President and Finance Minister Anura Kumara Dissanayake presented the first Budget under the National People’s Power (NPP) Government for the 2025 financial year, emphasizing economic democratization despite tight fiscal conditions. Although previous commitments focused on reducing government spending, the Budget outlines an expenditure increase exceeding Rs. 7 trillion.

Dissanayake highlighted key priorities, including economic empowerment, equitable wealth distribution, and the protection of economic rights, ensuring transparency and accountability in public funds usage. The Government aims for a 5% economic growth rate in 2025 and plans to maintain above 5% real GDP growth in the medium term. Export earnings are projected to reach $19 billion, with a primary budget surplus of 2.3% of GDP.

Acknowledging the role of the IMF’s Extended Fund Facility Programme, the President stressed Sri Lanka’s goal of economic sovereignty. Ongoing debt restructuring has eased debt servicing costs, allowing resources to be redirected towards external reserve strengthening and attracting non-debt generating inflows, such as exports and foreign investments. The Government aims to stabilize finances and resume full debt servicing by 2028.

Despite declining inflation, high living costs and stagnant wages have reduced living standards. Dissanayake emphasized the need for salary increases, given the significant decline in real wages. To address this, the Government is extending the Aswesuma cash transfer program while refining beneficiary selection to improve efficiency.

Key Budget Figures:

Total revenue and grants: Rs. 4,990 billion

Tax revenue: Rs. 4,590 billion

Total expenditure: Rs. 7,190 billion

Primary surplus: Rs. 750 billion

Total financing requirement: Rs. 2,200 billion

Gross borrowing requirement: Rs. 4,000 billion

To boost investment and exports, the Government will amend the Economic Transformation Act and implement a National Export Development Plan (2025-2029). Support for small and medium enterprises will help them expand into global markets. Tariff policy revisions will ensure better access to high-quality raw materials, while Sri Lanka aims to strengthen trade agreements, particularly with ASEAN nations. A new Customs Law will be introduced to streamline trade processes and modernize border controls.

Investment in export-driven industries, eco-industrial parks, and sustainable resource management is a priority, with an emphasis on public-private partnerships. The Government will lease underutilized state land for economic activities. Business operations will be simplified through reforms in property registration, tax payments, contract enforcement, and credit access, including a “one-stop-shop” for business approvals.

Public Sector Salary Hikes and Employment Plans

A key feature of the Budget is a Rs. 345 billion allocation for public sector salary increases. The minimum monthly basic salary will rise by Rs. 15,750, from Rs. 24,250 to Rs. 40,000, incorporating existing allowances into base salaries. Employees across judicial services, public corporations, statutory boards, universities, and the military will also receive salary adjustments.

Annual salary increments will increase by 80%, from Rs. 250 to Rs. 450. The total salary revision cost is estimated at Rs. 325 billion, to be implemented between April 2025 and January 2027. Retirement benefits for employees retiring from January 2025 will be recalculated based on the new salary structure, leading to higher pensions. The distress loan limit for public servants will also increase from Rs. 250,000 to Rs. 400,000.

 Public Sector Expansion

Despite recommendations to downsize, the Government plans to recruit 30,000 new employees for essential public services, allocating Rs. 10 billion for this initiative in 2025. Unemployed graduates, who have often been hired through ad-hoc programs, will be a primary focus. Recruitment will prioritize skill-based hiring, with an emphasis on training and role suitability.

Sri Lanka’s public sector currently employs 1.8 million people, about 15% of the total workforce. While there are shortages in key areas such as healthcare—with only 38,000 nurses compared to over 100,000 development officers—many graduates are employed without clear job roles. The Government’s hiring plan seeks to address this imbalance.

Pension Reforms

The Budget proposes phased pension revisions for retirees before January 2020 to ensure fairness. The first phase, beginning in July 2025, will align pre-2018 retirees’ pensions with the 2018 salary scale, with Rs. 10 billion allocated for this adjustment. Further revisions in 2026 and 2027 will align pensions with subsequent salary structures.

