The 2025 Budget was well-crafted and balanced, staying true to the philosophy of placing sound fiscal management at the heart of the macroeconomic framework, former Central Bank Governor and Senior Advisor to the Centre for Poverty Analysis (CEPA), Dr. Indrajit Coomaraswamy said.
He was delivering the keynote address on “Structural Reforms for Crisis Driven Poverty Reduction” at the CEPA Forum on Crisis Driven Poverty in Colombo on Thursday.
“President Anura Dissanayake has been pragmatic and cautious in ensuring that the overall framework remains stable,” he said.
“In a highly fiscally constrained environment, addressing poverty and multi-dimensional vulnerability cannot be a one-shot deal within the Budget. However, it is a very constructive Budget with sound policies to support the growth of trade and investment.
“It is encouraging that there is a record allocation of Rs. 604 billion for health. Investment in education has been increased to Rs. 619 million. The outlay for ‘Aswasuma’ and other social welfare programs has been increased to Rs. 232 billion. Agriculture and food security have got Rs. 254 billion. Paid prime attention has been given to Small and Medium Enterprises,” Coomaraswamy said.
He said that there has been a shift in policy direction to increase support for sectors where multidimensional vulnerability has risen and to allocate cash funds for social welfare. “Historically, we relied on untargeted subsidies, particularly for electricity, with substantial evidence showing that these primarily benefited non-poor communities. Now, we have finally taken the right approach by assisting the poor with the appropriate instrument,” he added.
The former Central Bank Governor also commended the Government’s strongly committed to digitalisation. “If we can get RAMIS of the Inland Revenue Department and the single window in the Customs working effectively, there will be a significant increase in revenue, giving more fiscal space for activities of protecting the poor. Such investments will have a significant impact on the lives of the poor, because they improve the quality of public service delivery,” he said.
While pointing out that the country has gone backwards very fast in the past 25 years, Dr. Coomaraswamy highlighted the need to open the economy and capture the export market.
“If we are to make a serious impact on poverty, we need to have over 5 percent economic growth. That is also necessary to make sure that we can resume our full debt repayment in 2028, while financing all the imports we need. We will not do it without structural reforms.
“I hope this Government, which is committed to evidence-based policy making, will have the space to get the reforms done as it does not have the same baggage as its predecessors.
“If we have to go for another debt restructuring program in 2028, the challenges in maintaining social and political stability would become more intense. People of Sri Lanka have been extraordinarily patient, but it is not fair to ask them to ask to bear another round of austerity,” he added.
CEPA Chairperson Manilka Fernando, Asian Development Bank Country Director Takafumi Kadono and CEPA Director General Prof. Sirimal Abeyratne also spoke.
