President AKD defends economic recovery

• Tells Parliament economy is on stable and strengthened path
• Notes US tariff was not Govt.’s failure, negotiations ongoing 
• Says 1H export earnings highest in a decade, tourism revenue has increased by 10% YoY
• Points to FDI doubling to $ 507 m in 1H and expects to reach $ 1 b by year-end 
• Asserts 2025 will see highest export revenue, foreign workers’ remittances inflow and most number of tourist arrivals
• States foreign reserves to reach $ 7 b by year-end
• Rejects speculation of potential suspension or additional taxation on vehicle imports 
• Discloses LCs totalling $ 1.27 b already opened, expects to rise to $ 1.5-1.8 b by end 2025
• Says revenue collection has exceeded expectations; with IRD surpassing July target by 101%, Customs by 115%
• Assures all district development funds allocated in 2025 Budget would be disbursed in full

President Anura Kumara Disanayake forcefully defended Sri Lanka’s economic recovery in Parliament yesterday following months of difficult reforms, and warned that political conspiracies to trigger instability would be firmly resisted.

Addressing an adjournment debate on the economy, Disanayake said the Government had restored macroeconomic stability, secured international financing, revived exports, and reopened vehicle imports. 

“The economy is now on a stable and strengthened path as a result of the immense sacrifices made over the past year,” he stressed.

The President cautioned political opponents against seeking advantage through economic disruption. “Some are dreaming of a collapse. That collapse will not happen. Do not even think of conspiring to destabilise this country,” he warned.

Disanayake addressed concerns over the 44% retaliatory tariff imposed by the US on Sri Lankan exports in April.

He explained that the tariff was based on the US formula of applying duties equal to half the bilateral trade deficit, in this case, 88%. “This was not a failure of our Government,” he said, “but a result of the mechanism the US uses in applying such tariffs.”

The President said that after difficult negotiations, the Government succeeded in reducing the tariff to 20%. “We achieved a significant outcome through a competent negotiating team and continuous dialogue. There was no media show – only serious work,” he said. He confirmed that discussions with the US are ongoing and that no final agreement has been signed.

President Disanayake also said Sri Lanka recorded its highest-ever export earnings in a decade during the first six months of 2025 and the export market has been diversified. “Of our total exports, 25% go to the US and 23% to the EU. Therefore, any tariffs imposed by these countries have a significant impact on Sri Lanka. This is why the Government has planned to further diversify exports. We do not intend to rely solely on two or three powerful countries or a few export markets in the future. Comparing June 2024 with June this year, exports to the African market have grown by 57%. Looking at the Asian market, export activity has expanded by 26% compared to the previous year.”

He highlighted diversification efforts. “We cannot depend on two or three powerful markets. We are planning for broader export resilience.”

Tourism revenue has increased by 10% over the previous year, and foreign direct investment (FDI) in the first six months reached $ 507 million, double the $ 252 million recorded during the same period last year. 

Disanayake affirmed that the Government expects FDI to surpass $ 1 billion in 2025, with $ 1.3 billion already approved for the Colombo city development project. By December, he said, foreign reserves are expected to reach $ 7 billion. “This year, we will have the highest exports, foreign workers’ remittances inflows, and the highest number of tourists,” he stressed.

For the first time in five years, vehicle imports have resumed. “Letters of credit (LCs) worth $ 1.27 billion have already been opened, with the figure expected to rise to $ 1.5-1.8 billion by year-end,” he said.

Disanayake dismissed speculation that vehicle imports would be halted or taxed further. “Vehicle imports will not be limited and the taxes will not be increased. If you can’t buy a vehicle this year, you can buy one next year,” he said, emphasising that the sector would remain part of the formal economy.

The President said revenue collection has exceeded expectations. The Inland Revenue Department (IRD) surpassed its July target by 101%, Customs by 115%, and the Excise Department reached Rs. 143 billion against a Rs. 136 billion target.

“We were told Rs. 4.5 trillion in revenue was impossible,” he said. “But we have already proven otherwise.”

A list of 200 tax defaulters, owing between Rs. 100-150 billion, has been compiled. The administration is pursuing recovery, including from defaulters connected to State banks and former political actors.

Disanayake acknowledged problems in the sugar industry and indicated that a 50% tax on imported sugar may be necessary to stabilise prices. The Government is also providing Rs. 1 billion in support to sugar producers.

Major infrastructure projects will begin this year, including the Katunayake Airport expansion and the Kadawatha-Mirigama expressway. A new Yuan-denominated loan from the EXIM Bank of China will finance the expressway, replacing the original Chinese facility.

The Government is also proceeding with energy sector reforms, including tenders for new projects, expansion of oil storage in Kolonnawa, and rehabilitation of the Trincomalee oil tank farm.

President Disanayake linked rule of law enforcement with economic confidence. He confirmed that anti-corruption institutions such as the Criminal Investigation Department (CID) and the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) had been empowered and protected to act without interference. “There will be no leniency for those attempting to use political chaos to avoid accountability,” he said. “We will protect every official who upholds the law.”

Responding to criticism over legal action against a former Navy Commander, he said, “We are not trying to please any diaspora. We are trying to bring justice to the people of this country.”

Disanayake assured that all district development funds allocated in the 2025 Budget would be disbursed in full. While delays had occurred due to elections and late submissions by MPs, he said this would not recur. Starting in 2026, allocations will be released in January.

The upcoming Budget will also include a concessionary vehicle scheme for MPs during their term of office.

Concluding his remarks, the President said the country had entered a recovery phase after severe economic collapse. “We inherited a broken economy. Today, the dollar has remained stable for a year. The black market is collapsing. Investors know political leaders are not stealing.”

He warned against renewed attempts to incite unrest. “If anyone is contemplating conspiracy, we will not allow it. Politics is welcome, but not plots that harm the economy or the justice process.”

He urged Opposition parties to offer constructive alternatives instead of exploiting instability. “If you think this Government is unnecessary, present a program that shows why you are needed. Otherwise, join us in rebuilding this country.”