The upcoming Budget will test whether Sri Lanka is prepared to make the difficult policy choices needed for long-term stability or if it will resort to short-term measures that risk undermining progress. With limited fiscal space and an economy still finding its footing, the government faces growing pressure to introduce policies that improve public finance management, attract investment and create a business environment that creates real growth.
In response, ACCA Sri Lanka has put forward a set of Budget recommendations aimed at cutting through inefficiencies and setting the country on a more sustainable economic path. The proposals include establishing a budget monitoring unit (BMU) to improve fiscal oversight, leveraging digital transformation and introducing tax incentives to attract foreign investment.
But beyond policy suggestions, the real challenge lies in execution. How realistic are these recommendations? What obstacles might stand in the way? And, most importantly, how does Sri Lanka ensure that reforms translate into action rather than just another round of policy discussions? In this conversation, Sashi Jayakody FCCA, chair of ACCA’s national initiatives sub-committee, and Chaaminda Kumarasiri FCCA, chairman of ACCA Sri Lanka, examine the key proposals, their feasibility and what they could mean for the country’s economic future.
‘The government must develop and enforce policies that incentivise sustainable business practices’
How do you see ACCA’s proposal for implementing a BMU addressing Sri Lanka’s fiscal management issues? What challenges might arise in its execution?
Sashi Jayakody: Establishing a BMU offers a vital solution to Sri Lanka’s fiscal management challenges by enhancing transparency, accountability and efficiency in public spending.
However, implementing a BMU is not without its challenges. Institutional resistance may arise as entrenched bureaucratic processes face reform. Capacity constraints, such as the limited availability of skilled personnel and technical expertise, could hinder operational effectiveness. Ensuring the accuracy of financial data, a critical foundation for monitoring, poses additional difficulties.
Moreover, risks of political interference and coordination gaps between government agencies could undermine the unit’s independence and efficiency. Building public trust and engagement, managing and integrating diverse data systems, and achieving real-time monitoring capabilities further compound the complexity of this undertaking.
‘Collaborating with organisations like ACCA can accelerate the integration of sustainability’
To succeed, the BMU must operate under an independent mandate with clearly defined legal authority, roles and responsibilities established through robust legislation. A strong technical infrastructure is essential to support data collection, analysis and reporting.
ACCA’s proposals emphasise sustainable practices. How can these align with Sri Lanka’s current economic priorities, and what role do you see the government playing in facilitating this shift?
SJ: ACCA’s 2025 Budget proposals, which prioritise sustainable economic growth, public welfare and fiscal responsibility, are well-aligned with Sri Lanka’s economic priorities, particularly the transition to a blue-green economy. This strategic focus emphasises the sustainable use of marine resources, the promotion of renewable energy, and the implementation of eco-friendly agriculture and waste management practices.
The government must develop and enforce policies that incentivise sustainable business practices, promote investment in renewable energy infrastructure and ensure strict adherence to environmental regulations. Additionally, fostering public-private partnerships and collaborating with organisations like ACCA can accelerate the integration of sustainability into Sri Lanka’s economic framework. By doing so, the government can drive innovation, enhance economic resilience and secure long-term prosperity for the nation.
The proposals highlight the need for digital transformation. What specific sectors in Sri Lanka stand to benefit most from this, and how can the government incentivise private sector participation?
Chaaminda Kumarasiri: Digital transformation holds immense potential to advance key sectors in Sri Lanka. The healthcare sector can benefit from telemedicine, electronic health records and digital health platforms, ensuring improved accessibility and patient care. Digital tools in education can democratise access to quality resources through e-learning platforms, bridging gaps in rural and urban education. In agriculture, digital transformation enables efficient resource management, real-time market access and better decision-making through data-driven solutions.
To incentivise private sector participation, the government can introduce targeted tax incentives for companies investing in digital transformation projects within these strategic sectors. Joint initiatives, such as public-private partnerships and co-funding models, can accelerate progress, ensuring that digital technologies drive sustainable growth and competitiveness across Sri Lanka’s economy.
‘Encouraging SME clusters can foster collaboration, resource-sharing and innovation’
Revamping SME support is another key focus area. What measures would you suggest to ensure that SMEs have better access to financial and technical resources to thrive in the current economic climate?
CK: SMEs must look beyond traditional loans and explore financing options such as equity funding, venture capital, crowdfunding and factoring. Government-backed credit guarantee programmes can help mitigate lending risks and encourage banks to extend credit, particularly to those without collateral or credit history. Financial institutions should design SME-friendly loan products with flexible repayment terms, lower interest rates and simplified application processes. Expanding microfinance initiatives can improve access to funding for rural SMEs, while tax incentives for investors and export financing schemes can support global market participation.
Beyond financing, SMEs need better technical support. Regular training in business management, financial literacy and digital marketing can enhance competitiveness, while adopting global best practices and compliance with international standards can boost exports. Digital integration is also key to improving operational efficiency. Encouraging SME clusters can foster collaboration, resource-sharing and innovation, giving businesses greater market leverage. Facilitating access to global networks can provide market insights, technology transfers and supply chain opportunities. A dedicated SME development authority could ensure the successful execution and oversight of these initiatives.
