January 13, Colombo (LNW): A delegation from the International Monetary Fund is due in Sri Lanka on January 22 for further engagements linked to the country’s ongoing financial support programme, Deputy Minister of Finance and Planning Dr Anil Jayantha Fernando disclosed.

He explained that the visit will centre on follow-up discussions connected to the fifth review of the Extended Fund Facility, a process that has already been technically completed.

Approval by the IMF’s Executive Board was originally expected in mid-December, but this was deferred after Sri Lanka sought additional assistance under the Rapid Financing Instrument.

According to the Deputy Minister, the forthcoming discussions will go beyond the programme review and are also expected to cover recent fiscal developments. In particular, the IMF team is likely to examine the supplementary estimates tabled in Parliament, reflecting revised spending needs and emerging economic pressures.

Dr Fernando noted that the government views the visit as an opportunity to clarify outstanding issues and align expectations, as Sri Lanka continues efforts to stabilise the economy while managing new challenges within the broader reform framework.

January 13, Colombo (LNW): Small and medium-sized businesses (SMEs) still reeling from the impact of the Easter Sunday terror attacks and the subsequent Covid-19 pandemic are facing renewed hardship, with promised financial relief failing to materialise, the Joint District Entrepreneur Organisation has warned.

Addressing a media briefing, the organisation’s President, Chamli Kumarasiri, said a series of proposals put forward by the Ministry of Industry after detailed assessments were intended to help revive enterprises damaged by the attacks. However, he claimed these measures have effectively stalled, as commercial banks have shown little willingness to adopt them.

Mr Kumarasiri emphasised that business owners are not calling for blanket debt cancellations, but for reasonable concessions based on individual assessments of viability and losses. He argued that a merit-based approach would allow deserving entrepreneurs to recover, while maintaining discipline within the financial system.

He was critical of what he described as weak follow-through by the Ministry of Finance, noting that repeated efforts to secure discussions at the highest political level, including with President Anura Kumara Dissanayake, had so far been unsuccessful.

The organisation has urged the government to step in more decisively by appointing an independent panel to review and guide bank lending decisions for affected businesses. Mr Kumarasiri also renewed calls for the establishment of development banks outlined in the national Budget, saying these institutions could play a vital role in supporting long-term recovery.

As immediate relief, he proposed that loans impacted by the enforcement of the Parate law be transferred to the state’s asset management entity. In addition, he appealed for the introduction of special loan facilities without collateral requirements, arguing that such support is essential if struggling entrepreneurs are to rebuild their livelihoods and contribute once again to economic growth.

January 13, Colombo (LNW): Sri Lanka is likely to press for changes to the performance benchmarks agreed with the International Monetary Fund under its ongoing financial support programme, Central Bank Governor Dr Nandalal Weerasinghe said.

In remarks made during a televised discussion last night (12), the Governor indicated that the matter would be raised during talks with an IMF delegation expected to arrive in the country later this month. The visiting team is due to conduct the fifth assessment of Sri Lanka’s 48-month Extended Fund Facility arrangement.

Dr Weerasinghe pointed out that major unforeseen shocks have altered the country’s economic outlook since the targets were finalised. He cited the widespread damage caused by Cyclone Ditwah, which disrupted infrastructure, economic activity and livelihoods across several regions, as a key factor making a reassessment unavoidable.

He added that fiscal plans, including the national budget prepared prior to the cyclone, no longer fully reflect current realities. These developments, he said, would need to be taken into account during discussions with the IMF before reaffirming or adjusting the agreed benchmarks under the programme.

The Governor stressed that while Sri Lanka remains committed to reform and recovery, flexibility is essential when circumstances change dramatically, particularly in the face of natural disasters that place additional strain on public finances and growth prospects.

