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World Bank Urges Sri Lanka to Spend Smarter, Not More

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A new World Bank review of Sri Lanka’s public finances says the country is now well-positioned to focus on making public finances work better for all Sri Lankans.

It adds that Sri Lanka has made remarkable strides in stabilizing its economy, undertaking one of the largest fiscal adjustments in its history—equal to nearly 8 percent of GDP over three years. 

The adjustment was also sharper and faster by international standards – when compared with more than 330 similar efforts in 123 countries worldwide since 1980. 

The World Bank’s Sri Lanka Public Finance Review: Towards a Balanced Fiscal Adjustment finds that while fiscal measures helped restore stability, they also put pressure on households through higher indirect taxes and reduced real public-sector wages, and slowed growth due to lower public investment. 

The next phase of fiscal calibration should prioritize raising revenues in ways that support growth and fairness, and improve the quality of government spending.

The review highlights that Sri Lanka could increase revenue by up to 2 percent of GDP by 2029 without undermining growth or equity. It also points out that better targeting and management of public spending can deliver improved outcomes within current budget limits.

Economy

CPC Seeks Investors As Natural Gas Confirmed in Mannar Basin

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The Ceylon Petroleum Corporation says the process of calling for proposals to select an appropriate investor to extract and utilize the natural gas resources in the Mannar Basin will begin this month.

Managing Director of CPC, Dr. Mayura Neththikumara, said the presence of natural gas in the Mannar Basin has been scientifically confirmed by the Sri Lanka Petroleum Development Authority.

The relevant process will be carried out with the approval of the Procurement Committee, and investors will be given approximately five months to submit their applications.

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Economy

Battery storage systems to join national grid in September

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Commercial-scale battery energy storage systems being installed at 16 electricity transmission substations across Sri Lanka are expected to be connected to the national grid in early September.

The systems, which were brought into Sri Lanka through the Colombo Port in three stages during May and June, are currently in the final stages of construction.

The project being implemented by WindForce PLC near the Anuradhapura substation is now around 85% complete.

The battery systems will store excess electricity generated by solar power plants during the daytime and release the stored electricity to the national grid at night when required.

Officials said the system would help maintain the stability of the national grid while reducing the need to generate electricity from diesel power plants during nighttime hours.

Each battery energy storage project will have a capacity of 10 MW. The National System Operator Ltd. (NSO), operating under the Ministry of Energy, will be responsible for managing and controlling the systems, while their maintenance will be handled by the respective companies.

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Economy

Delft Island to become Sri Lanka’s first zero emission eco‑tourism destination

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The Government of Sri Lanka has unveiled plans to transform Delft Island into the country’s first Zero Emission eco‑tourism destination, with a strong emphasis on sustainability, environmental conservation, and the preservation of its unique natural and cultural heritage.

A special site inspection and stakeholder discussion on the proposed development was held under the leadership of Deputy Minister of Tourism Ruwan Ranasinghe recently. 

The island, renowned for its Dutch‑era ruins, numerous archaeological landmarks, and iconic wild horses, is seen as possessing exceptional tourism potential.

Deputy Minister Ranasinghe told participants that Delft Island should be experienced not only by international visitors but also by domestic tourists. Despite its extraordinary attractions, he noted, the island has so far made only a limited contribution to Sri Lanka’s tourism industry. 

He emphasized the Government’s commitment to unlocking Delft’s full potential through sustainable and environmentally responsible development. 

Discussions focused on identifying priority infrastructure to position Delft Island as a premier tourism destination, with key areas including water supply, road infrastructure, transportation and accessibility. Strengthening community participation was also highlighted, with plans to enhance the knowledge and hospitality skills of local residents to enable them to benefit directly from tourism development.

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