Acknowledging economic hardships caused by COVID-19, political instability, and the broader downturn, the Government is dedicating Rs. 10 billion to recruiting unemployed graduates into public service, despite concerns about efficiency and lack of prior training.

Conclusion

Sri Lanka’s 2025 Budget attempts to balance economic recovery, social welfare, and fiscal responsibility. While salary hikes, pension reforms, and public sector expansion aim to uplift workers, concerns remain about their impact on financial stability. 

The Government’s emphasis on economic democratization, investment, and trade reforms seeks to position Sri Lanka for long-term financial security and sustainable growth.

.The 2025 Budget, presented by President and Finance Minister Anura Kumara Dissanayake on February 17, has faced widespread criticism from trade unions and industry representatives. Public sector employees, health workers, private sector employees, transport operators, and consumers have expressed dissatisfaction, arguing that key concerns have been overlooked.

However, the Ceylon Chamber of Commerce has praised the budget for maintaining policy stability by keeping the existing tax framework and avoiding sudden tax hikes. 

The Chamber acknowledged that several budget proposals align with its recommendations, discussions from the Sri Lanka Economic Summit, and the Vision 2030 goals. 

It also commended the focus on governance, public relief, anti-corruption measures, and inclusive economic growth.

A significant aspect of the budget is the emphasis on infrastructure development through Public-Private Partnerships (PPPs) and the expansion of the digital economy. 

The Chamber welcomed reforms such as modernizing the Customs Ordinance and implementing the National Single Window to facilitate trade. 

Additionally, the proposed Economic Transformation Act and new legislation on PPPs were recognized as positive steps. 

Ensuring the timely implementation of these reforms is expected to attract private sector investment in key areas such as ports, tourism, and infrastructure.

The Chamber also supported the decision to uphold the Public Financial Management Act, which caps primary government expenditure at 13% of GDP. 

This measure is expected to boost investor confidence and strengthen Sri Lanka’s global credit rating. Additionally, tax stability and simplified compliance processes were highlighted as crucial for fostering a more competitive business environment. 

The Chamber stressed the importance of concrete action plans, particularly for long-standing projects like the National Single Window, which has been awaited by the private sector for over two decades.

Another notable reform is the establishment of a holding company for state-owned enterprises (SOEs), aligning with international best practices to improve governance, financial discipline, and operational efficiency.

Despite these commendations, several trade unions have strongly opposed the budget. Priyantha Fernando, President of the Ceylon Teachers’ Union (CTU), accused the government of misleading the public by restructuring existing allowances rather than granting genuine salary increases. 

He insisted that, given the rising cost of living, a Rs. 21,500 increase in the Cost of Living (CoL) allowance was necessary by December 2024. He also warned of potential trade union action if demands were not met.

 Ceylon Teachers’ Union (CTU) Secretary Joseph Stalin criticized the government for ignoring teachers’ salary issues in the recent budget. He noted that while public sector employees demanded a Rs. 20,000 raise, teachers sought the remaining two-thirds of salary adjustments per the Subodhini Committee report. 

However, the budget plans salary hikes only for three years, with no allocations for 2026-2027. With a Rs. 7,500 allowance cut, actual increments will be significantly lower than expected  

Ravi Kumudesh, President of the College of Medical Laboratory Scientists, criticized the budget for negatively impacting health sector employees. He highlighted reduced take-home pay, overtime allowances, and longer career progression timelines—previously set at 12 years but now extended to 40. 

He warned that selective treatment of different public sector groups could lead to unrest among workers, especially those who had previously supported the government.

 Pradeep Basnayake, National Convenor of the Sri Lanka Government Officers’ Trade Union Association, expressed disappointment over the minimal salary increase for public servants. Instead of the requested Rs. 25,000 raise, the budget offers an increment of just Rs. 3,500 spread over three years. Additionally, pension benefits primarily favor employees who joined before 2016.

