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The 2025 Budget Speech, delivered by Anura Kumara Dissanayake, Minister of Finance, Planning, and Economic Development, on February 17, 2025, marks Sri Lanka’s 79th National Budget. It is the first budget under the newly elected government, representing a significant shift in the country’s approach to economic recovery and governance. This budget aims to restore economic stability, ensure social protection, and set a course for sustainable growth following the unprecedented economic crisis that struck Sri Lanka in 2022.
The speech outlines the government’s vision to rebuild the economy while addressing deep-rooted issues related to debt, corruption, and governance. It emphasizes the importance of long-term structural reforms to ensure that the hardships experienced during the crisis do not recur.
Economic Context and Crisis Response
Sri Lanka’s economic decline in 2022 was identified as the worst crisis in the nation’s post-independence history. This collapse was attributed to decades of corrupt governance, unsustainable fiscal policies, and poor financial management, which led to severe shortages of essential goods such as fuel, electricity, food, and medicine. Citizens endured long queues for basic necessities, and the country experienced inflation exceeding 70%, significantly eroding purchasing power.
The crisis also triggered mass emigration of skilled professionals, further weakening the country’s workforce. The situation escalated into political turmoil, leading to mass protests that resulted in the ousting of the existing political leadership. A temporary government was later formed, though it failed to address the root causes of corruption and mismanagement.
Upon assuming office, the new administration prioritized stabilizing the economy. With assistance from the International Monetary Fund (IMF) and other international partners, Sri Lanka embarked on debt restructuring, fiscal consolidation, and currency stabilization measures. These efforts began to restore macroeconomic stability by the end of 2024.
Budgetary Vision and Objectives for 2025
The 2025 budget is framed as a foundation for sustainable and inclusive economic development. It seeks to achieve 5% economic growth in 2025, maintain low inflation, and strengthen the country’s fiscal position. Social protection for vulnerable groups is highlighted as a core priority, ensuring that the economic recovery does not leave marginalized communities behind.
The government aims to transform Sri Lanka into a competitive, export-driven economy while leveraging digital transformation as a catalyst for progress. This budget also emphasizes the importance of transparent governance, anti-corruption measures, and fiscal discipline.
Key Policy Measures and Initiatives
Revenue and Fiscal Reforms
The government is committed to increasing revenue collection through enhanced tax administration and streamlining the tax system. Efforts will focus on improving tax compliance and ensuring transparency in public expenditure. Fiscal consolidation will continue, aiming to achieve a primary fiscal surplus of 2.3% of GDP by 2028. Public finance management laws will be strengthened to prevent a recurrence of fiscal mismanagement.
Debt Restructuring and Financial Stability
Debt restructuring, which concluded in 2024, provided much-needed relief. The government will prioritize responsible debt management to prevent future defaults. Strengthening foreign exchange reserves and improving Sri Lanka’s credit ratings are viewed as essential steps toward restoring investor confidence.
Economic Modernization and Export Growth
The budget emphasizes the need to diversify exports and attract foreign direct investment (FDI). A National Export Promotion Plan (2025-2029) will be introduced to identify and expand into new global markets. Additionally, the expansion of Free Trade Agreements (FTAs) with regional partners such as ASEAN and RCEP will be pursued.
Sri Lanka’s geostrategic location will be leveraged to position the country as a regional logistics and trading hub. Major upgrades are planned for Colombo Port, including the development of new terminals and logistics hubs to handle increased cargo capacity.
Digital Economy Development
Digital transformation is recognized as a pillar of Sri Lanka’s economic future. A Unified Digital ID System (SL-UDI) will be introduced to facilitate seamless financial and administrative services. The government will also strengthen cybersecurity laws, promote digital payment systems, and encourage investments in emerging technologies such as artificial intelligence and fintech.
A national push towards digital governance is expected to improve transparency, reduce corruption, and streamline government services. The GovPay system has been launched as an initial step towards enabling cashless transactions in public services.
Tourism Sector Development
Tourism is identified as a key sector for economic recovery. The budget proposes upgrading key tourist infrastructure, including expanding Bandaranaike International Airport and introducing digital ticketing systems for popular attractions. Investment will also be made to develop new tourist destinations, while enhancing security and visitor experience through real-time information systems.
Support for SMEs and Entrepreneurship
Recognizing the role of small and medium enterprises (SMEs) in the national economy, the government will establish a Development Bank to improve access to credit for rural entrepreneurs and startups. Financial and technical support will be provided to promote innovation and expand business operations.
Public-private partnerships will be encouraged to fund infrastructure projects and support enterprise development. The budget also proposes a National Innovation Fund to commercialize research and inventions, particularly focusing on technology and manufacturing sectors.
Social Welfare and Poverty Alleviation
Protecting the most vulnerable populations remains a primary goal. The Aswesuma Welfare Program will be expanded to cover a larger portion of low-income families. Adjustments to minimum wages will be considered to cushion the impact of inflation, while targeted financial support will be provided to elderly citizens and disabled individuals.
To ensure long-term poverty reduction, the government will promote skill development programs and enhance access to quality education and healthcare.
Long-Term Structural Reforms
The budget also highlights the importance of political stability, good governance, and institutional reforms. Combating corruption, ensuring judicial independence, and strengthening regulatory institutions are seen as vital for sustained economic progress.
A transition towards green and sustainable development is encouraged, with policies aimed at promoting renewable energy, modernizing agriculture, and improving environmental protection.
The government acknowledges that structural reforms may cause short-term hardships, but emphasizes their necessity to achieve long-term prosperity. Citizens are urged to exercise patience and resilience as the nation undergoes this transformative journey.
Conclusion
The 2025 Budget lays the foundation for a stable, inclusive, and modern Sri Lankan economy. It reflects the government’s commitment to fiscal discipline, economic modernization, and social equity. By promoting exports, accelerating digital transformation, and ensuring social protection, the government aims to restore public confidence and position Sri Lanka on a path toward sustainable growth.
While significant challenges remain, the policies and measures outlined in the budget speech signal a decisive break from the past, emphasizing accountability, transparency, and long-term economic resilience.
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