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Friday November 13th, 2026

Sri Lanka’s misguided state priorities and how to reset them

ECONOMYNEXT – In the previous Arthashasthra columns, I showed that the Sri Lankan state’s priorities were all wrong; it was not doing well (or at all) what should be the highest priority tasks; it was doing many things badly that were low in priority.

If a business were to act like this, it would go bust.

But states can get away with it. They have a near-monopoly on the means of violence; the citizens who they allegedly serve are easily distracted and misled.

But these are features common to all states. Not all states are as bad as ours (and ours is not as bad as some others). Some states perform their core functions well. Some that used to be like ours have improved over time. The situation is bleak, but hope is not absent.

Priority setting by politicians?

One may argue that priorities should be set by the people. After all, they are the sovereigns.

How do the sovereign people set priorities? In the same way that they appoint agents to govern the country on their behalf. At periodically held elections.

All political parties and candidates present a manifesto when running for election.

The winning candidate’s or political party’s manifesto then gets converted into a contract that governs their actions for the next five years.

Read Previous columns here

What the Sri Lanka state should prioritize: Arthashashtra

Core elements of a Sri Lanka state; public goods, national defence, justice: Arthashastra

Arthashasthra, for new thinking on Sri Lanka statecraft

Political leaders often refer to the “mandate” they received.

But this is a muddy mandate. Each manifesto contains a multiplicity of promises. Was the vote aconsidered approval for each of those promises?

The primary purpose of a manifesto is to convince citizens to vote for the candidate or political party presenting it. The secondary purpose is to gain legitimacy for specific actions.

Manifesto making is political. Experts or those who are perceived as experts may be called in to contribute, but the principal criterion is not expertise, but trust.

Those who have been involved in manifesto making will testify to the opacity of the process, wherein what is accepted one day can disappear the next and new clauses and conditions can mysteriously appear even after “finalization.”

Contributions can be sought, and consultations conducted, but in the end, decisions are made by a few in proverbial “smoke-filled rooms.”

Putting out a manifesto is not a bad thing. It conveys information about the values of the candidate or party and about the overall direction they are likely to take if elected.

Some politicians keep a copy of the manifesto at hand and try to deliver on the promises made therein (though our immediate past President claimed not to know what was in his own manifesto). Some convert their manifestoes into formal policy statements, like the current President.

Politicians, the officials who lack both expertise and spine, and the general public all overstate the significance of manifestos.

A manifesto is, at most, broadly indicative of orientation and priority-setting. Given the partisan and opaque procedure used to develop a manifesto, errors and impossible promises are unavoidable.

The Saubhagyaye Dakma manifesto of the current President included poorly formulated commitments related to exports that were inconsistent with the thrusts and targets of the broadly consulted National Export Strategy (NES) of 2018.

Luckily, the Chairman of the Export Development Board appointed by the newly elected President was himself an exporter and had participated in the formulation of the Strategy. Instead of throwing away the good work done by many, including international experts, he simply announced that the National Export Strategy had priority and would continue to be implemented.

A weaker and less informed person may have done serious harm in the name of respecting “the mandate.”

This example points both to the cause of the problem and to its solution.

Why is it that half-baked ideas of politicians and their advisors cooked up in backrooms to win a particular election against a particular opponent end up setting priorities for the state? It is because in many areas, the responsible officials have not done their job and have not got policies in place.

Assume for a moment that the NES of 2018 did not exist when the new President took office in November 2019 and appointed a new Chairperson for the Export Development Board.

Even if he or she were superbly qualified and motivated, such a Chairperson would have had to fall back on the language in the manifesto because that’s all there was.

Now assume that the NES had been developed through broad consultation and approved by Cabinet but that the new President appointed a political hack as Chairperson.

The political hack would try to impose the manifesto priorities, but her/his subordinates in the EDB would point out the superiority of the NES.

Even more importantly, she/he would face resistance from exporters, many of whom who would have bought into the strategy because of the consultative processes that had been adopted and may have even made investment decisions based on it.

There is no guarantee that the strategy developed in the right way would survive the political hack, but the hack’s disruption would face considerable resistance.

Because the professionals in the EDB and the relevant political authorities in the years preceding 2018 had put in the effort to properly develop a NES, it would have been difficult for the country’s export priorities to be derailed.

So, the key is that the officials should do their job and not leave a vacuum. But vacuums are what exist in most Ministries.

