Dissanayake govt unveils first budget, eyes 5% growth for Sri Lanka in 2025

The Sri Lankan economy is expected to grow at 5 per cent in 2025, President Anura Dissanayake said Monday while presenting the budget for this year.

This is the first full-year budget presented by the National People's Power (NPP) government, which came to power in November last year.

Introducing the budget, Dissanayake said a budget is a "reflection of the government's approach to building the economy and overall policy."  He added that this year's budget intends to set a foundation of an economy where "all citizens are active participants, active stakeholders, and active beneficiaries," news portal Adaderana.lk reported.

We expect the 2025 economic growth to be around 5 per cent, said Dissanayake, also the island nation's Finance Minister.

He asserted that all fiscal measures would be directed towards the commencement of repaying the external debt from 2028.

"...Growth in non-debt creating inflows along with robust economic growth and a primary budget surplus of 2.3 per cent of GDP will ensure Sri Lanka is well placed to meet the gradual increase in debt service payments from 2028 onwards," the report quoted the president as saying.

Last year, under then-president Ranil Wickremesinghe, Sri Lanka received capital grace periods on bilateral loan payments until 2028.

Dissanayake also said a budget deficit of 6.7 per cent of the GDP or SLR 2.2 trillion was expected in 2025, down from the previous year's 6.8 per cent.

In line with the International Monetary Fund (IMF) programme targets, tax revenue is expected to be increased to 15 per cent of the GDP in 2025, he said.

Dissanayake said the government would prioritise digitising government services and would move towards a cashless economy.

Despite his pre-election statements to review the IMF programme of his predecessor Wickremesinghe, he has continued to steer the economy within the global lender's reforms.

Since the IMF and Sri Lanka entered a USD 2.9 billion bailout in March 2022, three tranches of over USD 330 million have been disbursed.

The fourth tranche of the four-year facility is expected to be materialised soon after the IMF executive board's approval.

The president also announced a phased wage hike for state sector employees while presenting the budget.

We propose to increase the minimum monthly basic salary from SLR 24,250 to 40,000 by 15,750. The current ad-hoc interim allowance and special allowance will be integrated into the basic salary giving a net increase of SLR 8,250 in the minimum salary," he said.

Of the total net salary increase, SLR 5,000 and 30 per cent of the balance amount will be paid starting from April 2025, with the remaining 70 per cent being paid in equal portions beginning in January 2026 and January 2027, he said.