1,300	10	1,340	93,810

 

Table 01(b): Armed Forces

No	Category	Salary Code	Group	Initial Step	Years	1st slab	years	2nd slab	Years	3rd slab	Maximum
1	Private/Ordinary Seaman/ Air Craftsman	OR 1-2025	III	49,550	7	540	19	670			66,060
2	Private/Ordinary Seaman/ Air Craftsman	OR 1-2025	II	50,090	6	540	19	670			66,060
3	Private/Ordinary Seaman/ Air Craftsman	OR 1-2025	I	50,630	5	540	19	670			66,060
4	Lance Corporal/Able Seaman/Leading Air Craftsman	OR 2-2025	III	51,170	4	540	19	670			66,060
5	Lance Corporal/Able Seaman/Leading Air Craftsman	OR 2-2025	II	51,710	3	540	19	670			66,060
6	Lance Corporal/Able Seaman/Leading Air Craftsman	OR 2-2025	I	52,250	2	540	19	670			66,060
7	Lance Corporal/Able Seaman/Leading Air Craftsman	OR 2-2025	Special	52,790	1	540	19	670			66,060
8	Corporal/Leading Seaman/Corporal	OR 3-2025	III	52,790	1	540	10	670	9	890	68,040
9	Corporal/Leading Seaman/Corporal	OR 3-2025	II	53,330	10	670	9	890			68,040
10	Corporal/Leading Seaman/Corporal	OR 3-2025	I	54,000	9	670	9	890			68,040
11	Corporal/Leading Seaman/Corporal	OR 3-2025	Special	54,670	8	670	9	890			68,040
12	Sergeant/Petty Officer/Sergeant	OR 4-2025	III	54,670	3	670	9	890	3	1,190	68,260
13	Sergeant/Petty Officer/Sergeant	OR 4-2025	II	55,340	2	670	9	890	3	1,190	68,260
14	Sergeant/Petty Officer/Sergeant	OR 4-2025	I	56,010	1	670	9	890	3	1,190	68,260
15	Sergeant/Petty Officer/Sergeant	OR 4-2025	Special	56,680	9	890	3	1,190			68,260
16	Staff Sergeant/Chief Petty Officer/Flight Sergeant	OR 5-2025	III	56,010	1	670	9	890	3	1,190	68,260
17	Staff Sergeant/Chief Petty Officer/Flight Sergeant	OR 5-2025	II	56,680	9	890	3	1,190			68,260
18	Staff Sergeant/Chief Petty Officer/Flight Sergeant	OR 5-2025	I	57,570	8	890	3	1,190			68,260
19	Staff Sergeant/Chief Petty Officer/Flight Sergeant	OR 5-2025	Special	58,460	7	890	3	1,190			68,260
20	Warrant Officer II/Fleet Chief Petty Officer/Warrant Officer	OR 6-2025	III	59,350	6	890	14	1,190			81,350
21	Warrant Officer II/Fleet Chief Petty Officer/Warrant Officer	OR 6-2025	II	60,240	5	890	14	1,190			81,350
22	Warrant Officer II/Fleet Chief Petty Officer/Warrant Officer	OR 6-2025	I	61,130	4	890	14	1,190			81,350
23	Warrant Officer II/Fleet Chief Petty Officer/Warrant Officer	OR 6-2025	Special	62,020	3	890	14	1,190			81,350
24	Warrant Officer I/Master Chief Petty Officer/Master Warrant Officer	OR 7-2025	III	65,880	13	1,190					81,350
25	Warrant Officer I/Master Chief Petty Officer/Master Warrant Officer	OR 7-2025	II	67,070	12	1,190					81,350
26	Warrant Officer I/Master Chief Petty Officer/Master Warrant Officer	OR 7-2025	I	68,260	11	1,190					81,350
27	Warrant Officer I/Master Chief Petty Officer/Master Warrant Officer	OR 7-2025	Special	69,450	10	1,190					81,350
28	Cadet	Fixed Salary		54,670							54,670
29	Mid Shipman	Fixed Salary		55,340							55,340
30	2nd Lieutenant (cadet)/ Pilot Officer (cadet)	Fixed Salary		65,880							65,880
31	2nd Lieutenant (non cadet)/ Pilot Officer (non cadet)	Fixed Salary		71,830							71,830
32	Lieutenant / Sub Lieutenant/Flying Officer	R 1-2025		82,150	30	2,400					154,150
33	Quarter Master	R 2-2025		84,550	30	2,400					156,550
34	Captain/Lieutenant/Flight Lieutenant	R 3-2025		96,550	24	2,400					154,150
35	Major/Lieutenant Commander/Squadron Leader	R 4-2025		106,150	22	2,400					158,950
36	Lieutenant Colonel/Commander/Wing Commander	R 5-2025		109,090	17	2,940					159,070
37	Colonel/Captain/Group Captain	R 6-2025		133,570	17	3,900					199,870
38	Brigadier/Commodore/Air Commodore	R 7-2025		141,370	15	3,900					199,870
39	Major General/Rear Admiral/Air Vise Marshal	R 8-2025		156,000	12	4,850					214,200
40	Lieutenant General/Vise Admiral/Air Marshal	R 9-2025		165,700	10	4,850					214,200
41	General/Admiral/Air Chief Marshal	R 10-2025		180,250	7	4,850					214,200