Anton Marcus, General Secretary of the Free Trade Zones and General Services Employees Union, criticized the budget’s failure to address the ongoing economic crisis, foreign exchange issues, and debt repayment. 

He noted that while the minimum wage was raised to Rs. 27,000, this increase has little practical impact as most private sector workers already earn higher salaries. 

Marcus warned that stagnant wages could drive more workers to seek employment abroad. Discussions with private sector unions are underway to address these concerns

The Australian Government has strengthened Sri Lanka’s hydrographic capabilities with the donation of a Shallow Water Multibeam Echo Sounder (SWMES) to the Sri Lanka Navy Hydrographic Service (SLNHS).

The advanced hydrographic instrument was officially handed over to Sri Lanka Navy Commander Vice Admiral Kanchana Banagoda by Australian High Commissioner to Sri Lanka Paul Stephens at the Sri Lanka Navy Base Rangala in the Colombo Port yesterday (18).

The SWMES will enable the SLNHS to conduct precise hydrographic surveys essential for the creation of Nautical and Electronic Charts used by vessels, including SLN ships. This donation significantly enhances Sri Lanka’s hydrographic capabilities, paving the way for more efficient and accurate maritime mapping.

Strengthening Bilateral Cooperation

Speaking at the event, Australian High Commissioner Paul Stephens emphasized that this contribution further reinforces the longstanding maritime cooperation between Australia and Sri Lanka.

“The SLN plays a crucial role in the security of the Indian Ocean region, and we are pleased to support its efforts. This instrument will be invaluable to the SLN’s hydrographic initiatives,” he stated.

Enhancing Maritime Security and Surveying Capabilities

Navy Commander Vice Admiral Kanchana Banagoda expressed gratitude for the donation, highlighting that the acquisition of this cutting-edge technology aligns with Sri Lanka’s international maritime security commitments.

“This marks a new era in the development of Sri Lanka’s hydrographic sector. The SWMES will significantly enhance the efficiency of hydrographic surveying and enable the production of highly accurate nautical charts, which are critical for maritime operations within Sri Lankan territorial waters,” he said.

This is the first SWMES received by the SLN, and its impact is expected to be transformative. The technology’s ability to collect data in shallow waters will enhance Sri Lanka’s capacity to survey ports, coastal zones, and key waterways. The data collected will not only benefit the National Hydrographic Service but also strengthen Sri Lanka’s position in regional maritime affairs.

Australia’s Continued Support for Sri Lanka’s Maritime Development

Vice Admiral Banagoda also acknowledged Australia’s ongoing contributions to Sri Lanka’s maritime domain awareness, recalling Australia’s previous provision of the Ratnadeepa and Mihikatha vessels to bolster maritime operational capabilities. He reaffirmed Sri Lanka’s commitment to further strengthening bilateral relations and fostering deeper cooperation in the maritime sector.

The event was also attended by Australian Deputy High Commissioner to Sri Lanka Lalita Kapoor, Defence Advisor Colonel Amanda Johnston, and SLN Chief of Staff Rear Admiral Damian Fernando.

The Government will not allow a legal system that serves only the powerful, nor will it tolerate individuals taking the law into their own hands, Prime Minister Dr. Harini Amarasuriya declared while addressing a public gathering in Mullaitivu.

Emphasizing the importance of justice and equality, the Prime Minister reaffirmed the Government’s commitment to upholding the rule of law and ensuring that all citizens are treated fairly.

Transforming Education for a Brighter Future

Dr. Amarasuriya also outlined the Government’s ambitious plans for education reform, set to begin next year. These initiatives include modernized learning methods for children and comprehensive training for teachers to create an engaging and effective learning environment.

“The current Government firmly believes that educational reform is fundamental to national progress. Sustainable change can only be achieved through the collaborative efforts of the Government and citizens,” she stated.

She further assured that a new national curriculum will be introduced in 2026 to prepare students with a clear and well-structured future pathway. As part of efforts to support underprivileged students, the Government has provided Rs. 6,000 vouchers to children from economically disadvantaged families and those in schools with fewer than 300 students, enabling them to purchase essential school supplies.

