The liquidation of Sri Lanka’s Shrama Vasana Fund marks more than the closure of another government institution. It raises difficult questions about how a welfare body created to protect private and semi-government sector workers drifted from its original mandate, accumulated administrative costs and ultimately became a target of the government’s state-sector rationalisation programme.
Established under the Shrama Vasana Fund Act, No. 12 of 1998, the fund was designed to provide financial assistance and welfare services to employees outside the public sector. Its responsibilities included medical assistance, legal support, disaster relief and other forms of worker welfare. The fund operated under the Ministry of Labour but remained a separate statutory body.
Its financing model was also distinctive. Working with the National Lotteries Board, the fund benefited from dedicated lottery revenue, initially associated with the Shrama Vasana lottery and later linked to the weekend Jathika Sampatha draws. That arrangement created a continuing stream of money intended ultimately to support workers and their families.
However a government review of non-commercial institutions concluded that the fund had become an institution that could be deintervened from direct state management and liquidated. The recommendation was not simply about abolishing a statutory body. It reflected a broader concern over duplication, administrative expenditure and whether government institutions were still performing functions that could be delivered more efficiently elsewhere.
The most serious allegations concern expenditure outside the fund’s core welfare mandate. Government statements have pointed to spending during the previous administration, including educational programmes and the distribution of school bags, as examples of activities that allegedly moved beyond the fund’s intended purpose.
Former Labour Minister Manusha Nanayakkara has been cited in connection with those decisions. Such allegations require scrutiny of the relevant accounts, approvals and audit findings to determine whether expenditure was lawful, properly authorised and consistent with the fund’s statutory objectives.
The government subsequently approved a plan to liquidate the fund by June 30, 2026, while transferring essential services to the Ministry of Labour. Parliament later approved the winding-up under the Finance Act framework.
The central investigative question now is what happens to the money, assets and responsibilities left behind.
If the fund’s welfare functions remain necessary, transferring them to the ministry should not simply mean changing the name on the door. Authorities must demonstrate that beneficiaries will continue receiving assistance, that lottery-linked resources are properly accounted for, and that assets and liabilities are transparently settled.
The liquidation may therefore become a test of whether state-sector reform actually reduces waste or merely moves existing functions from one institution to another.