Lack of capacity in Ministries and agencies

I recall a choice that I faced back in 2002, under one of the most reform-oriented governments I have ever worked for.

I was leading a small unit responsible for infrastructure reforms at the Ministry for Economic Reforms and was fast-tracking the completion of telecom sector reforms started in 1996.

Prior to my arrival, the Telecom Regulatory Commission (TRC) had prepared a draft National Telecommunication Policywith the assistance of an international consultant.

But it was seriously flawed because the Constitution and relevant Supreme Court judgments had been willfully ignored in the interests of increasing the powers of the TRC and improving the prospects of its officials.

Cabinet declined to approve the policy.

Given the money that had already been spent, it was not possible to complete the work using another consultant. I told my superiors that the draft NTP could be repaired if I devoted some time to the task.

I was asked what would happen to all the other urgent reforms I was responsible for, such as spectrum refarming and liberalization of the international telecom business at the end of SLT’s five-year ambiguous exclusivity, in addition to work in other infrastructure sectors.

I admitted that some of those would have to be slowed down. The decision was to prioritize implementation of ongoing reforms. Parliament was dissolved prematurely, the government changed, and to this day we have no National Telecommunication Policy.

Looking back at ourcontribution to creating the business process outsourcing industry through the international reforms, the spectrum that was freed up for the mobile operators, the end of the waiting list, and so on, I cannot fault the decision that was made in terms of allocating my time.

But why was I, a team leader in the Ministry for Economic Reforms, needed for this task?

There was a Ministry responsible for telecom. Policy and legislation are core responsibilities of a Ministry. But most Ministries lack capacity for these core tasks.

There were relatively well-paid and trained people at the TRC. But they had proved their incompetence and partialityby submitting a policy that ignored the country’s basic law.

The problem is the incompetence of the senior officials in Ministries.

In my most recent stint in government service, 20 months heading the ICT Agency under the Ministry of Digital Infrastructure, I saw the problem firsthand.

Compared to the Ministry of Post and Telecommunications that I worked under 20 years earlier, this Ministry hadmore personnel and facilities. But they did little of value. Several pieces of legislation and a National Digital Strategy were formulated, but there was no intellectual or other contribution from any of the Ministry officials. All their time was taken up second-guessing the actions of agencies under the Ministry and slowing things down.

The individuals were not blameless but there were structural problems too.

In the twenty months that I served this Ministry, its name was changed twice (or thrice if the coup period is counted). It had two (or three) Ministers; and four (or six) secretaries.

An official who was a few months away from retirement was appointed as secretary, I suppose to give him a better retirement package.

Workarounds

Political leaders from J.R. Jayewardene to the current President have come up against the incapacity of the Sri Lankan Administrative Service and the other 20 plus services to execute policies. Realizing the difficulties of reforming the SLAS, they have resorted to workarounds.

J.R. Jayewardene, even before becoming President, brought in an outsider, Ananda Tissa de Alwis, to serve as his Secretary.

The 1978 Constitution institutionalized this practice, by giving the power to appoint Secretaries to the President and the power to appoint Heads of Departments to the Cabinet of Ministers. Lateral entry was much easier in Sri Lanka than in India.

Ranil Wickremesinghe entrusted the execution of his Regaining Sri Lanka policies to committees headed by persons outside the administrative structure.

It worked, more or less, twenty years ago. When he appointed some of the same people in 2015, they were older and the results poorer. The current President is appointing serving and retired military officers.

When government departments were seen as incapable of execution, Boards and Authorities were created. As workarounds for the Department of Irrigation, the River Valleys Development Board and then the Mahaveli Authority were created.

The Department of Government Electrical Undertakings was converted to the Ceylon Electricity Board.

When Boards and Authorities were also found to be ineffective, government-owned companies were created.

These were not limited to commercial entities, earlier organized as corporations, but extended to entities such as the ICT Agency, whose task it was to digitally transform Sri Lanka.

These non-commercial units had policy implementation functions and were funded entirely from international development finance grants or loans or by allocations from Treasury.

While the political authorities, at least at the outset, tried to allow the workaround institutions to function, the government officials who belonged to various services such as the Sri Lanka Administrative Service (SLAS), did their utmost to subject them to the salary caps and rules that they were subject to.

They withheld funds, even for salaries in some cases. This passive-aggressive approach resulted in gradually neutralizing the workarounds.