                                                         

Table 01(c): Parliament Staff

No	Service Category	Salary Code	Initial Step	Years	1st Slab	Years	2nd Slab	Years	3rd Slab	Maximum
1	Primary Level	A-2025	42,290	9	490	10	540	6	590	55,640
2		B-2025	47,240	9	540	10	590	3	680	60,040
3		C-2025	51,020	11	590	10	680			64,310
4	Secondary Level	D-2025	54,560	3	680	10	800	4	1,190	69,360
5		E-2025	58,660	9	1,190	3	1,360			73,450
6		F-2025	69,370	12	1,360					85,690
7	Territory Level	G-2025	74,810	9	1,360	6	1,670			97,070
8		H-2025	81,610	3	1,360	13	1,850			109,740
9		I-2025	91,750	5	2,400	8	2,940			127,270
10	Senior Level	IA-2025	101,350	3	2,400	8	2,940	2	3,900	139,870
11		J-2025	109,090	7	2,940	6	3,900			153,070
12		K-2025	117,910	4	2,940	8	3,900			160,870
13		L-2025	133,570	12	3,900					180,370
14		M-2025	156,000	12	4,850					214,200
15		N-2025	175,000	12	5,300					238,600

Table 01(d): University staff

Service Category	Salary Code	Initial step	Years	1st Slab	Years	2nd Slab	Years	3rd Slab	Years	4th Slab	Maximum
Primary Level Unskilled	U- PL 1 - 2025	42,775	10	450	10	490	10	540	12	640	65,255
Primary Level   Semi-skilled	U -PL 2 - 2025	44,575	10	490	10	540	10	640	12	690	69,555
Primary Level Skilled	U-PL 3 - 2025	48,005	10	490	10	540	10	640	12	690	72,985
Management Assistants - Non Technical	U-MN 1 - 2025	49,475	10	540	11	640	10	890	10	1,190	82,715
Management Assistant -  Technical	U-MT 1 - 2025	51,095	7	540	11	640	10	890	13	1,190	86,285
Associate Officer- Segment 2	U-MN 2 - 2025	61,275	10	890	18	1,190	8	1,240	-	-	101,515
Associate Officer- Segment 1	U-MN 3 - 2025	71,365	10	1,190	10	1,700	16	2,020	-	-	132,585
Staff Assistant/Supra & Senior Staff Assistant	U-MN 4 - 2025	71,365	6	1,190	10	1,700	5	2,020	-	-	105,605
Medical Officer	U-MO 1 - 2025	93,805	10	2,400	22	2,940	-	-	-	-	182,485
Chief Medical Officer	U-MO 2 - 2025	161,905	15	3,900			-	-	-	-	220,405
Junior Executives/Managers	U-Ex 1 - 2025	85,305	3	2,020	21	2,400	-	-	-	-	141,765
Middle Level Executives	U-Ex 2 - 2025	113,690	8	2,400	10	2,940	8	3,120	-	-	187,250
Middle Level Executives	U-Ex 2a - 2025	150,530	16	3,900	-	-	-	-	-	-	212,930
Senior Executives	U-Ex 3 -2025	166,130	7	3,900	11	4,850	-	-	-	-	246,780
Academic Support- Segment 2	U-AS 1 - 2025	68,145	10	1,190	20	1,240	-	-	-	-	104,845
Academic Support- Segment 1	U-AS 2 - 2025	85,305	15	2,400	15	2,940	-	-	-	-	165,405
Demonstrators	U-AC 1 - 2025	Fixed Salary									68,145
Temporary Assistant Lecturer	U-AC 2 - 2025	Fixed Salary									85,305
