Amid an unending economic crisis and ongoing efforts to cut costs, Sri Lanka will slash its army by a third to 135,000 personnel by next year and to 100,000 by 2030, the state minister of defence said on Friday.
“Military spending is basically state-borne expenditure which indirectly stimulates and opens avenues for economic growth by way of assuring national and human security,” Premitha Bandara Thennakoon said in a statement.
The aim of the move is to create a “technically and tactically sound and well-balanced” defence force by 2030, Thennakoon said.
Sri Lanka needs to achieve debt sustainability as a precondition to secure a $2.9 billion IMF loan. The lender has also asked Colombo to trim its 1.5 million-strong public service, sharply raise taxes and sell off loss-making state enterprises.
A day earlier, Sri Lanka’s central bank urged China and India to agree a write-down of their loans as soon as possible. The crisis-hit Indian Ocean state defaulted on its debt repayments and negotiated a $2.9bn (£2.4bn) bailout.
But the International Monetary Fund (IMF) will not release the cash until China and India first agree to reduce Sri Lanka’s billions of dollars of debt.
The governor of Sri Lanka’s central bank told BBC Newsnight it was in the interest of all parties to act quickly.
P Nandalal Weerasinghe said: “The sooner they give us finance assurances that would be better for both [sides], as a creditor, as a debtor,” adding, “That will help us to start repaying their obligations.”
“We don’t want to be in this kind of situation, not meeting the obligations, for too long. That is not good for the country and for us. That’s not good for investor confidence in Sri Lanka.”
According to the World Bank data, the size of Sri Lanka’s armed forces peaked between 2017 and 2019, with 317,000 personnel, higher even than that during the 25 year-long conflict with the Liberation Tigers of Tamil Eelam (LTTE) that ended in 2009.
The share of the defence sector in Sri Lanka’s total expenditure peaked in 2021, at 2.31 percent of GDP, but fell to 2.03 percent last year.
Recently, President Ranil Wickremesinghe ordered a five percent reduction in state spending and his administration warned earlier this week that welfare payments for 1.8 million families below the poverty line could be delayed this month.
Doubled personal income and corporate taxes kicked in on New Year’s Day to shore up state revenue while the electricity prices are also rising another 65 percent after a 75 percent tariff increase in August.
Sri Lanka’s 22 million people endured months of food and fuel shortages, chronic blackouts and runaway inflation last year, inflaming public anger.
Wickremesinghe came to power in July at the peak of the crisis after his predecessor fled the country when protesters stormed his residence.