As the nation waits in cautious anticipation for the presentation of Budget 2026 on Friday (7), few in Sri Lanka are holding their breath. The President, in his dual capacity as Head of State and Minister of Finance, has already declared that there will be no major changes in economic policy or taxation. That assurance, though seemingly intended to calm jittery markets and temper speculation typical of the pre-budget season, has been interpreted quite differently by the collective Opposition, which sees the declaration as an admission, if not a confession, that the National People’s Power (NPP) Government has neither the courage nor the capacity to deviate from the path laid down by the previous administration, despite the sweeping rhetoric of reform that powered it to victory over a year ago.
The painful irony is that up until 23 September 2024, the NPP was the loudest voice condemning what it called “the unbearable cost of living” and promised relief through a radical overhaul of economic priorities. Those promises, repeated across campaign stages, television debates, and party manifestos, raised public expectations to unprecedented heights. Yet, as the Government approaches its second budget, that tide of reformist zeal appears to have disappeared. What remains is a heap of broken promises, economic inertia, and a growing sense of betrayal among those who believed this Government would finally break from the cycle of deceit that has long defined Sri Lankan politics.
The NPP’s campaign was built on the economic promise to renegotiate the International Monetary Fund (IMF) agreement that it routinely decried as punitive and burdensome to ordinary citizens. The party even pledged to amend the primary Debt Sustainability Framework in order to ease the “burden” placed on the people by the agreement.
It was this pledge – of going to any extreme – that was presented as the moral and ideological cornerstone of the NPP’s claim to be different from the establishment. Yet, after over a year in office, no such renegotiation has taken place, nor has there been any indication of intent to pursue one. The IMF programme continues, unaltered in essence or execution, with fiscal targets and tax structures firmly in place as they were in 2022. Unless Budget 2026 introduces explicit provisions for such a renegotiation, that pledge must be deemed officially abandoned – another addition to Sri Lanka’s long archive of broken political promises.
Equally conspicuous in their absence are the NPP’s bold commitments to reduce the cost of fuel and electricity. The party promised to remove duties and taxes from fuel and supply it at a significantly lower cost, and to reduce electricity tariffs by 33%. These promises struck a chord with a population reeling under skyrocketing energy prices and inflationary pressure. But as the NPP unveils its second budget, neither has materialised. Instead, the Government has chosen silence, leaving the public to assume that those pledges, too, have quietly found their way to the dustbin of history.
The same can be said of the commitment to remove Value-Added Tax (VAT) from essential goods, including food, medicines, medical equipment, and educational items. During the campaign, this was not presented as a vague aspiration but as a concrete promise. Yet, as families struggle today under equal or even greater financial stress than they did a year ago, the silence from the Government is deafening.
Even symbolic promises have withered. The much-hyped pledge to sell off luxury vehicles from the State sector and use the proceeds to build schools and purchase smaller, fuel-efficient vehicles has not only failed to materialise, but instead, it has been turned on its head. In place of selling, the Government is reportedly planning to buy 1,775 new double cab vehicles for State use at a staggering cost of Rs. 43 billion in taxpayer funds. The moral hypocrisy is plain to see. Meanwhile, rather than building new schools as promised, the regime is contemplating closing down smaller schools. Budget 2026 is likely to shed more light on this matter.
Among the more dramatic campaign promises was the vow to “destroy the rice mafia with one stroke of the pen”. That pen, it seems, has gone missing. The rice mafia is alive and thriving, thanks in no small part to Government policy; by setting a higher controlled price than even what the so-called mafia desired, the regime has allowed middlemen and large traders to profit immensely while farmers and consumers have been left to grin and bear it.
In a country facing looming debt repayments within the next two years, the failure to generate meaningful economic growth is inherently dangerous. Grandstanding about ‘stabilisation’ and ‘structural reform’ will mean little if the economy remains stagnant. Sri Lanka desperately needs a rapid and sustained boost to growth, but thus far, no coherent plan has emerged. The Government appears content to let the economy drift on autopilot, buoyed only by the inertia of previous reforms and the hope that foreign remittances, tourism, and IMF discipline will somehow keep the ship afloat.
This complacency is all the more frustrating when one considers Sri Lanka’s historical capacity for economic transformation. The liberalisation of 1977 unleashed near double-digit growth and ushered in an era of modernisation. The garment export boom of the 1990s reshaped the nation’s economic landscape, creating employment and foreign exchange stability. The post-war tourism surge in 2010, despite its imperfections, demonstrated how focused policy and strategic branding can drive an entire sector forward. Even the brief push between 2015 and 2018 to position Sri Lanka as an IT and services hub showed potential before the Easter Sunday attacks derailed that effort. Sri Lanka is in desperate need of such bold, forward-thinking initiatives that can inject new energy into the weary economy.
But instead of visionary planning, what we see is bureaucratic lethargy and political distraction. Sri Lanka’s approach to global business remains antiquated, rooted in outdated bureaucratic routines rather than proactive strategy. While regional competitors like Vietnam, Malaysia, and even Bangladesh aggressively pursue Foreign Direct Investment (FDI) through innovation, digital diplomacy, and global branding, Sri Lanka remains stuck in the past, waiting for opportunity instead of creating it.
The tourism sector, once a potential game changer, is emblematic of this inertia. There is no coherent marketing strategy, no coordinated plan for collaboration with international partners, and no innovation in product diversification or sustainability. Even the entry policy of compulsory online visa application remains masked in confusion. The country’s natural beauty and cultural wealth are unmatched, yet they remain either underutilised or overutilised like Yala, because the leadership lacks imagination and initiative.
Meanwhile, the Government’s preoccupation with grandiose distractions has reached tragicomic levels. The much-publicised Clean Sri Lanka programme, which began with fanfare and a generous budgetary allocation, has fizzled out without a trace. There is no transparency about its objectives, deliverables, or performance metrics. Not even members of the ruling party seem to know what the programme has achieved. It is a textbook case of public funds being spent without accountability.
Now, the Government appears to have found a new diversion in the form of its ‘war on drugs.’ Once again, millions are being spent on media events and publicity stunts, but no clear plan or policy framework has been put forward. One cannot blame the public for growing weary of these theatrics, and with good reason.
The Opposition has wasted no time in pointing out that the last so-called ‘war on the rice mafia’ ended in failure and that the Clean Sri Lanka campaign achieved nothing. Why should this latest crusade be any different, they question. Their scepticism is only strengthened by the Government’s failure to investigate the controversial release of 323 shipping containers from the Colombo Port – two of which have since been confirmed to have contained narcotics. Instead of a transparent inquiry, as recommended by the Committee of Inquiry appointed by the President, the Customs officer at the centre of the controversy has been promoted as Director General.
Instead of fostering innovation, attracting investment, and building confidence, the regime is busy managing optics. Instead of crafting a strategic blueprint for national renewal, it is trapped in a cycle of reaction, improvisation, and spin. It is for this reason that it is imperative that Budget 2026 restores credibility, because in economics as in politics, credibility is currency. The upcoming Budget could, in theory, serve as a reset – a moment to demonstrate seriousness of purpose and set the foundation for accelerated economic progress. But given the signals coming from the top, that hope seems faint.