Lecturer	U-AC 3 - 2025	91,365	10	2,400	13	2,940	8	3,900	-	-	184,785
Associate Professors	U-AC 4 - 2025	173,930	13	3,900	-	-	-	-	-	-	224,630
Professors/Senior Professors	U-AC 5 - 2025	198,280	7	4,850	12	5,300	-	-	-	-	295,830

 

Table 01(e): State Owned Enterprises

Service Category	Salary Code	Initial step	Years	1st Slab	Years	2nd Slab	Years	3rd Slab	Years	4th Slab	Maximum
Primary Level Unskilled	PL 1 - 2025	40,500	10	450	10	490	7	540	15	590	62,530
Primary Level Semi-skilled	PL 2 - 2025	42,300	10	490	10	540	10	590	12	630	66,060
Primary Level Skilled	PL 3 - 2025	43,280	10	490	10	540	10	590	12	630	67,040
Management Assistant  Non Tech - C 1	MA 1-1 - 2025	46,220	10	540	7	630	4	890	20	1,190	83,390
Management Assistants Non Tech - C 2	MA 1-2 - 2025	46,220	10	540	7	630	12	1,080	12	1,280	84,350
Management Assistant Tech - C 1	MA  2-1 - 2025	50,540	10	540	7	630	4	890	20	1,190	87,710
Management Assistant - Tech - C 2	MA 2-2 - 2025	50,540	10	540	7	630	4	1,080	20	1,280	90,270
Management Assistant Tech	MA 2-3 - 2025	52,700	10	800	11	1,190	10	1,320	10	1,350	100,490
Associate Officers	MA 3 - 2025	53,940	10	800	11	1,190	10	1,320	5	1,350	94,980
Operational/Instructional	MA 4 - 2025	64,320	10	1,360	15	1,670	5	2,040			113,170
Enforcement/Operational/ Extension  - C 1	MA 5-1 - 2025	58,740	10	1,190	15	1,360	11	1,670			109,410
Enforcement/Operational/ Extension  - C 2	MA 5-2 - 2025	62,310	10	1,360	15	1,670	5	2,040			111,160
Enforcement/operational/ Extension - C 3	MA 5-3 - 2025	79,440	10	2,040	20	2,230					144,440
Junior Manager/MA Supra/Spl - C1	JM 1-1 - 2025	72,650	10	1,360	18	2,040					122,970
Junior Manager/MA Supra/Spl - C 2	JM1-2 - 2025	74,010	10	1,360	18	2,040					124,330
Academic/Research Staff	AR 1 - 2025	91,650	10	2,480	15	3,450					168,200
Senior Academic/Research Staff	AR 2 - 2025	133,220	10	3,600							169,220
Middle Manager - C 1	MM 1-1 - 2025	91,690	10	2,480	15	3,450					168,240
Middle Manager - C 2	MM  1-2 - 2025	94,170	10	2,480	15	3,450					170,720
Middle Manager - C 3	MM 1-3 - 2025	96,650	10	2,480	15	3,450					173,200
Senior Manager - C 1-1	HM 1-1 - 2025	140,640	15	4,100							202,140
Senior Manager - C 1-2	HM 1-2 - 2025	143,120	15	4,100							204,620
Senior Manager - C 1-3	HM 1-3 - 2025	152,500	15	4,100							214,000
Senior Manager - C 2-1	HM 2-1 - 2025	161,140	12	4,850							219,340
Senior Manager - C 2-2	HM 2-2 - 2025	163,620	12	4,850							221,820
Senior Manager - C 2-3	HM 2-3 - 2025	173,000	12	4,850							231,200

