President Anura Kumara Dissanayake held a comprehensive discussion with officials from the Ministry of Finance today (7) at the Presidential Secretariat. The meeting addressed key economic concerns, including vehicle imports, withholding tax, and the digitalization of Value-Added Tax (VAT) collection.

Vehicle Imports

The President stressed the importance of balancing the challenges related to vehicle imports with the country’s financial constraints and economic priorities. He called for a strategic approach to manage the issue while ensuring minimal strain on Sri Lanka’s recovering economy.

Withholding Tax Refunds

Addressing the concerns of retirees, President Dissanayake underscored the necessity of creating a mechanism to refund withholding taxes deducted from individuals not liable for income tax. He emphasized that such measures would provide much-needed relief to senior citizens.

VAT Digitalization

President Dissanayake announced plans to digitize VAT collection processes to enhance transparency and efficiency. The proposed digital system is expected to improve tax compliance and significantly boost revenue generation.

Optimism for Economic Recovery

The President expressed confidence in Sri Lanka’s progress towards economic recovery and stability. He reiterated the government’s commitment to optimizing the benefits extended to citizens despite prevailing challenges.

The meeting was attended by Deputy Minister of Finance and Planning Dr. Harshana Suriyapperuma, Secretary to the Ministry of Finance Mahinda Siriwardana, Central Bank Governor Dr. Nandalal Weerasinghe, Senior Advisor to the President Duminda Hulangamuwa, and senior officials from the Ministry of Finance.

The Committee on Public Finance held its inaugural meeting yesterday (6) under the leadership of Member of Parliament Dr. Harsha de Silva, who was recently appointed Chair by the Committee of Selection in accordance with Parliamentary Standing Orders.

In his opening address, Dr. de Silva provided an overview of the Committee’s functions and its past work, followed by an open discussion involving Committee Members and attending officials.

During the session, Ministry of Finance Secretary Mahinda Siriwardena and Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe presented the Mid-Year Fiscal Position Report 2024 and an analysis of recent economic developments along with future outlooks. The Committee subsequently approved the report.

The Committee also recognized Dr. Weerasinghe’s contributions to economic recovery and congratulated him on being named LMD’s ‘Sri Lankan of the Year.’

Additionally, the Committee reviewed and approved the Annual Work Programme of the National Audit Office – 2025, with provisions for potential revisions if necessary.

The meeting saw participation from Deputy Ministers Harshana Suriyaperuma and Chathuranga Abeysinghe, alongside Members of Parliament Ravi Karunanayake, Harshana Rajakaruna, Shanakiyan Rasamanickam, Dr. Kaushalya Ariyarathne, Arkam Ilyas, Nimal Palihena, Wijesiri Basnayake, Thilina Samarakoon, and Lakmali Hemachandra. Parliament Assistant Secretary General Hansa Abeyratne also attended the proceedings.

The Election Commission of Sri Lanka has announced its intention to initiate legal proceedings against candidates who failed to submit their income and expenditure reports for the 2024 General Election.

In a statement released yesterday (7), the Commission revealed that it had directed all District Election Offices to finalize and submit files concerning these non-compliant candidates to the Police. This measure aims to facilitate prompt legal action.

The decision follows repeated failures by certain candidates to comply with the mandatory requirement to submit financial reports, despite the extended deadlines. According to the Election Expenditure Regulation Act, all candidates—whether representing political parties, independent groups, or included in national lists—must submit their income and expenditure reports to their respective Election Commission offices.

The Election Commission stated that preparations are underway to file cases next week against five Presidential election candidates who have similarly failed to meet the reporting requirements. This follows prior legal action already initiated against seven other Presidential candidates for the same offense.

The Commission emphasized its commitment to enforcing the Act, which grants it the authority to take legal measures against candidates who fail to adhere to these financial disclosure obligations. It also reiterated the importance of compliance to uphold transparency and accountability in the electoral process.

The Sri Lankan Government has announced the extension of the school stationery allowance, initially granted to “Aswesuma” beneficiaries, to a broader group of underprivileged students. This initiative aims to provide essential resources for children from marginalised backgrounds, ensuring they are prepared for the new school year.