Toward a solution

I recall President Kumaratunge wanting to appoint a dynamic leader as the Director of the Sri Lanka Institute of Development Administration (SLIDA), saying that it was a critical leverage point for improving the quality of the administration.

But she never got around to it. The directorship of this premier training institution has become a way station for senior officials marking time between Ministry appointments. SLIDA has become a high-class tutory.

In 2014, the then Secretary to the President mandated an expert committee with a majority from outside government to make recommendations on how to reform the SLAS.

It could not complete its work because the government changed in January 2015. The abovefacts indicate that senior decisionmakers are sensing that something needs to be done about the capacity and attitudes of the officials in charge of the machinery of the state.

Reform of the most powerful among the various services may not, by itself, lead to an end to the dysfunctions of the Sri Lankan state. But the reform of the SLAS is a necessary condition for improving the performance of the state.

How important is the restoration of some form of self-governing civil service that can ensure that continuity is maintained, and waste is avoided whenever political power changes hands? Can generalists lacking analytical skillsmeet the complex requirements of today’s society?

It may be argued that what is more important is the ability to mobilize and manage expertise rather than be expert. This means the ability specify that tasks expected of consultants, to attract qualified consultants to bid for the work and procure the best ones, and then to get quality work from them.

Writing the terms of reference for a specialized task is in itself a highly skilled activity. In the case of IT projects within government organizations, getting the users to describe the requirements has been one of the biggest challenges faced by the ICT Agency.

It is necessary to get to real human capacity building for government officials including familiarization with how companies actually work, from today’s rote-learning-based training activities.

The mindless expansion of those employed by the state without giving them the necessary resources to perform their duties has made the reform of the administration difficult.

Removing the distortion of the labor market caused by non-contributory lifetime pensions for government officials, contributory provident funds for others in the formal sector, and nothing for those who are self-employed or in the informal sector appears necessary to allow lateral exit and lateral entry.
These are just some elements of the essential reforms.

More will be said on the reforms.

Rohan Samarajiva is founding Chair of LIRNEasia, an ICT policy and regulation think tank active across emerging Asia. In Artharshastra, he looks at how to arrest Sri Lanka’s declining state capacity and re-orient it to current and future needs.

Samarajiva was Policy Advisor to the Ministry of Post and Telecom in Bangladesh (2006-09). He has also been a policy advisor for The Sri Lnaka govermment and was Director General of Telecommunications in Sri Lanka (1998-99), when key reforms were made.

He is a member of the UN Global Pulse Advisory Group on the Governance of Data and Artificial Intelligence. Information lives of the poor: Fighting poverty with technology which he co-authored in 2013 had been published in Burmese, English, French and Spanish.

(Colombo/Apr06/2021)

Sri Lanka stocks close down 0.60-pct, dragged by HNB and LOLC

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Friday, CSE data showed, with the benchmark All Share Price Index moving down 0.60 percent.

The ASPI was down 133.22 points at 22,024.18, while the more liquid S&P SL20 was down 1.06 percent, or 67.55 points, at 6,298.02.

The ASPI ended the week up 784.53 points from last Friday.

Positive contributors to the ASPI were Dialog Axiata (up 0.40 percent at 50.20 rupees), Distilleries Company of Sri Lanka (up 0.52 percent at 58.30 rupees), Aitken Spence (up 3.60 percent at 151.00 rupees), Ceylon Tobacco Company (up 1.05 percent at 1,828.50 rupees), and LOLC Finance (up 1.96 percent at 5.20 rupees).

Hatton National Bank (down 1.88 percent at 403.75 rupees), Richard Pieris and Company (down 6.21 percent at 27.20 rupees), LOLC Holdings (down 2.17 percent at 405.00 rupees), Sampath Bank (down 1.91 percent at 154.00 rupees), and Singer (Sri Lanka) (down 2.40 percent at 77.30 rupees) were top negative contributors.

Market turnover was 3.23 billion rupees. Capital goods led turnover with 869.21 million rupees. (Colombo/Nov13/2026)

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Sri Lanka MP slams budget speech for omitting Tamil national question

ECONOMYNEXT – A Sri Lanka legislator has voiced strong disappointment that the President’s budget speech failed to make a single mention of the Tamil national question.

“It is very unfortunate that in His Excellency the President’s speech, there has not been a single word mentioned about the Tamil national question. Not a single word,” Shanakiyan Rasamanickam said.