 

 Table 01(f): Judicial Services

Service Category		Salary Code	Initial step	Years	1st Slab	Years	2nd Slab	Maximum
Sri Lanka Judicial Service	Class II  Grade II	JS 1-1 - 2025	108,570	5	2,400	5	2,940	135,270
	Class II  Grade I	JS 1-2 - 2025	131,300	10	2,940			160,700
	Class I  Grade II	JS 1-3 - 2025	151,900	10	3,900	-	-	190,900
	Class I  Grade I	JS 1-4 - 2025	176,000	10	4,250		-	218,500
	Special	JS 1-5 - 2025	194,000	10	4,500	-	-	239,000
High Court Judges		JS 2 - 2025	212,000	10	4,950	-	-	261,500
Appeal Court Judges		JS 3 - 2025	239,000	5	12,200	-	-	300,000
Puisine Judges /President CA		JS 4 - 2025	248,000	5	12,600	-	-	311,000
Chief Justice		JS 5 - 2025	266,000	5	13,500	-	-	333,500

 

Table 01(g): Department of Attorney - General

Service Category	Salary Code	Initial step	Years	1st Slab	Maximum
Junior Assistant State Attorney	AGS 1 - 2025	82,150	10	2,400	106,150
State Counsel/Assistant State Attorney	AGS 2 - 2025	131,300	10	2,940	160,700
Senior State Counsel/ Senior Assistant State Attorney	AGS 3 - 2025	151,900	10	3,900	190,900
State Attorney/ Deputy Solicitor General	AGS 4 - 2025	176,000	10	4,250	218,500
Senior State Attorney/ Senior Deputy Solicitor General	AGS 5 - 2025	194,000	10	4,500	239,000
Additional Solicitor General	AGS 6 - 2025	212,000	10	4,950	261,500
Senior Assistant Solicitor General	AGS 7 - 2025	239,000	10	4,950	288,500
Solicitor General	AGS 8 - 2025	248,000	10	5,300	301,000
Attorney General	AGS 9 - 2025	257,000	10	5,300	310,000

 

Table 01(h): Department of Legal Draftsman

Service Category	Salary Code	Initial step	Years	1st Slab	Maximum
Assistant Legal Draftsman	LDS 1 - 2025	131,300	10	2,940	160,700
Senior Assistant Legal Draftsman	LDS 2 - 2025	151,900	10	3,900	190,900
Deputy Legal Draftsman	LDS 3 - 2025	176,000	10	4,250	218,500
Additional Legal Draftsman	LDS 4 - 2025	212,000	10	4,950	261,500
Legal Draftsman	LDS 5 - 2025	239,000	10	4,950	288,500

