Hulangamuwa says 2026 Budget restores private sector’s role as “engine of growth”

Adviser to the President on Economic Affairs and Finance Duminda Hulangamuwa yesterday said that the key theme of the 2026 Budget is mobilising private capital and restoring the private sector’s role as the “engine of growth.”

“Almost every major reference in the Budget from tax incentives to institutional reforms is directed toward encouraging private sector participation,” he said at the Daily FT-Colombo University Alumni Association post-Budget Forum. 

Hulangamuwa said the country’s path to achieving 7% growth will depend not merely on fiscal policy, but on rebuilding Sri Lanka’s credibility through consistent policies, rule of law and the active participation of the private sector in driving investment and development.

He explained that the 2026 Budget was crafted not only to stabilise the economy, but to lay the groundwork for sustained, broad-based growth powered by private enterprise, structural reforms and good governance.

He said that while Sri Lanka is likely to achieve 3–4% GDP growth in the short term, sustaining a higher trajectory of 6–7% is critical for meaningful development that benefits the wider population.

“If we are to ensure that the benefits of economic growth reach all citizens, we must grow by 7%. Growth cannot come from fiscal tools alone, it requires consistency, credibility and trust in governance,” he added.

Hulangamuwa said one of the main lessons from the experiences of Asian peers such as Singapore, Malaysia and Vietnam was that policy consistency and credibility is not just reforms, it fuels investor confidence and economic transformation.

“In the past, we changed fiscal and monetary policies almost every year. Interest rates, taxation and exchange rate directions shifted without predictability. That undermined investor trust. The most important thing is for the country, not just the Budget, to demonstrate policy stability and credibility,” he pointed out.

He further stressed that the rule of law and zero tolerance for corruption are essential preconditions for both domestic and foreign investment. “Investors must know that in Sri Lanka, laws apply equally to all, and that you don’t need to go behind officials or offer favours to get approvals anymore,” he said.

He cited Singapore’s governance model which is built on transparency, accountability and fair application of law as an example Sri Lanka should emulate. “That is how those countries grew; with consistent policies and honest, transparent governance,” he opined.

He said that four landmark legislations; Public-Private Partnership (PPP) Act, State-Owned Enterprise (SOE) Act, Strategic Development Projects Act and revised Port City Economic Commission Law will underpin the new economic framework, which are expected to be presented to Parliament before the end of this year and early next year.

“These laws will provide the legal and structural foundation for long-term foreign direct investment (FDI) inflows,” he said, adding that the PPP Act will unlock new opportunities in infrastructure, energy and logistics through transparent and competitive processes.

He also noted that one major challenge for new investments is the limited availability of land for industrial development, since most of country’s landmass is categorised as agriculture, plantations or forest reserve.

“To address this, the Government is developing a ‘land bank’ coordinated through the Presidential Secretariat, to systematically identify and release land for industrial and commercial use, while protecting environmental zones,” he said.

Beyond the Budget, Hulangamuwa said the Government has already launched multiple initiatives to mobilise private participation, monetise public assets and revitalise dormant projects. “There is a visible shift in how we are engaging the private sector, not just through policy, but through actual projects that had been stuck for years,” he added.

He cited several examples of renewed investor activity. “Phosphate mine in Eppawala, unused since 1998 due to legal disputes, have now been cleared for private investment with new expressions of interest (EOIs) called. The graphite and ilmenite mining projects are being reopened for investment under competitive EOIs. Plantation lands in the Matale and Kandy districts, covering about 3,000 acres, have attracted 480 EOIs from private partners and Pelwatte National Livestock Development Board (NLDB) farms and Bogambara redevelopment projects are preparing for new calls for EOIs and Requests for Proposals (RFPs). These are all examples of projects that were stagnant for decades and are now being revived with private participation,” he noted.

Hulangamuwa also referred to recent wind power projects in Silavatura, which were awarded through a fully transparent, competitive tender at below four US cents per kilowatt-hour (kWh), as a model of the new governance approach.

“This is what both local and foreign investors look for; open, competitive processes that ensure value for money and fairness,” he said, calling it “a foundation for future investor confidence.”

He stressed that the Government’s efforts to transform the economy go far beyond the annual Budget, encompassing a wide set of reforms to enhance efficiency, monetise State assets and strengthen market liquidity. “The groundwork has been laid over the past year. Now the next phase is to build on that foundation to move the economy towards a 7% growth path,” he said.

According to him, policy stability, private sector empowerment and institutional reforms are not separate tracks, but part of an integrated economic strategy. “The Budget provides the fiscal framework. But consistency, credibility, and governance are the pillars on which long-term growth must stand,” he stressed.