Colombo University Professor Praises Govt's Budget Deficit Reduction, Counters Debt Claims

COLOMBO, SRI LANKA — Sri Lanka’s current economic situation, particularly concerning debt management and fiscal targets, is drawing varied opinions from academics and political figures, highlighting ongoing debate about the success of recent government policies.

Professor Praises Debt Reduction and Fiscal Discipline

Professor Priyanga Dunusinghe, of the Department of Economics at the University of Colombo, asserted that the current government has succeeded in systematically reducing the budget deficit.

Speaking at a media briefing in Colombo, Professor Dunusinghe countered reports suggesting the government took on a large amount of debt in the past year, stating they are false.

"The government has mostly had to borrow from domestic sources. The reason is that, with the debt crisis, the ability to access foreign financial markets or obtain loans from bilateral creditors is minimal. Even multilateral institutions are providing fewer loan facilities than before. Therefore, the government is obliged to borrow when a budget deficit exists. I do not see a massive increase in borrowing under this government. The reason is that the budget deficit has systematically decreased. Furthermore, looking at the government's borrowing targets for 2026, those targets show a reduction in the amount of borrowing. Therefore, I do not believe there is sufficient evidence to support the claim that this government took the most loans in a short period."

Minister Highlights Revenue Success and Expenditure Control

Echoing a positive view on the government's economic performance, Health and Mass Media Minister Nalintha Jayatissa offered his perspective on the achieved economic gains.

"We did not take over a country that was smooth and comfortable. Therefore, spending on everything is only possible to the extent that the economy strengthens. Setting a state revenue target and chasing that target is one goal, and we have succeeded in that. Several institutions that bring revenue to the country have exceeded their income targets. As a government, we were very careful about state expenditure... We have managed state expenditure by focusing on all these factors and bringing them under control."

Opposition Questions Long-Term Sustainability

However, Udaya Gammanpila, the leader of the Pivithuru Hela Urumaya (PHU), offered a more cautious assessment while participating in the "360 Kaalina Wedasatahana" program on TV Derana last night (03).

"When you look at the indicators, it feels like things are great. For example, foreign remittances have increased, approaching the 2018 figure. However, this is like the young man plucking the fruit from the trees his grandfather planted. Ranil Wickremesinghe himself said, 'I am the cashew grandfather.' The government sent a large number of people abroad based on our bankruptcy. As a result, those who went are now sending remittances. However, you know that this year's foreign employment departures are lower than last year's. Fewer people leaving this year means our remittances will decrease in the coming years. The government has failed to achieve its targets this year. That is not my statement; the IMF says it."

The diverse opinions reflect a critical moment in Sri Lanka's economic stabilization efforts, where short-term gains are being weighed against structural challenges and the long-term sustainability of the recovery. (NewsCenter)