Table 02: Revised Monthly Allowance/s

Types of allowance/s			Present Rate as at 31/03/2025	Revised amount under basic salary structure-2025
University staff
	Academic allowance
		Lecturer (Probationary)	144%	82% + Rs.12,000 p.m.
		Lecturer	164%	92% + Rs.16,500 p.m.
		Senior Lecturer II	189%	104% + Rs.21,900 p.m.
		Senior Lecturer I	189%	104% + Rs.24,400 p.m.
		Associate Professor	196%	107% + Rs.32,000 p.m.
		Professor	203%	110% + Rs.41,000 p.m.
		Senior Professor	209%	112% + Rs.50,000 p.m.
	Non-Academic -MCA
		Monthly Compensation Allowance (MCA)	45%	36% - Rs.330 p.m. (Rs.330/- p.m. deducted from the amount of 36%)
	Backlog allowance		20%	Terminated
	Research allowance		35%	20%   + Rs.1,000 p.m.
Sri Lanka Police
	Special Allowance		40%	22% + Rs.1,000 p.m.
Judicial Services
	Personal Allowance		50%	28%+ Rs.800 p.m.
Institutional specific allowance			1/3 of the basic salary	1/4 of the basic salary
Institutional specific allowance			25% of the basic salary	20% of the basic salary
Day’s holiday payment			1/20 of the basic salary	1/30 of the basic salary

 Annexure VI

 Resolving the Pension Anomalies of Pensioners who retired before 01^st January 2020

The details related to the phased revision of the pensions of all pensioners who retired before 01^st January 2020 to the salary scales relevant to 01^st January 2020 as per Public Administration Circular No. 03/2016 are mentioned below.

Phase	Description	Effective date
01	Revision of the pensions of all pensioners who retired before 01st January 2018 corresponding to the third stage salary scales on  01st January 2018 as per the Public Administration Circular No. 03/2016	01st July 2025
02	Revision of the pensions of all pensioners who retired before 01st January 2019 corresponding to the fourth stage salary scales on  01st January 2019 as per the Public Administration Circular No. 03/2016	01st July 2026
03	Revision of the pensions of all pensioners who retired before 01st January 2020 corresponding to the fifth stage salary scales on 01st January 2020 as per the Public Administration Circular No. 03/2016.	01st July 2027

            

 

Annexure VII

Key Welfare, Subsidy and Development Assistance Programmes - 2025

Programme	Rs. Million
Pension payments (1)	441,300
Aswesuma cash grant programme	232,500
Medical supplies for hospitals	185,000
Service compensation for death and injured soldiers	49,000
Fertilizer subsidy	35,000
School nutritional food programme	32,100
Housing programme for low income families	18,000
Free school text books	15,500
Schools, vocational education and higher education season Tickets	11,500
Nutritional food package for expectant mothers	7,500
Construction of housing units for low income people	7,000
School uniforms	6,400
Farmer pensions scheme	5,600
Programmes for food security (1)	5,550
Triposha programme	5,000
Suwasariya Free Ambulance Service	4,900
Mahapola and Bursary for university students (1)	4,600
Estate housing programme	4,267
Resettlement /permanent houses for the conflict affected families	3,500
Morning meal for pre-school children	3,200
Financial support for the revival of the fisheries industry	3,000
Loan scheme for the students who are unable to get into the state universities	2,785
Shoes for students	2,500
Health insurance for school children (Suraksha)	2,400
Contribution to socially obligatory bus services	2,200
Ranaviru Mapiya Rakawarana allowance	2,200
Subsidy for Tea, Rubber, Coconut and other crops	2,120
Operating buses on economically non profitable routes	2,000
Grade 5 scholarships (1)	1,845
World Food Programme	1,800
Government contribution for crop insurance	1,500
Sanitary napkins for female students	1,440
Allowance for pre-school teachers (1)	1,050
Assistance for export crop development	1,000
Financial support for orphaned, low income young married couples for housing	1,000
Social Security allowance to orphaned children (1)	1,000
Government contribution for agrahara insurance scheme	970
Facilitate dhamma school teachers relating to all religious	940
Allowance to low income vocational trainees (1)	900
Nutrition food programme for sports school children and national athletic pools	630
Providing assistive devices for differently able people (1)	500
Resettlement of displaced people due to landslides	500
Scholarship for pursuing undergraduate courses at high-ranking universities (1)	200
Printing of dhamma school text books	150
Note (1) : Provision including Budget Proposals in 2025

