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Tuesday October 13th, 2026

Sri Lanka parliamentary polls show unity among ethnic, religious groups, but weaker opposition

ECONOMYNEXT – Sri Lanka’s parliamentary election results showed unity among the island nation’s different ethnic and religious people in backing President Anura Kumara Dissanayake’s request for a clean parliament, but a weaker opposition that could threaten the country’s fragile democracy.

President Dissanayake’s Marxists Janatha Vimukthi Peramuna (JVP)-led ruling National People’s Power (NPP) recorded a landslide victory, winning 159 seats in the 225-member parliament.

The election saw ethnic majority Sinhalese along with minority Tamils and Muslims voting for the NPP, which campaigned for “Fill parliament with compass”.

Compass is the symbol of NPP.

For the first time in history, Sri Lanka saw all Tamil-dominated Northern districts and Muslim-dominated Eastern districts backing the NPP as much as Sinhalese-dominated Southern districts.

Dissanayake’s leadership marked a pivotal shift in Sri Lanka’s political landscape, bringing hope of unity to the nation long divided by ethnic tensions, analysts say.

His campaign for reforms, economic recovery, equitable governance, and social justice has united the country’s different ethnicities around a shared vision.

WEAK OPPOSITION

However, the move has inadvertently weakened the opposition, setting a precedent that may shape Sri Lankan politics for years amid threats to the island nation’s fragile democracy.

The NPP is the first party to have won two-third majority under proportional representation (PR) system since it was implemented in 1989.

Both former presidents Mahinda Rajapaksa (2010-2015) and his brother Gotabaya Rajapaksa (2020-2022) secured two-third majority with the support of other minority political parties in the parliament.

However, Sri Lanka has experienced weaker opposition and democracy when there had been two-third majority in the parliament in the past.

Mahinda Rajapaksa government removed a chief justice when his government’s poverty alleviation programme was resisted and removed the limit for presidential term using the special majority. His administration also weakened independent institutions through a constitutional amendment.

His brother Gotabaya’s government repeated the same when he had the special majority before he was forced to flee the country in the face of mass protests in 2022.

Diverse Sri Lankan communities see President Dissanayake’s political dialogue as an inclusive platform of reconciliation and genuineness.

His reputation as a tireless campaigner against corruption, social inequality, and economic mismanagement resonated widely across the ethnic divide.

Unlike many of his predecessors, who often stoked nationalist fervor to galvanize their base, Dissanayake’s campaign focused on bridging the gap between communities.

He actively engaged with historically marginalized groups, offering them a seat at the decision-making table and promising tangible reforms that prioritized social and economic equity over divisive rhetoric.

YEARS OF HARD WORK

This strategy, however, did not happen in a vacuum. It was built on years of groundwork by Dissanayake’s political allies in the JVP and aligned civil society organizations.

The outreach to Tamil and Muslim communities, alongside broader progressive Sinhalese constituencies, helped craft an image of a government genuinely invested in the country’s diversity.

His government pushed initiatives for Tamil reconciliation, promoted Muslim rights without capitulating to sectarian pressures, and encouraged dialogue forums to address historic grievances.

Such inclusive politics transformed Dissanayake from a niche leftist leader into a nationally unifying figure.

However, this surge in broad-based support fragmented and weakened the opposition, the election results showed.

Traditional political rivals, including those from the center-right Samagi Jana Balawegaya (SJB) and factions of the nationalists Sri Lanka Podujana Peramuna (SLPP), struggled to maintain their identity and relevance.

The SLPP, once a dominant nationalist force in the last parliamentary polls, found itself unable to pivot from its prior nationalist agenda to compete in the new political climate. It won only three seats in the parliament.

With Dissanayake championing unity, moderate opposition leaders appeared less distinct and failed to capture public attention or differentiate themselves from the President’s transformative platform.

This weakened opposition landscape was further marred by internal divisions and ineffective coalition-building.

Efforts to unite disparate groups against the President’s coalition floundered, primarily due to lack of a cohesive vision and internal power struggles.

Some factions resorted to the familiar playbook of ethnic polarization, but these messages fell flat against Dissanayake’s genuine outreach and the tangible benefits his policies began to deliver.

Younger voters, especially, gravitated toward his more inclusive, reformist agenda, leaving traditional parties scrambling for relevance.

The consequence was a fragmented and weakened opposition, unable to pose a significant challenge to Dissanayake’s dominance.

Political analysts are of the view that such consolidation of power comes with risks.

