MONETABRIEF – Sri Lanka plans to hire 121,000 state workers to fill identified vacancies over the next year as part of plans to return tax money to the economy President Anura Kumara Dissanayake has said.

For many years employment was restricted to the state service.

"We will not hire in a ad hoc manner (hithoo hithoo vidiyater)," President Dissanayake told a public rally in Akuressa.

"A committee under the Prime Minister and asked each agency what the vacancies were. Was it essential? Will these people stay with no work? We will hire 121,000 to the state service in that manner. This year. We have not hired all."

"10,000 for the Police. 23,000 teachers. Then a young person in the village will get a job. A teacher will be there. They will get an economic strength. They will join the police.

"Next year we will give a special allowance to police in the budget. They work 18 hours. They will get a uniform with a batton and kid. When the jobs are created, economic opportunities will be created.

"Then the benefits that the economy got will to the people."

When Sri Lanka defaulted around 80 percent of the tax revenues went to pay state worker salaries and pensions after rising to 50 percent when the stimulus for economic growth (potential output targeting) initially started.

With more money in the Treasury capital expenditure will also be increased to 2,000 billion rupees in the 2027 budget. Sri Lanka is planning to build some expressways with domestic financing.

Analysts had warned that 'revenue based fiscal consolidation' was a spurious doctrine as spending will catch up to match revenue.

Generally called Parkinson's Second Law, it was articulated by Nortcote C Parkinson in an article in the Economist magazine in 1957.

Sri Lanka went on a revenue based fiscal consolidation drive from 2015 and eventually defaulted as 'policy support' intensified with aggressive central bank activism under a 5 percent inflation target.

In Sri Lanka politicians are against printing money but macro-economists support high inflation and monetary depreciation. When people are impoverished by depreciation and the high inflation target of the central bank, Aswesuma benefits are increased.

In 2026 the rupee collapsed to 330 to the US dollar from 300 a year earlier as the government ran a budget surplus.

Macro-economists who cut rates had blamed budget deficits for external trouble since money printing to suppress interest rates started in 1952. What is now called 'rate cuts' were not invented at the time.

Meanwhile another method of spending money in the Treasury was to give subsidies, President Dissanayake said. The subsidies will however be targeted to the deserving.

These included persons affected by kidney disease, orphans in care who will get 5,000 rupee a month deposited into their accounts and 2 million rupee when they leave the home to build a house.

The time in the care home had been extended from 18 to 21 years, he said.

It was not a good idea to give subsidies to all, he said. However even in rich countries there were a section of the population that had to be supported and others who faced sudden crises in their lives. (Colombo/Sept25/2026)