Cabinet Spokesman, Health and Media Minister Dr. Nalinda Jayatissa, revealed at the weekly Cabinet Media conference that the Rs. 6,000 allowance, initially given to children from “Aswesuma” beneficiary families, will now benefit students in 6,576 schools with fewer than 300 pupils.

The expanded scheme will also cover children from families ineligible for the welfare program, residents of Child Development Centers, and both lay and monastic students enrolled in Pirivenas. Additionally, the initiative will assist orphaned children, those with disabled parents, and others facing hardship due to special circumstances.

The Education, Higher Education, and Vocational Education Ministries will oversee the implementation of this program. Recognizing the absence of a comprehensive database to identify all eligible recipients, the government has opted to include predefined categories to avoid delays.

Dr. Jayatissa emphasized the importance of timely assistance, ensuring the aid is delivered before the start of the 2025 school term. He reiterated the government’s commitment to supporting education and ensuring no child is left behind in their academic journey.

The Government of Sri Lanka has reiterated its unwavering commitment to the One China policy, underscoring its support for China’s sovereignty and territorial integrity.

During this week’s Cabinet meeting on Monday, the Cabinet of Ministers reaffirmed the country’s adherence to this long-standing policy, recognizing the People’s Republic of China as the sole legitimate government of China.

In a statement issued by the Government Information Department, the Government declared, “Our nation remains firmly committed to the One China policy. We recognize that Taiwan is an integral part of China and oppose any attempts to undermine China’s sovereignty or territorial unity.”

The One China policy has been a cornerstone of Sri Lanka’s diplomatic relations with China for decades, aimed at fostering strong bilateral ties. The Cabinet approved a proposal submitted by Foreign Affairs, Foreign Employment, and Tourism Minister Vijitha Herath to continue adhering to this policy in all aspects of diplomatic engagement.

This reaffirmation comes as part of Sri Lanka’s broader effort to maintain and strengthen its longstanding partnership with China, a key ally in trade, investment, and regional cooperation.

The Cabinet of Ministers has approved a compensation scheme for patients who developed eye-related complications following cataract surgeries at the Nuwara Eliya District Hospital.

The scheme was proposed by Health and Mass Media Minister Dr. Nalinda Jayatissa and includes compensation for 17 patients based on the severity of their complications. Under the approved framework:

• 12 patients will receive Rs. 1,000,000 each,
• Two patients will receive Rs. 750,000 each,
• One patient will receive Rs. 700,000, and
• Two patients will receive Rs. 250,000 each.

Speaking in Parliament, Minister Jayatissa emphasized the government’s commitment to addressing the issue and ensuring justice for the affected individuals. “The health and well-being of our citizens are our top priorities. We are deeply concerned about the incidents at the Nuwara Eliya Hospital and have taken immediate steps to address them,” he stated.

A special review committee will assess claims to ensure fair and timely distribution of compensation. The minister assured the public of the government’s dedication to stricter oversight of medical practices to prevent similar occurrences in the future.

Investigations are ongoing, and any medical personnel found guilty of negligence will face disciplinary action. Dr. Jayatissa also urged affected patients to report their cases promptly to facilitate the compensation process.

This decision aims to uphold accountability in the healthcare system while providing relief to those impacted by the unfortunate incident.

Sri Lanka is adopting more American Bell 206 helicopters and a Pakistani Chengdu J-7 aircraft to enhance the country’s air force capabilities.

The investment stipulates eight of the 206 systems in their TH-57 Sea Ranger military derivative ordered from Washington DC and a single Chinese-made J-7 in its FT-7 export trainer variant from Islamabad.

Sri Lanka Air Force (SLAF) Commander Air Marshal Udeni Rajapaksa confirmed that the Bell fleet is scheduled to arrive later this year.

Meanwhile, Rajapaksa’s recent bilateral meeting with Pakistan allowed the FT-7 order to be delivered as a grant, with the shipment expected “in the near future.”

A Pakistani Chengdu F-7PG aircraft conducts a training mission during a multinational exercise Dec. 9, 2009, in Southwest Asia. Aircrews from France, Jordan, Pakistan, the U.A.E., the U.K. and the U.S. are training together in the Air Forces Central area of responsibility.