A diminished opposition risks undermining democratic accountability, leading to potential policy stagnation, and less effective checks on executive power.

As President Dissanayake’s administration continues its reform agenda, the challenge will be maintaining the balance between unity and power consolidation, ensuring the pluralism that elevated him to power does not give way to political complacency. (Colombo/November 15/2024)

Sri Lanka President explains measures to speed up capital investment spending

ECONOMYNEXT – Sri Lanka has planned reforms in the public procurement system and alignment of budget and procurement timelines among key measures to speed up the spending under planned projects with capital expenditure allocated in annual budget, President Anura Kumara Dissanayake said.

Dissanayake, also the island nation’s Finance Minister said the current procurement guidelines have become a barrier for public investment projects implemented through budget-allocated capital expenditure.

Sri Lanka has spent less than 30 percent or only around Rs.385 billion of this year’s capital spending of Rs. 1,380 billion through the first nine months of this year, two government sources have told EconomyNext.

Sri Lanka’s chronic failure to utilize its full budgetary allocations for capital investment reflects deep-rooted structural inefficiencies in public financial management and project execution, analysts and economists say.

“Our upcoming budget plans for public capital expenditure of around 2 trillion rupees (Rs.2,000 billion).  Compared to when we took office, this represents a massive increase,” President Dissanayake told the gathering at the launch of the Sri Lanka Economic and Investment Summit 2026 on Monday (12).

He said his administration utilized 76 percent of the allocated capital expenditure last year. However, critics have said that this included some past loan repayments for the central highway project as well.

“Our procurement system was fundamentally built on the mindset that the state apparatus is susceptible to corruption. We created layer upon layer of regulations, and the ultimate result is that the rules have become so restrictive that nothing can get done. It reached a point where the rigidity paralyzed execution.”

“We are actively focusing on redesigning procurement mechanisms tailored for these distinct sectors,” he said, citing the current procurement system was designed merely for purchasing physical goods and there were difficulties in formulating criteria when procuring services like  global promotional campaign or repairs of defence equipments.

“Our objective is to identify these specialized domains and formulate modern procurement systems. How do we procure complex software systems? We need new procurement protocols,” he said.

“Additionally, we must operate competitively in commercial markets. SriLankan Airlines, for example, how does it procure its operational requirements while staying competitive in the market? It requires flexible, modern procurement mechanisms.”

“Defense procurement is another area. We have a fleet of helicopters that cannot undergo timely repairs because the procurement cannot be awarded within the financial year. Funds get allocated, but if the procurement isn’t finalized within that year, the allocation lapses.”

Analysts warn of lower economic growth in the future if the government fails to implement its planned capital investment projects.

The government has repeatedly said most of the spending occurs in the last quarter of the year.

Year after year, bureaucratic delays, protracted procurement disputes, politicized project selection, and a lack of technical expertise within line ministries leave a significant portion of capital expenditure unspent on the Treasury books.

This capital under-utilization carries severe long-term repercussions for the island’s economic trajectory.

By failing to deploy allocated funds into critical infrastructure such as transport networks, modernized power grids, and digital public systems, Sri Lanka suffers from lower productivity growth and worsening structural bottlenecks as well as a decline in overall gross domestic product (GDP) potential.

Procurement Timing

“Previously, the practice was that only after the budget was presented and formally passed, and after the Treasury allocated the funds to the respective Ministry Secretaries, would the procurement process commence,” President Dissanayake explained.

“Consequently, procurements routinely dragged on until August or September before reaching finalization.”

“We have changed that. For major procurements, the Treasury Secretary guarantees funding ahead of time within 2026. For instance, take the Kurunegala–Galewela expressway. Funds will officially be allocated in the 2027 budget, but we have provided Treasury assurance to the Road Development Authority that the funds will be granted in 2027.”

“This allows them to call for tenders, evaluate bids, and select contractors right now. Once the budget is passed in December, we can award the contract directly in January. Work can commence immediately at the start of 2027.”

The President also said Sri Lanka is exploring e-procurement to accelerate the process while addressing professional capacity in the public sector.

“Our public service is currently not attractive enough to recruit and retain high-caliber technical professionals. We face significant deficits in recruiting IT specialists, engineers, and executive management within the standard state salary framework,” he said.

“To attract specialized talent, we must institute specialized, competitive compensation packages. Otherwise, we cannot attract this talent.”

