SL confronting 'decisive test of fiscal discipline'

Sri Lanka enters the new year confronting a familiar but deepening economic strain, with falling foreign reserves, a weakening rupee, rising public debt and mounting disaster-related losses posing what analysts describe as a decisive test of fiscal discipline and policy coherence.

- BY IFHAM NIZAM

Ranjith Keerthi Tennakoon

Sri Lanka Human Rights Centre Executive Director and former Provincial Governor Ranjith Keerthi Tennakoon has warned that the country urgently requires a coordinated economic response to prevent further deterioration, particularly as the cost of post-disaster reconstruction threatens to exert fresh pressure on already strained public finances.

"While the government has succeeded in revenue augmentation through heavy taxation and repeated increases in electricity and gas tariffs, its performance in maintaining fiscal discipline remains weak," Tennakoon said in an economic indicators statement issued on January 5.

According to figures cited by Tennakoon, Sri Lanka's domestic debt stood at Rs. 17,595.05 billion when President Anura Kumara Dissanayake assumed office. By the end of September 2025, that figure had climbed to Rs. 18,701.46 billion, reflecting an increase of Rs. 1,106.41 billion within a year.