 

 

2025 Budget Estimate

Key Development Projects

Project	Rs. Million
Central  Expressway Kadawatha - Meerigama Section	81,300
Maintenance, Widening and Improvement of Road Network and Connected Bridges	47,800
Central Expressway Pothuhera - Rambukkana Section	34,000
Mahaweli Water Security Investment Program	32,500
Port Access Elevated Highway Project and Interchanges	28,400
Stimulating Loan Scheme for Re-energizing the SME Development Sector	20,000
Completion of Gampaha - Attanagalle - Minuwangoda, Polgahawela - Pothuhera, Aluthgama - Mathugama and Tambuttegama Water Supply Projects which commenced under foreign financing and subsequently halted	20,000
Inclusive Connectivity and Development Project (Rehabilitation of Rural Roads)	18,080
Urban Regeneration Programme for relocation of underserved settlements (Colombo/Suburbs)	18,035
Rehabilitation & Improvement of Rail Fleet, Track & Signaling System (1)	16,400
Completion of Flyovers at Baladaksha Mawatha, Kohuwala and Getambe	13,400
Providing Bio-medical Equipment to Hospitals	13,325
Science & Technology Human Resource Development Project	12,300
Primary Health Care System Enhancing Project	12,190
Colombo Suburban Railway Efficiency Improvement Project	11,525
Complesiton of activities of existing Water Supply Schemes	9,300
Health System Enhancement Project	9,260
Climate Resilience Multi-phase Programmatic Approach Project	9,080
Climate Smart Irrigated Agriculture Project	8,775
Kandy Multimodal Transport Terminal Development	7,730
Kandy North & Pathadumbara Integrated Water Supply Project	7,560
Construction of 2,000 Housing units for Low Income People (Chinese Grant)	7,000
Small and Medium Sized Enterprises Line of Credit Project	6,868
Health Information and Quality Improvement	6,631
Establishment of Faculty of Medicine at University of Sabaragamuwa	6,430
Improvement of Road Network in Northern Area (1)	5,000
Clean Sri Lanka Programme (1)	5,000
Housing Programmes for Low Income Earners	4,750
Estate Housing Programmes	4,267
Renovating Rural Roads & Bridges (1)	4,000
Housing Programmes in Conflict Affected Areas	3,500
Modernization of Public Transport (1)	3,000
Decentralized Budget Programme	2,250
Rehabilitation of key Irrigation Systems including, Galoya, Rajanganaya, Huruluwewa, Minneriya (1)	2,000
District Development Programme (1)	2,000
Construction of Vadduvakal Bridge in Mullativu (1)	1,000
Commencing Giribawa-Eppawala Water Supply Scheme (1)	1,000
Note (1) : Provision including Budget Proposals

 

 

Annexure VIII

 

Proposed Legal Reforms for 2025

The following new laws and legal amendments are planned to be introduced in 2025 in furtherance of the policies of the new Government. 

1. The Act on the Exchange of Information between State Institutions

A new Act on the "Exchange of Information between State Institutions" is set to be introduced to enhance the efficiency of public services and ensure the proper collection of state revenues, especially to facilitate the seamless exchange of information among relevant state institutions, including the Department of Inland Revenue, Department of Customs, Department of Import and Export Control, Department of Registration of Persons, Department of the Registrar General, and the Department of Motor Traffic.

2. Investment Protection Act

An overarching new legislation will be introduced to safeguard the rights of the investors and provide a conducive environment for foreign investment.

3. State Business Enterprises Management Act

Since gaining independence, Sri Lanka's economic development has been significantly hindered by the politicization and mismanagement of state-owned enterprises. Over the years, various governments have pursued privatization policies for many of these enterprises; however, the desired objectives have not been fully realized. Hence, a new legal framework will be introduced to ensure the effective management of state-owned business enterprises, thereby creating those enterprises free from political influence and enable them to operate as commercially driven institutions that provide high-quality goods and services to the public. This law will further enable those businesses to be managed by industry experts by ensuring that boards of directors are appointed independently.

