Sri Lanka now has enough rupee resources to absorb a domestic shock but remains too exposed to external ones, President Anura Kumara Dissanayake said on Friday, naming tourism, worker remittances and fuel prices as the channels through which the next crisis would arrive.
He was speaking at the centenary annual general meeting of the Government Surveyors’ Association, held at the Waters Edge Hotel in Battaramulla. The same address produced his announcement that the Finance Ministry has decided to close 34 state institutions.
Two causes, one diagnosis
The President traced the 2022 collapse to two failures. The first was revenue: unable to raise enough, the state repeatedly printed money or borrowed from the banking system. By 2022 the Treasury account was running a deficit of roughly Rs. 700 billion. It now holds a surplus approaching Rs. 1 trillion, he said.
He claimed 2025 revenue collection reached 110 percent of the projected target — which he described as the first time in Sri Lanka’s history a budget had met its revenue projection — and said 2026 targets for Inland Revenue, Customs and Excise were on track.
The second failure was foreign exchange. Across its post-independence history Sri Lanka has recorded a current account surplus on only about three occasions, together worth roughly US$300 million. In 2025 alone the surplus reached about US$1.8 billion.
The oil problem
That recovery is being tested. Sri Lanka spent about US$4 billion on oil imports across the whole of last year; it had spent the same amount by the end of August this year, the Island reported from his remarks. At that rate the year-end total could exceed US$6 billion. He attributed the pressure to the conflict in the Middle East.
Spending in rupees, paying in dollars
Dissanayake said several large projects are being built from Treasury funds without dollar borrowing — the Kurunegala–Galewela, Rambukkana–Galagedara and Kahathuduwa–Ingiriya expressways — with an estimated Rs. 600 billion electrification of the Kelani Valley railway line due to start next year.
But he acknowledged the limit of that approach: even rupee-funded construction requires imported machinery and steel. Capital expenditure is planned to rise from Rs. 1,330 billion this year to Rs. 2 trillion next year, which he said makes earning dollars and curbing dollar outflows the country’s principal economic strategies.
Public service pay
On salaries, he said the 2025 Budget provided for basic-pay increases in three phases across 2025, 2026 and 2027, each costing Rs. 110 billion — an additional annual salary burden of Rs. 330 billion by 2027 compared with 2024. No further basic-salary increase is planned in the 2028 Budget, he said, so allowances could receive greater consideration at that stage.
Wealth accumulated in the Treasury, he argued, has to reach people through a strong public administration rather than the political authority.