“We are managing a 2-trillion-rupee capital portfolio, running vast services across education and healthcare, yet the state is constrained by rigid salary scales that deter top professionals.”

“When we established GovTech, we were able to bring in leading IT experts by offering specialized salary scales. We must extend this approach to other critical domains. Can we attract a top-tier civil engineer under standard civil service pay? No, because the private sector creates more lucrative opportunities and pays substantially better.”

In a fragile post-default macroeconomic climate, the persistent shortfall of public investment sends a negative signal to international development partners and private investors, analysts say. (Colombo/October 13/2026)

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Sri Lanka rupee closes at 331.00/10 to US dollar spot, bond yields steady

ECONOMYNEXT – Sri Lanka’s rupee closed at 331.00/10 to the US dollar in the spot market on Tuesday, weaker from 330.90/331.00 the previous day, while bond yields were broadly steady, dealers said.

A bond maturing on 01.08.2030 closed at 11.30/35 percent, down from 11.30/37 percent.

A bond maturing on 15.10.2030 closed at 11.35/40 percent, down from 11.37/40 percent.

A bond maturing on 01.02.2031 closed flat at 11.42/47 percent.

A bond maturing on 15.12.2032 closed flat at 11.75/85 percent.

A bond maturing on 15.10.2034 closed at 12.12/18 percent, down from 12.15/20 percent.

An auction of 90,000 million rupees Treasury bills is scheduled on October 14. (Colombo/Oct13/2026)

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Sri Lanka sells Rs100bn in 2029, 2031 and 2036 bonds

ECONOMYNEXT – Sri Lanka has sold 100 billion rupees in 2029, 2031 and 2036 bonds, data from the public debt management office showed.

All offered 20 billion rupees of 15 September 2029 (LKB00629I154) bonds were sold at an average yield of 11.00 percent.

All offered 30 billion rupees of 1 December 2031 (LKB01031L016) bonds were sold at an average yield of 11.67 percent.

30.69 billion rupees of an offered 50 billion rupees of 15 August 2036 (LKB01136H151) bonds were sold at an average yield of 12.33 percent.

The 2029 and 2031 bonds are available on tap. (Colombo/Oct13/2026)

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Sri Lanka’s 2027 budget to “heavily” focus on rural economic empowerment: President

ECONOMYNEXT – Sri Lanka’s 2027 budget has heavily focused on rural economic empowerment with high-speed communication and modern road infrastructure with an aim to address rural poverty in rural area across the island nation, President Anura Kumara Dissanayake said.

Rural poverty in Sri Lanka remains disproportionately higher and more entrenched than in urban centers, accounting for roughly 80 percent of the island nation’s poor.

While urban areas benefit from diversified service economies, concentrated foreign direct investment, and higher-paying industrial employment, rural communities remain heavily tied to smallholder agriculture, seasonal labor, and informal enterprises.

Eradicating rural poverty has proven uniquely difficult due to structural constraints, including low agricultural productivity, land fragmentation, and poor market integration.

“This is why, through the 2026 budget, we have focused heavily on empowering rural citizens within their native regions,” President Dissanayake told the gathering at the launch of the Sri Lanka Economic and Investment Summit 2026 on Monday (12).

“This entails high-speed communication infrastructure and robust road networks connecting rural and urban centers. Through these multifaceted programs, we can address rural poverty.”

“It cannot be solved overnight with a quick-fix solution. It requires a long-term, sustained, structured, and targeted plan, and I believe we have laid the foundation for that.”

“Eradicating rural poverty is not something that can be achieved in a year or two simply by building a road or a bridge. It demands a sustained, targeted program.”

Limited Opportunities

He acknowledged that the segment needing a social safety net has grown excessively and the government has been forced to support groups that should not necessarily require state welfare.

“This is because of our failure to create new economic opportunities for the rural population. What economic avenues do they currently have? The rural populace has access to only a very limited scope of economic activities like agriculture, marine and inland fisheries, and running small, marginal village boutiques/shops,” he said.

“These are essentially their only economic opportunities. Therefore, if we are to eliminate rural poverty, our primary challenge is: how do we create new economic avenues for them?”

He said rural agriculture is restricted to small plots of land and has historically been a subsistence economy.

“It was never a commercial economy for a large portion of the population; it was subsistence-based. Consequently, looking at the extent of land and resources available to us, we cannot develop a large-scale commercial agricultural sector solely by targeting individual smallholders. That remains a poverty-alleviation and food-security mechanism; it must be viewed in that light,” he said.

