📈 Full Implementation of Economic Transformation Act Critical to Avert Forex Crisis

• Macroeconomic Challenge: Post-2022 recovery delivered single-digit inflation and primary budget surpluses under the IMF EFF. However, real GDP growth must reach 6%–7% to service restructured foreign debt once grace periods end. • Status Quo Limitations: Legacy administrative structures remain fragmented and sub-scale: - Merchandise exports are stuck at US$ 12–13 Bn annually, heavily reliant on low-complexity apparel & textiles and unrefined tea / rubber. - Net Foreign Direct Investment (FDI) rarely exceeds 1.5% of GDP. - The Board of Investment (BOI) historically deployed tax holidays for non-tradable sectors over export-linked manufacturing. - The Export Development Board (EDB) and Department of Commerce (DoC) lack statutory authority over border taxes managed by Customs. • Actionable Budget Priorities: 1. Capitalize new apex bodies like the Office for International Trade (OIT) and Economic Commission of Sri Lanka (ECSL) to hire specialized negotiators for trade pacts (ETCA, RCEP). 2. Create an earmarked Trade Adjustment Assistance (TAA) Matching Grant Fund (LKR 10–15 Bn) for SME factory automation, renewable energy, and ISO/ESG certifications. 3. Ring-fence capital expenditure for a digital Trade National Single Window (TNSW). 4. Replace blanket corporate tax holidays with performance-linked R&D and capex tax credits. 5. Tie overseas commercial diplomat budget allocations to verifiable economic KPIs. • Risk of Inaction: Relying on ad-hoc roadshows, seasonal tourism, and remittances risks locking GDP growth at 2.5%–3.5%, leaving the country vulnerable to future balance-of-payments traps when debt servicing scales up.