A Pakistani Chengdu F-7PG aircraft. Photo: Michael B. Keller/Wikimedia Commons/US Air Force

“By acquiring modern drone security units and advanced air defence weapons, the SLAF has initiated a programme in collaboration with the government to upgrade both the air defence and radar systems,” Rajapaksa remarked.

“As the government aims to boost the economy by enhancing the tourism industry, the Sri Lanka Air Force has also launched several programmes to support these efforts.”

Airborne Fleet Expansion

The SLAF’s latest project follows the service’s induction of a Beechcraft King Air 360ER aircraft last year as part of a contract signed with US-based aerospace company Textron Aviation in 2022.

Concurrently, the military received a Beechcraft King Air 350 from the Royal Australian Air Force to bolster Sri Lanka and Canberra’s maritime security partnership across the Indian Ocean.

Sri Lanka is also engaged with Tel Aviv’s state-owned Israel Aerospace Industries to upgrade the SLAF’s existing Kfir fourth-generation fighter jets.

The modernized planes will obtain Kfir’s latest C12 configuration, replacing the air force’s older C2 and C3 models by 2025.

Additionally, the South Asian government accepted two Harbin Y-12s from China to bolster its tactical airborne cargo and personnel transportation.

Air Marshal Rajapaksa said that with those aircraft the  SLAF has already initiated surveillance operations in Sri Lanka’s seas  to combat maritime threats such as drug trafficking, human smuggling,  and illegal fishing, while also protecting local fishermen and naval  personnel from piracy.  

In addition to these new acquisitions, the SLAF is in the  process of modernising its fleet of Kfir fighter jets. An agreement signed with Israel Aerospace Industries (IAI) in 2021 will see five Kfir  jets upgraded.  

The Commander confirmed that the upgraded C12 Kfir jets,  replacing the older C2 and C3 models, will be integrated into the SLAF  fleet in 2025. These jets will play a crucial role in surveillance  operations across the Indian Ocean.  

.“By acquiring modern drone security units and advanced air  defence weapons, the SLAF has initiated a programme in collaboration  with the government to upgrade both the air defence and radar systems.

 As the government aims to boost the economy by enhancing the tourism  industry, the Sri Lanka Air Force has also launched several programmes  to support these efforts,” the commander said.         

The Central Bank of Sri Lanka (CBSL) has directed licenced banks to establish Relief Banking Units to aid troubled Micro, Small, and Medium Enterprises (MSMEs), as outlined in Circular No. 01 of 2025. This is in addition to existing Business Revival Units mandated by a previous circular. The new units aim to provide effective implementation and monitoring of relief measures.

Banks can reschedule loans for eligible borrowers up to 10 years, contingent on repayment capacity and revival plans. Borrowers and banks must agree on terms, including interest rates, aligned with prevailing benchmarks. Disputes over auctioned property valuations must be addressed through transparent grievance mechanisms.

To enhance accountability, banks must report relief measures granted to borrowers monthly, starting 31 January 2025. The measures follow MSME complaints over perceived inadequacies in CBSL’s previous relief efforts and criticism of its response to the government’s loan freeze extension.

Deputy Minister Chathuranga Abeysinghe stated the relief targets loans under Rs. 25 million, covering 99% of debt-affected businesses. He emphasized the need for collective efforts from the government, banks, and businesses to overcome the debt crisis.

Key relief measures include:

Rescheduling non-performing loans classified after 1 April 2019, provided discussions with Business Revival Units begin by 31 March 2025.

Finalizing rescheduling agreements by 15 June 2025, with repayments starting between June and December 2025, based on loan size.

Waiving unpaid interest accrued between April 2019 and December 2024 for eligible borrowers.

Offering additional working capital loans and refraining from rejecting new loan applications solely due to adverse CRIB records.

Borrowers denied relief can appeal to the CBSL’s Financial Consumer Relations Department. Banks must provide detailed breakdowns of credit facilities upon request and collaborate with borrowers to ensure consistent application of relief measures. Borrowers are urged to engage with banks promptly to finalize repayment plans, as prolonged non-repayment may strain both parties.

 These measures align with the National People’s Power (NPP) government’s election promise to establish a dedicated Relief Bank, aiming for sustainable economic recovery while addressing MSME concerns.