A United and Equal Nation

Reaffirming the Government’s commitment to national unity, the Prime Minister vowed that racism would not be tolerated, nor would a system that protects only the elite while leaving others vulnerable.

“We have come into power with the mandate entrusted to us by the people. We have a responsibility to fulfill that trust. Let us work together to build a nation where equality prevails and every citizen can live in safety. Unity is our strength – no force can divide us,” she declared.

Balanced Development for All Regions

Acknowledging that development has been uneven across the country, Dr. Amarasuriya assured that the Government is committed to implementing a nationwide development framework that benefits all regions equally.

“The path we have chosen is not easy, but it is necessary. We will honor the trust you have placed in us and uphold the hope for a better future,” she affirmed, calling on citizens to actively participate in the nation-building process to ensure a prosperous and dignified life for all.

Deputy Labour Minister Mahinda Jayasinghe elaborated in Parliament yesterday on how the salaries of government employees, particularly teachers and principals, will be increased under the 2025 Budget.

Addressing the House during the debate on the Second Reading of the 2025 Appropriation Bill, the Deputy Minister emphasized that the salary adjustments mark the highest increment for public servants in recent history.

According to Minister Jayasinghe, the minimum salary of a newly appointed teacher is currently Rs. 31,490, which will rise to Rs. 53,060 within the next three years, with an annual increment of Rs. 800. A graduate teacher who joins the Teaching Service today with a salary of Rs. 50,020 will see an adjustment to Rs. 67,000 by April 1, 2025.

Teachers in Grade 2.2 will receive Rs. 50,220 plus an additional Rs. 17,500, totaling Rs. 73,350. Those with five years of service will get an increment of Rs. 10,500. Meanwhile, the salary of a Grade 2.1 teacher will rise from Rs. 41,000 to Rs. 83,000, and Grade I teachers, currently earning over Rs. 56,000, will see an increase to Rs. 98,000 within three years, with an annual increment of Rs. 2,940.

Principals will also benefit from these salary revisions. A principal in Grade III of the Principal’s Service, currently earning Rs. 42,175, will see their salary rise to over Rs. 72,000. Those in Grade II, currently earning Rs. 48,000, will receive an increase to Rs. 86,370. Grade I principals will also experience significant salary hikes.

Minister Jayasinghe noted that the Budget has been structured to shift Sri Lanka’s economy towards manufacturing and alleviate rural poverty. He accused the Opposition of being unable to accept the government’s success, stating, “The Opposition never believed we could present a Budget that fulfills our promises to the people.”

He further clarified public misconceptions regarding salary increments, stating that the lowest-level public servants will receive an increase of Rs. 5,975. The basic salary hike is Rs. 15,750, including an integration of two previous allowances totaling Rs. 7,500. The annual salary increment for all government employees will increase by 80%, with the minimum annual increment rising from Rs. 250 to Rs. 450.

Other categories of public service will also benefit. The Grama Niladhari Service (GN-1) salary will rise from Rs. 28,940 to Rs. 56,630 within three years, incorporating the Cost of Living allowance of Rs. 17,500 into the new basic salary.

Medical officers will see significant pay hikes as well. Currently, a newly recruited doctor (MO) earns Rs. 54,290. Under the new salary structure, their basic salary will increase to Rs. 91,750. Additionally, their hourly overtime rate will increase from Rs. 687 to Rs. 764.

These salary adjustments, set to be implemented from April 1, 2025, will benefit all government employees through structured increments based on their respective pay scales.

Showers or thundershowers may occur at several places in Galle, Matara, Kaluthara and Rathnapura districts in the evening or night. A few showers may occur in Ampara district.

Mainly dry weather will prevail elsewhere over the island.

Misty conditions can be expected at some places in Western, Sabaragamuwa and Central provinces and in Badulla district during the morning.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.