Calls for targeted spending amid economic challenges

Labor Minister and Deputy Minister of Economic Development Anil Jayantha emphasized the urgent need for targeted social spending to address the widespread economic struggles faced by Sri Lankans, particularly in rural areas. Speaking at an investment forum, he outlined the government’s approach to balancing fiscal discipline with public welfare while navigating significant economic challenges.

“A large majority of Sri Lankan people are not living with an adequate amount of income to have a decent life. They are really struggling,” said Jayantha. “We are contemplating giving more targeted benefits and social safety nets rather than offering blanket spending.”

Jayantha was speaking on January 17 at the First Capital Colombo Investor Symposium. The minister highlighted that achieving this targeted approach is especially pressing in light of the constraints imposed by the 2025 budget. With the government projecting GDP growth at just 2.1% for 2024 and overall economic growth capped at 2-3% in the coming years, spending for 2025 is limited to Rs 4,290 billion, with a minimum of 4% allocated for capital expenses.

“Within these constraints, our primary goal is to channel limited resources into areas that can make a real difference in people’s lives,” he said.

The minister also discussed the broader economic stabilization measures undertaken by the government, including commitments to the International Monetary Fund (IMF). The decision to continue with the IMF’s debt restructuring process and integrate social spending within the program reflects the government’s resolve to achieve fiscal stability without neglecting social needs.

“Our engagement with the IMF was not easy,” Jayantha noted. “We were able to negotiate some social spending, tax cuts, and benefits to stabilize the market while addressing public needs.”

Beyond immediate fiscal priorities, the government is also working to develop a more inclusive and efficient financial system. Minister Jayantha outlined the need to integrate political, financial and technological spheres to create a “real economy” where markets operate transparently and resources are effectively mobilized.

“Finance can work as a supportive element to energize the economy,” he said, adding that transparency, governance and symmetric information in capital markets are crucial for fostering investor confidence.

Underpinning these efforts is the government’s broader vision of “Clean Sri Lanka,” which Jayantha described as a commitment to “clean politics, clean administration, and clean public service.” The concept reflects the government’s determination to uphold public interest while fostering collaboration and innovation to overcome current challenges.

“Our long-term goal is to create an environment where everyone can live in harmony and peace, with sufficient income to ensure a dignified life,” Jayantha said. The Minister called on the debt markets of Sri Lanka to become activated. (TP)

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Exchange rate outlook upgraded to Rs. 310 for 1H2025:

Export industries must look at innovative products, automation and going digital

Shirajiv Sirimane

Most of the export industries including apparel must look at innovative products, automation and going digital to cut costs to meet competition from other countries, said Managing Director of Brandix, Hasitha Premaratne at the 11th Edition of its ‘First Capital Colombo Investor Symposium’, at Cinnamon Grand on Friday.

He said that the competition has caught up and the cost factor in the industry is something they are concerned about. “Adopting technology to bring the cost down is the way forward to overcome this. Also new innovative products too should be exported.”

He said that these initiatives will also help them to be less dependent on labor which is now moving to other industries. He said that the apparel industry had a roller coaster ride during the C-19 pandemic era and later many started buying online and kept them at home. Due to this the order book dropped and now we see a recovery.

Deputy Chairman/Group Finance Director of John Keells Holdings PLC Gihan Cooray said Sri Lanka Tourism has not had a focused international destination campaign for over a decade and this is something urgently needed if Sri Lanka is looking at a revenue target of USD 5 billion which is attainable.”

He said that today China has an over 120 million outbound tourism market and India too will follow this pattern soon. “Hence Sri Lanka tourism should also be looking at a more focused marketing approach towards India.”

Minister of Labour and Deputy Minister of Economic Development Prof. Anil Jayantha Fernando said that countries economic forecast for the future is very promising which is leading to added investor confidence and this is also reflected in the Stock market.

Dimantha Mathew, Chief Research and Strategy Officer of First Capital Holdings PLC said that with debt repayments recommencing, it is expected that import demand will gradually weaken currency which will result in LKR to reach around 305-315 against the US dollar by December 2025.

It is now expected that LKR weakness will be limited to 300.0 to 310.0 by June 2025, with added pressure to push LKR to 305.0 – 315.0 by December 2025.”

He also said that forward bookings for Cinnamon Life were very positive and this trend is expected to continue.

 

 

 

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