Sri Lanka President announces record Rs. 1.35 Trillion for capital investment in 2025 budget

Sri Lankan President Anura Kumara Dissanayake announced that the upcoming budget is expected to allocate Rs. 1.35 trillion for government capital investment expenditure, marking the highest capital expenditure by any government in recent times.

The President made this statement while addressing the Sri Lanka Economic Summit 2025, organized by the Ceylon Chamber of Commerce, under the theme “Shaping Sri Lanka’s Future: Transformational Growth Rooted in Sound Economic Policies.”

The summit, held on Tuesday (January 28) at the Shangri-La Hotel, Colombo, aims to prepare Sri Lanka for a transformative shift in South Asia through political stability, debt restructuring, and improved sovereign credit ratings.

Economic Growth and Investment Climate

President Dissanayake emphasized that the government anticipates an economic growth rate exceeding 4% in 2025. Achieving this target, he noted, will require significant improvements in attracting and sustaining foreign direct investments (FDIs). He outlined the importance of creating a conducive environment for investors and highlighted the government’s commitment to stable economic policies.

“We represent a political movement that has not previously held power. If there were doubts about us among business groups, investors, and certain members of the international community, we have successfully dispelled those concerns and built confidence in the government’s plans and future direction,” he stated.

Addressing Bureaucratic Delays

President Dissanayake identified bureaucratic inefficiencies as a major hurdle to investment. He revealed that securing approval for an investment in Sri Lanka currently requires clearance from 82 different institutions, with the process taking over two and a half years. For environmental approvals alone, 11 institutions are involved, and the process takes approximately 269 days. The government plans to streamline these procedures:

• Environmental approval process – reduced from over 269 days to less than 82 days.
• General investment approval – reduced from 184 weeks to 102 days.
• Board of Investment (BOI) decision-making – reduced from 80 days to less than two weeks.

“If we expect higher economic growth, we must ensure that all necessary facilities and processes for attracting foreign direct investment are efficient and investor-friendly,” he stressed.

Key Economic Sectors

The President highlighted the tourism sector’s potential for rapid growth, with a target of attracting over 3 million tourists in 2025. He also noted significant opportunities in the information technology and maritime sectors. Operations at the Western Terminal are set to commence in March, followed by the Eastern Terminal in July, both expected to contribute to economic progress in the maritime sector.

Additionally, the government has reached an agreement on the long-delayed Sampur Power Plant project and is working to expedite approvals for various BOI projects.

International Collaborations and Policy Reforms

The President disclosed ongoing discussions with India and China on major investment projects. He acknowledged previous governments’ failures in attracting investments and criticized the inefficiencies within the BOI. To address these issues, a new structure has been proposed through the Economic Transformation Act. However, he noted that the Act currently lacks a comprehensive implementation mechanism, which the present government intends to rectify.

Furthermore, the government is prioritizing digital transformation to enhance efficiency and transparency in public services. The introduction of an Electronic National Identity Card will be a key initiative, supported by Rs. 10 billion in funding from the Indian government.

Public Sector Reforms

President Dissanayake criticized inefficiencies and corruption within the state administration, emphasizing the need to restructure government institutions. He pointed out that multiple state institutions operate within the same sector, leading to redundancy and mismanagement. The government plans to consolidate institutions for better resource allocation and efficiency.

Additionally, he highlighted disparities in Sri Lanka’s economic structure:

• 90% of export revenue is generated by a few organizations.
• 69% of customs revenue comes from only 621 files.
• Western Province contributes 37% to the national economy, whereas Uva Province contributes only 5%.

Rural Economic Development

The government aims to address rural poverty by fostering economic opportunities at the village level rather than merely providing welfare assistance. The Aswesuma program currently benefits 1.8 million individuals, but further efforts are needed to create sustainable economic opportunities.

“Until now, Sri Lanka has largely focused on aid distribution rather than economic empowerment. If previous methods had worked, we would have seen large-scale farms thriving across the country. We are now shifting towards community-driven economic initiatives,” the President explained.

Trade and Global Market Strategy

The government is reassessing trade agreements, particularly with India, to ensure Sri Lanka secures a better position in the global market. While the term “free market” is often used, he noted that international markets operate within segmented structures, and Sri Lanka must strategically position itself.

Workforce and Private Sector Development

President Dissanayake acknowledged inefficiencies in the government workforce, which currently comprises 1.3 million employees. While there is an excess of lower-level employees, there is a shortage of mid-level staff. He suggested that conducting competitive examinations could make government jobs more appealing to skilled professionals and emphasized the need to enhance private sector employment attractiveness.

Conclusion

Concluding his address, the President emphasized the need for a mindset transformation in governance, investment policies, and economic management. “Good governance alone will not take the country forward unless there is a fundamental change in perception and approach,” he asserted.

Key figures attending the summit included Minister of Labour and Deputy Minister of Economic Development Dr. Anil Jayanth Fernando, Central Bank Governor Dr. Nandalal Weerasinghe, Deputy Minister of Industries and Entrepreneurship Development Chathuranga Abeysinghe, and Senior Presidential Advisor on Economic Affairs Duminda Hulangamuwa, along with officials from the Ceylon Chamber of Commerce.