Small-scale farmers frequently lack access to modern technology, cold-storage facilities, affordable credit, and efficient supply chains, leaving them exposed to volatile crop prices, middleman exploitation, and recurring climate shocks like severe droughts and floods.

Furthermore, long-standing fiscal deficits have constrained state investment in rural infrastructure, education, and non-farm employment creation, while administrative inefficiencies in targeted welfare programs such as Aswesuma have often left vulnerable agrarian households without adequate social safety nets during broader macroeconomic downturns.

Dissanayake said the focus is on enabling the rural poor to generate their own economic opportunities amid obstacles such as lack of capital, lack of technology, weak management capacity, and lack of market access.

“The responsibility of the state is to step in and fulfill these requirements,” he said.

“We have already launched a collateral-free loan scheme. They lack financial assets to pledge to banks, so we introduced collateral-free lending. That program has proven successful, channeling nearly 18 billion rupees so far. Next, we are integrating new technology.”

He said the government is relying two approaches to channel the wealth mobilized by the state toward the rural population, spending the revenue collected the Treasury for rural infrastructure development including for the rehabilitation of minor tanks and irrigation canals and community empowerment to directly link rural communities

He also said rapid communication networks between villages and cities to ensure the flow of rapid information and access opportunities and an advanced transport and road network connecting rural production to urban markets could help in creating more economic opportunities for the rural poor.  (Colombo/October 13/2026)

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Sri Lanka to set up Rs5.4-bn center for disease control

ECONOMYNEXT — Sri Lanka’s cabinet has approved a 5,431 million rupee project to establish a dedicated Center for Disease Control and Prevention (CDC) and upgrade national laboratory facilities, minister Nalinda Jayatissa said.

The proposal covers 35 identified activities under the Integrated One Health Pandemic Preparedness and Response Strengthening Project.

The work is funded through a 4,785 million rupee grant received from the Pandemic Fund alongside a 646 million rupee contribution from the Sri Lanka government, with the Asian Development Bank expected to fund the CDC’s establishment.

“Sri Lanka’s response to the COVID-19 pandemic and other zoonotic health threats has revealed shortcomings and gaps in national response mechanisms across both the human and animal health sectors,” Jayatissa said.

Although Sri Lanka maintains a routine vaccination coverage rate exceeding 95 percent, an action plan running from 2026 to 2028 was prepared with international partners to address gaps, with all project work scheduled to conclude by March 31, 2028.

“Activities to address these gaps are proposed for implementation through the Pandemic Fund, and an action plan covering the 2026–2028 period has been formulated in collaboration with funding organizations.”

Responding to questions from journalists on whether the facility would be an entirely new institution, Jayatissa confirmed plans for a standalone centre.

“On land belonging to the Ministry of Health in Mulleriyawa, we intend to construct a building of approximately 7,200 square meters as this CDC,” he said.

Jayatissa added that the project will also modernize five existing pharmaceutical warehouses, upgrade the National Medicines Regulatory Authority (NMRA) laboratory, and improve physical infrastructure at the Medical Research Institute’s National Public Health Reference Laboratory. (Colombo/Oct13/2026)

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Sri Lanka Cabinet approves public-private partnership for state printer

ECONOMYNEXT — Sri Lanka’s Cabinet of Ministers has approved a proposal to implement a diversification program for the State Printing Corporation (SPC) through a public-private partnership, minister Nalinda Jayatissa said.

Established in 1968, the SPC is the primary state body tasked with printing school textbooks, official government publications, and state institutional documents.

Jayatissa said that while the state printer has remained profitable, outdated machinery has created operational hurdles.

“Although the Corporation has consistently recorded financial profits in recent years, challenges regarding production efficiency and cost competitiveness have arisen due to the deterioration of existing machinery and the obsolescence of its printing technology.”

Restructuring the corporation’s business model and technical capabilities is essential to ensure its long-term sustainability, Jayatissa said.

Jayatissa dismissed both concerns on the partnership compromising national security or signals privatization.

He said printing syllabus-based schoolbooks involves no confidentiality issues and that old equipment must be modernized and since the corporation alone cannot bear the cost, the government plans to cover part of the expense with private sector assistance.

“We are moving towards a mechanism where this work can be carried out quickly, efficiently, and securely, while placing the minimum possible burden on the Treasury,” Jayatissa said.

He added that non-confidential government printing is already handled through open tenders, and proposals will be obtained to finalize the exact structure. (Colombo/Oct13/2026)

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