Former Finance Minister Ravi Karunanayake said he is encouraged by the current Government’s commitment to continuing economic policies that have helped maintain stability. However, in an interview with the Sunday Observer this week, he said that President Anura Kumara Dissanayake must now assemble a capable and dedicated team to effectively implement his vision.
Karunanayake also shared his insights on Sri Lanka’s economic landscape, key policy considerations, and recent political developments. The discussion covered economic stabilisation efforts, strategic priorities for boosting exports, engagement with international economic partners, and internal party dynamics in the lead-up to local elections.
Excerpts of the interview
Q: Given your extensive experience as Finance Minister, how would you evaluate the current Government’s economic policies?
A: I’m encouraged to see the current Government continuing economic policies that have helped maintain stability. Looking back, in 2001, former President Chandrika Bandaranaike Kumaratunga left the economy in poor shape, but Ranil Wickremesinghe stepped in as Prime Minister and stabilised it. Again, between 2015 and 2019, when I served as Finance Minister under Ranil’s leadership, we significantly strengthened the economy. Unfortunately, the economy deteriorated severely due to Gotabaya Rajapaksa’s policies, requiring Ranil Wickremesinghe to rebuild it once again between 2022 and 2024.
The present National People’s Power (NPP) Government has wisely continued the same policy direction that previously helped stabilise the economy.
However, the key issue I see now is that while the Government’s intentions are commendable, the capacity and the team needed to execute these policies effectively seem to be lacking. President Anura Kumara Dissanayake is articulating the right ideas, but to turn those ideas into reality, he needs a dedicated and experienced team around him.
Every administration enters office with good intentions; no one deliberately plans to fail. But intentions alone aren’t enough. President Dissanayake must assemble a capable and committed team to successfully implement his vision. The public has placed immense hope in him, and it is crucial that he brings everyone together to ensure those hopes are fulfilled.
Q: Economists have warned that current policies may not generate sufficient revenue for upcoming loan repayments, especially with obligations due in 2028. What is your perspective?
A: This is a crucial question, and it is something I frequently raise in Parliament.
At present, we are only servicing loans from multilateral agencies, but from 2028, we will have to begin repaying bilateral loans and those obtained through international bond markets. Essentially, we are facing the consequences of past mistakes.
We borrowed internationally at high interest rates and spent that money either on consumption or on projects that have not generated sufficient revenue. Ideally, loan repayments are not problematic if your revenue is adequate.
Unfortunately, we often failed to conduct proper economic cost-benefit analyses before borrowing, nor did we use metrics to determine whether these loans would truly benefit us in the long run.
Regarding loan repayments, the Central Bank must actively work to build foreign exchange reserves and prepare the country to manage these obligations.
However, the Central Bank currently insists on its independence to the extent that it has distanced itself from critical responsibilities essential for the country’s overall economic stability.
Q: Are you suggesting that the Central Bank needs a more collaborative approach with the Government?
A: My view is that the Central Bank must collaborate closely with the Government to strengthen Sri Lanka’s economy. While the Government handles fiscal policy and the Central Bank manages monetary policy, these two areas must work together rather than operate in isolation. Our economy is not advanced enough for the Central Bank to remain detached while the Government shoulders all the responsibilities.
I believe there is an excessive focus on controlling inflation without addressing the supply side of the economy. We need a stronger emphasis on increasing supply through enhanced economic activity, which will lead to greater prosperity. Tackling inflation alone will not bring sustainable economic growth, and right now, I do not see meaningful growth taking place in the country.
Q: What do you think about allowing vehicle imports? Do you think they were permitted too early?
A: Imports are important, but we must carefully manage them to prevent the rupee from depreciating. Our priority should be boosting exports and then using that revenue to support necessary imports. Allowing imports that contribute directly to our export production or facilitate manufacturing makes sense. However, importing vehicles simply to generate tax revenue is a short-sighted policy. Excessive vehicle imports could lead to further depreciation of the rupee, negatively impacting the economy. I have always emphasised that strengthening the rupee through increased exports should be our primary strategy.
Q: You have consistently emphasised export growth. Which sectors should Sri Lanka prioritise to substantially increase export earnings?
A: In 2024, Sri Lanka exported goods and services worth over 16.2 billion dollars, with merchandise exports bringing in about 12.7 billion and services exports around 3.46 billion. For 2025, we are targeting approximately 19 billion dollars in total exports.
However, our main revenue still comes from traditional sectors such as textiles and tea. To significantly increase our export earnings, we need to diversify into new sectors, especially those where our geographic location provides an advantage. For example, we could greatly expand our petroleum industry by refining, storing, and exporting petroleum products, generating substantial income.
The service sector also presents considerable opportunities. Areas such as banking, insurance, and health tourism hold untapped potential. Agriculture remains underutilised—for instance, in poultry production. If we allow imports of sufficient maize for poultry feed, we could easily dominate markets in the Middle East. Unfortunately, we have tried unsuccessfully to produce maize domestically. There is nothing wrong with strategically importing goods to support our export-oriented industries. Removing non-tariff barriers on imports that facilitate export production is also essential. Ultimately, expanding exports is our best path towards achieving debt sustainability.
Q: Given Sri Lanka’s current economic vulnerabilities, how do you propose we strategically engage with global powers to improve our economic stability?
A: Sri Lanka must strategically engage with global powers by carefully balancing our relations with major economies to strengthen our economic stability. India, China, and the US, among others, have substantial interests here, and we must leverage these relationships constructively. Instead of relying heavily on one partner, we should diversify our engagements, attracting investment and support from multiple sources. This approach would help us move away from our current vulnerable economic position. We should clearly communicate our national interests, ensuring our partners recognise Sri Lanka as an equal. By skilfully balancing these relationships, we can secure more favourable terms in trade, investment, and economic cooperation, ultimately strengthening our overall stability.
Q: Local Government elections are around the corner. How are the NDF’s preparations progressing?
A: The NDF initially came together to support Ranil Wickremesinghe during the Presidential election, and that cooperation continued into the General Election. As we approach the Local Government elections, we are now focusing on creating an even broader alliance.
Q: How are alliance discussions progressing between the NDF and the Samagi Jana Balawegaya (SJB)?
A: While Ranil Wickremesinghe is actively engaging in discussions, we currently have two individuals trying to undermine the United National Party (UNP). There are dedicated individuals such as Navin Dissanayake, Ruwan Wijewardene, Akila Viraj Kariyawasam, Harin Fernando, and Manusha Nanayakkara working hard to strengthen the party. Unfortunately, two individuals within the UNP have consistently undermined these efforts. During Ranil Wickremesinghe’s Presidency, one of them controlled the Presidential Secretariat, and the other, who entered Parliament as a nominee, dominated parliamentary activities. These two individuals have significantly damaged the party’s prospects by demotivating committed members and prioritising personal interests.
Despite being the most senior figure after Ranil Wickremesinghe, I have been sidelined due to these persons, who perceive anyone with experience or influence as a threat.
Q: Is Ranil Wickremesinghe going to enter Parliament this year?
A: He has stepped away from active politics. I believe the speculation about his return is being perpetuated by the two individuals I previously mentioned. The former President has clearly said he is no longer interested in contesting elections. It is time to put this issue to rest.
Q: What are your policy goals, and what do you aim to achieve through your current efforts in Parliament?
A: My primary policy goal is to encourage the Government to adopt a collective, inclusive agenda that brings together experienced and capable individuals from all parties to move the country forward. President Dissanayake and the NPP have received an important mandate, but to translate their vision into concrete achievements, they must urgently build a strong, experienced team to support implementation. The current momentum and widespread public support must not be squandered.