“A budget speech generally, is a policy direction of the government for the next year. The budget speech is not only a statement of the country’s fiscal position or the economy’s position. It is the country’s, the government’s, plan, or what the government plans to do the following year. That’s a policy statement.”

Former presidents would at least mention the Tamil question even if it was not resolved, he said.

Former President Ranil Wickremesinghe in his speech, in his policy statement, he would mention: “The Tamil national question must be resolved,” Rasamanickam said.

Former Presidents Maithripala Sirisena and Gotabaya Rajapaksa also mentioned that the national ethnic question must be resolved, he added.

“Every President, every country’s Head of State, in their policy statements, have acknowledged the fact that there is an unresolved national issue, the Tamil national question, that it needs to be resolved. Various governments have proposed various mechanisms; none of them have succeeded, but at least it was mentioned.”

This year’s budget made allocations for the Office of Missing Persons, and the Office of Reparations.

“But the domestic mechanism is a mechanism that the victim community has rejected. So you all are allocating money to a mechanism where the victim community is not going to be part of.”

Last year’s budget 1 billion was allocated to be spent on the Trincomalee and Jaffna airports.

“Where was that 1 billion for the Trincomalee and Jaffna airports spent last year?”

“The trajectory of this government, Honourable Deputy Speaker, is worrying to me. It’s really worrying to me. Because if the objective is to say that there is no Tamil national question, if the objective is to say that you all have resolved any ethnic issue that this country faced, then Honourable Deputy Speaker, then I think the Tamil people will teach this government a very, very, very harsh lesson in the future.” (Colombo/Nov13/2026)

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Sri Lanka sells extra Rs6.5bn Treasury bills after auction

ECONOMYNEXT – Sri Lanka has sold 6,500 million rupees of treasury bills offered on tap at an average rate of 9.95 percent, the public debt management office said, bringing the total of bills sold in the week to 85.562 billion rupees.

The issue offered 90 billion.

Total market subscription was 6.5 billion rupees.

The debt office sold a 12-month bill at 9.95 percent.

On Wednesday (11) the debt office raised 79 billion rupees of 3, 6 and 12 month bills after offering 90 billion.

Read more
Sri Lanka Treasury bill yields hold broadly steady, less bills sold

The settlement date is November 13. (Colombo/Nov13/2026)

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Access Engineering Sept quarter group net profit surges 200-pct to Rs4.75bn

ECONOMYNEXT — Sri Lanka’s Access Engineering PLC recorded a group net profit attributable to equity holders of Rs. 4.75 billion for the quarter ended September 30, surging 200 percent from Rs. 1.58 billion a year earlier, interim accounts showed.

Basic earnings per share rose to Rs. 4.08 for the September quarter, up from Rs. 1.58 previously.

Quarterly group revenue expanded 36 percent to Rs. 20.39 billion from Rs. 14.94 billion, underpinned by condominium property handovers — reflected in inventories dropping Rs. 7.69 billion since March to Rs. 35.71 billion — alongside strong automobile sales and steady civil engineering execution.

Cost of sales rose at a slower 27 percent to Rs. 14.34 billion, lifting gross profit by 64 percent to Rs. 6.05 billion and expanding gross margins to 29.7 percent from 24.7 percent.

Other income jumped 144 percent to Rs. 259.9 million, while administrative expenses rose 75 percent to Rs. 1.14 billion, leaving operating profit up 64 percent at Rs. 5.16 billion.

However, finance costs more than doubled, rising 107 percent to Rs. 1.18 billion on elevated group borrowings of Rs. 43.74 billion, partly offset by finance income climbing 302 percent to Rs. 42.2 million.

Share of results from equity-accounted investees rose 122 percent to Rs. 26.7 million, pushing pre-tax profit up 56 percent to Rs. 4.05 billion.

Income tax swung to a net reversal of Rs. 186.6 million from an expense of Rs. 804.1 million, boosted by deferred tax assets on unrelieved losses from a 100 percent enhanced capital allowance claimed by 60 percent-owned radiopharmaceutical subsidiary Access Medical Tracers (Private) Limited.

Total period profit rose 136 percent to Rs. 4.24 billion, with non-controlling interest declining 24 percent to Rs. 164.9 million following last year’s buyout of minority shareholders in Harbour Village (Private) Limited.

No separate exchange gain or loss was itemized in quarterly earnings, though foreign currency translation via associates recorded a Rs. 17.4 million loss in other comprehensive income, alongside USD 16.6 million in corporate guarantees.

