Publications

Sri Lanka's 2022 economic crisis was not merely a result of poor fiscal and monetary policy but also the direct consequence of a deep-rooted, systemic accountability deficit. Termed Sri Lanka's "third deficit" (alongside its chronic budget and trade deficits), this governance failure enabled catastrophic policy decisions, such as the 2019 tax cuts, to proceed without institutional challenge.

Despite many challenges, the Inland Revenue Department (IRD) has made significant strides in digitalisation.

Sri Lanka imports almost 100% of the fertiliser used, so our agriculture sector is highly vulnerable to import and energy price shocks.

In the first issue of Lanka Dispatch, we move beyond quarterly updates on China-Sri Lanka relations to look at something broader: how our island navigates a world that is fragmented and volatile.

Inflationary pressures are building in Sri Lanka as it faces the direct and indirect effects of the US-Israel war on Iran.

The impact of the war depends on how long it lasts and how far it spreads; if it ends in a few weeks, stability can return in a few months. If it continues for months, it will take years for the global economy to stabilise.

Over the last two decades, China has become a major financing source for Sri Lanka's infrastructure development.

Charuka Peiris, Programme & Research Officer at Arutha and Shaheen Abdul Gani, Research Assistant at Arutha write to The Diplomat on India's swift and significant support to Sri Lanka during recent crises in the broader context of India's failing relationships in the South Asian region. " Ultimately, this leaves Sri Lanka as one of the few countries in South Asia – historically considered India’s backyard – with whom New Delhi continues to enjoy consistent and reliable relati

Charuka Peiris, Programme & Research Officer at Arutha, writes to The Diplomat on surge of Indian tourism to Sri Lanka - bolstered by a shared culture and love of cricket. Read the full article here: https://thediplomat.com/2026/02/beyond-the-ramayana-trail-why-indian-tourists-matter-more-than-ever-to-sri-lanka/

The Microfinance and Credit Regulatory Authority (MCRA) Bill 2025, is legislation which introduces a consolidated regulatory framework to govern Sri Lanka’s microfinance and moneylending sectors. By repealing the Microfinance Act No. 6 of 2016, the Bill establishes a more empowered statutory authority with expanded supervisory, licensing, and enforcement capabilities. Arutha’s latest brief analyses the latest Bill and whether it does enough to protect the most vulnerable.

This report examines how China’s SOEs have operated and evolved in Sri Lanka over the past two decades.

China remains central to Sri Lanka’s economic and diplomatic landscape, particularly in the aftermath of its sovereign default. The debt restructuring process underscored China’s dual role as both a bilateral and commercial creditor, while trade and investment links highlight a structural asymmetry — Sri Lanka imports heavily from China but exports little in return.

While many fear that reducing the VAT threshold to Rs 36 million will cause inflation, Sri Lanka's recent history with VAT threshold reductions have proven otherwise. Read the latest op-ed on VAT threshold reductions by Arutha Director Rehana Thowfeek.

The government’s Budget 2026 proposal to subsidise part of plantation worker wages raises questions on fairness, employer responsibility and accountability. Arutha’s latest brief analyses the impact and practicality of this proposal.

Signals a mismatch between announced policy and revenue projections.

Prices should have reduced by 15%, but in reality only reduced by 6%.

Is Budget 2026 bold enough for a 7% GDP growth target? Rehana Thowfeek analyses #Budget2026 from the lens of structural economic reforms covering tax administration, public sector, SOE and trade reforms.

Speaking at Arutha’s inaugural conference, Debt & Tax Dialogue, Umesh Moramudali highlighted a major shift in how Sri Lanka handles development projects, moving away from costly, non-transparent deals toward competitive, accountable procurement.

In this issue, we unpack the Simplified VAT (SVAT) system and explore the new risk-based refund scheme.

China remains one of Sri Lanka’s largest economic partners, with growing trade relationships, tempered by project delays and IMF-driven investment reforms. What lies ahead for Sri Lanka–China relations in this evolving economic and geopolitical landscape? Explore the latest insights in the sixth edition of the Sri Lanka–China Economic Brief!