Sri Lanka Bank’s Association welcomes budget as “Positive,” stresses importance of implementation

Sri Lanka’s banks have welcomed the maiden budget of the new government, describing it as “positive” and one that seeks to maintain policy consistency, especially on the fiscal path.

In a statement, the Sri Lanka Banks’ Association (SLBA), which represents all licensed banks in Sri Lanka, commended the budget proposals presented to Parliament by President Anura Kumara Dissanayake in his capacity as Minister of Finance, Planning and Economic Development.

In particular, the SLBA commended the budget’s emphasis on digitization, the proposed establishment of Credit Guarantee Institute for Small and Medium Enterprises (SMEs), and the focus on export orientation, and said the key to achieving the envisaged outcomes would be effective and consistent implementation of the proposals in both “letter and spirit.”

Pointing out that the banking sector contributed about 10% of government revenues in 2024 and continues to play a significant role in the growth agenda of the country, the SLBA said the country’s banks remain committed to supporting the implementation of the proposals in the budget.

The Association noted that Point-of-Sale (POS) machines at every VAT registered business entity would lead to transparent business transactions in digitized form, reducing the use of physical cash, and that this would result in a greater percentage of cash-flows being captured in the banking channels.

“Increased digitalization of the financial economy would also increase investments from the financial institutions into digital infrastructure to drive online transactions, tighten anti-money laundering procedures, improve surveillance, and control cyber-crime,” the SLBA said.

It said the establishment of a credible Credit Guarantee Institute for the SMEs and establishing a development bank through the infrastructure of an existing state bank are positive steps that should enhance the segment’s capacity to secure credit and improve the quality of its relationship with the banking sector.

“We also welcome the envisaged national drive towards export orientation that would in turn stabilise the macroeconomy and help expand the capital markets through increased foreign exchange and investment flows into the country,” the SLBA said.

The Association stressed that “We anticipate that a focused approach to strengthen key sectors would result in improving the governance framework and reduce discrepancies between Management and Audited accounts, the usage of personal bank accounts for business transactions etc. These would in turn help control money laundering activities, generate increased revenue on the fiscal front and enable banks to expand credit to these sectors of the economy.

Representing 30 licensed banks including state sector banks, the SLBA was formed to represent and further the common interests of member banks and to assist in maintaining and developing a sound banking structure in Sri Lanka.