Notes also flagged an expected Rs. 1.45 billion recovery from the terminated South Asia Commercial and Logistics Hub project, a Rs. 225 million post-quarter legal settlement already provided for, and a Supreme Court appeal over a 2011/12 PAYE tax ruling.

Group assets stood at Rs. 132.4 billion as of September 30, with net asset value per share at Rs. 46.70, as the Employees’ Provident Fund raised its stake to 5.69 percent.

Access Engineering shares closed at 80.00 rupees at the end of September and are currently trading around 85.80 rupees. (Colombo/Nov13/2026)

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Sri Lanka private sector says timely implementation of Budget 2027 key

ECONOMYNEXT – Private sector body, The Ceylon Chamber of Commerce, said it was encouraged by the broad direction of Budget 2027, noting that it reinforces Sri Lanka’s commitment to economic transformation while maintaining policy continuity, macroeconomic stability, and fiscal discipline.

“This continuity is particularly important as the country seeks to transition from economic stabilisation to a more durable, investment-led growth trajectory.”

The chamber also noted several areas where the Budget could have placed greater emphasis to strengthen the country’s growth prospects.

“In particular, there is a need for a stronger focus on attracting Foreign Direct Investment (FDI), accelerating factor market reforms, particularly in land and labour, and fast-tracking public procurement reforms to improve the efficiency and speed of project implementation.

“More targeted and actionable proposals could have been introduced to unlock the potential of sectors with significant growth opportunities, including tourism, agriculture, IT/BPO and logistics.”

The chamber said the budget contains positive measures aimed at enhancing competitiveness, and external sector resilience, while presenting opportunities for focus on sectors that can accelerate growth.

“A number of the key structural reforms identified in last year’s Budget have been carried forward and strengthened, providing greater certainty and predictability to businesses and investors.

“These include the continued implementation of the Trade National Single Window (TNSW), the phased removal of para-tariffs, the rollout of the Digital ID framework, efforts to expand market access through new Free Trade Agreements (FTAs), the strengthening of one-stop-shop investment facilitation mechanisms, progress on Customs reforms, the expansion of Bandaranaike International Airport (BIA), enhanced financing support for SMEs, and reforms relating to the management of State-Owned Enterprises.”

The CCC said that more than 20 proposals submitted by it have been reflected in Budget 2027.

These include measures to strengthen investor facilitation through the establishment of a professionally managed investment promotion agency; continued efforts to improve trade facilitation and export competitiveness; the Government’s consideration of a successor programme with the International Monetary Fund (IMF); accelerated progress on key legislative reforms; the expansion of digital government services; and the promotion of cashless payments and broader digital adoption. The Budget has also captured several priorities relating to energy security, including the accelerated deployment of Battery Energy Storage Systems (BESS) and investments in fuel storage infrastructure, initiatives to optimize underutilized agricultural land, measures to support the expansion of the digital economy and the IT/BPO sector, and tax reforms to support exporters, including the acceptance of newly VAT-registered exporters as eligible exporters.

“The inclusion of these priorities reflects the value of sustained public-private dialogue and demonstrates increasing alignment between national policy objectives and the needs of a competitive, export-oriented economy.

“The priority now must be effective and timely implementation to translate policy commitments into investment, competitiveness, exports and sustainable growth.” (Colombo/Nov13/2026)

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Sri Lanka stocks trend lower day after budget reading

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange was trending lower on Friday, CSE data showed, with the benchmark All Share Price Index moving down 0.66 percent.

The ASPI was down 146.78 points at 22,011, while the more liquid S&P SL20 was down 0.94 percent, or 59.99 points, at 6,306.

Positive contributors to the ASPI were Access Engineering (up 1.30 percent at 85.80 rupees), LAUGFS Gas (up 3.31 percent at 49.90 rupees), Ceylon Tobacco Company (up 1.13 percent at 1,830 rupees), Ceylon Cold Stores (up 0.80 percent at 126 rupees), and Namunukula Plantations (up 1.79 percent at 68.10 rupees).

LOLC Holdings (down 1.03 percent at 409.75 rupees), Hatton National Bank (down 0.61 percent at 409 rupees), Sunshine Holdings (down 3.81 percent at 30.30 rupees), and Sampath Bank (down 1.91 percent at 154 rupees) were top negative contributors.

Market turnover was 1.55 billion rupees. Capital goods led turnover with 459.57 million rupees. (Colombo/Nov13/2026)

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