4. Public – Private Partnership Investment Management Act

This new law is intended to encourage foreign and domestic private investments in collaboration with the public sector, a crucial factor for the country’s rapid economic development. The aim is to create an attractive legal framework for investment and to conduct such investments as partnerships, providing public and government support. By enhancing investor confidence, the law will encourage financial investments in Sri Lanka, strengthen security for such investments, and create a more reliable and expansive investment environment, whilst also mitigating any fiscal risks that arise from such partnerships.

5. Statistics Act

Access to high quality data and analysis thereof is crucial for economic development and governance. A new Statistics Act will be introduced to replace the long-standing legislation governing population statistics and Census in Sri Lanka, incorporating updated methodologies and concepts. This will create a new environment for conducting an efficient population census through new technological methods, enhancing the utilization of census data collected by the Department of Census and Statistics for governance, data sharing with private institutions, and establishing a comprehensive data and information repository that will be instrumental in country’s economic growth.

6. Valuation Act

The Government expects to introduce new legislation for the management of the Government Valuation Department. The present hundred year old department needs modernization to cater growing demand to transform its role in a way that is more effective and conducive to economic development. Improving the efficiency of the department will enable timely valuation of state assets, thereby increasing revenue for local government institutions while also making valuation services more accessible to the public. 

7. Public Asset Management Act

The Government intends to introduce new legislation for non-financial asset management to ensure the effective utilization, proper maintenance, and optimal value extraction of those properties. Accordingly, this new legislation will envisage enactment of provisions to provide the required legal basis for the Non-Financial Assets management of public institutions, while ensuring institutional compliance for recording and reporting the information of these assets and thus enabling protection and proper management of public properties.

8. Public Procurement Law

The procurement of goods, works, and services accounts for a significant portion of government expenditure. Procurement related malpractices have also been an importance source of corruption vulnerabilities. Therefore, introducing a public procurement law is a timely necessity to support the country's economic development. This legislation will ensure the efficient use of public funds by promoting optimal performance, value for money, competitiveness, and transparency while also preventing corruption and strengthening accountability.

9. Micro Finance and Credit Regulatory Authority Act

The government plans to introduce a new law, the “Micro Finance and Credit Regulatory Authority Act,” to address the shortcomings of the existing Micro Finance Act No. 6 of 2006. The current Micro Finance Act does not provide comprehensive regulation and supervision of the microfinance industry. Additionally, it lacks adequate focus on consumer protection and the regulation of market conduct by microfinance institutions—issues that are particularly important in the current context. Therefore, the government has prioritized the introduction of the new law this year.

10. Strengthening of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Framework

Strengthening the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework has become a crucial aspect of a country's economic development and governance. A robust AML/CFT framework promotes financial sector integrity and ensures compliance with international standards. The Convention on the Suspension of Terrorist Financing Act, No. 25 of 2005, the Prevention of Money Laundering Act, No. 5 of 2006, and the Financial Reporting Act, No. 6 of 2006 are the primary legislations that support and strengthen Sri Lanka’s AML/CFT framework. Amendments to these legislations have been identified as essential to further enhance the country's AML/CFT regime, demonstrating Sri Lanka's technical competence and effectiveness in financial transactions in line with international standards. As a result, the government has prioritized these amendments, recognizing the importance of addressing the concerns at hand.

11. Amendment to Paddy Marketing Board Act No 14 of 1971

The government plans to amend the Paddy Marketing Act No. 14 of 1971 to address contemporary challenges in the paddy and rice market. The proposed amendment will establish a regulatory mechanism for paddy and rice stockpiling, while strengthening existing licensing provisions and other related regulations.