By: Staff Writer

January 12, Colombo (LNW): Sri Lanka is grappling with growing controversy over coal imports for the Lakvijaya (Norochcholai) Power Plant, as concerns mount over quality, efficiency, and financial losses. Sealed samples from a recently unloaded 60,000 metric tons (MT) of coal shipped from South Africa by the country’s newest Indian supplier have been sent to India’s Cotecna, an internationally accredited testing, inspection, and certification services provider, the Lanka Coal Company (LCC) confirmed.

LCC General Manager Namal Hewage said that the samples were dispatched with the consent of Norochcholai power plant specialists and collected in the presence of plant officials. “Coal testing is not like finished product testing, as coal is a natural resource. A single sample test cannot rule out quality issues,” Hewage emphasized. He added that comprehensive tests are essential, with multiple samples examined before conclusions are drawn. Results from Cotecna are expected shortly.

Despite concerns over the first shipment, a second consignment of 60,000 MT has already been unloaded, with sources indicating it is of better quality than the initial consignment. Officials explained that tests are conducted on all newly received coal stocks before they are used for power generation, regardless of remaining reserves from previous suppliers.

The controversy began when the Load Port Certificate for the first shipment indicated a low calorific value, raising fears of reduced operational efficiency and financial losses. Preliminary plant tests showed calorific values ranging from 5,430 to 5,760 kcal/kg, below the contractually required range of 5,900–6,150 kcal/kg. Sources from the Ceylon Electricity Board estimated that 117 MT of the new coal would generate only around 285 MWh of electricity, compared to 300 MWh from 107–109 MT of prior Russian coal, signaling a potential decline in efficiency. Opposition MP D.V. Chanaka claimed that the loss from low-quality coal could amount to Rs. 10 billion.

In response, Minister of Energy Kumara Jayakody stated that the coal was procured according to tender conditions but noted that certain loading standards had not been fully met. Consequently, the LCC has withheld 80% of the payment for the first shipment until all contractual requirements are verified through an accredited laboratory. The Minister stressed that no supplier or party could bypass official procedures and that all coal shipment reports would be reviewed strictly according to contractual and regulatory standards.

The LCC finalized long-term coal procurement late last year, contracting suppliers to deliver 25 consignments. The process includes rigorous technical and contractual safeguards, including penalties for coal supplied outside specified calorific and moisture limits.

As the government awaits the final test results from Cotecna, the unfolding situation highlights the delicate balance between energy security, operational efficiency, and accountability in Sri Lanka’s power sector. Analysts note that the outcome will have implications not only for immediate electricity generation but also for broader fiscal responsibility and public trust in the energy procurement system.

By: Staff Writer

January 12, Colombo (LNW): Sri Lanka has witnessed an unprecedented surge in foreign worker remittances, reaching record highs in December 2025, according to Central Bank data. Official remittances jumped 43.2 percent month-on-month to US$879.1 million, surpassing the previous peak of US$812.7 million recorded in December 2020. The cumulative inflow for the year also reached an all-time high of US$8,076.2 million, marking a 22.8 percent rise from 2024’s US$6.58 billion.

Experts point to several factors behind this surge. A significant driver is the continued outflow of Sri Lanka’s labor force seeking overseas employment. The trend, accelerated after the country’s 2022 economic crisis, has seen a growing number of workers, particularly professionals, moving abroad to earn foreign exchange. Remittances now stand as the top foreign exchange revenue source for the island nation, a critical lifeline as it navigates post-crisis economic recovery.

Government policy and regulatory adjustments have also played a pivotal role. Following the dismantling of the parallel exchange rate regime, many expatriates who had previously relied on informal channels like Hawala and Undiyal transfers shifted back to official banking systems. The parallel rate had emerged after the Central Bank engaged in large-scale money printing to maintain low policy rates, which made informal channels more attractive. By abandoning this system, the authorities effectively channeled higher volumes of remittances through formal mechanisms.

In its 2026 budget, the government has proposed new incentives to sustain and further boost remittances, including housing loans and a contributory pension scheme for Sri Lankans employed overseas. Such measures are expected to encourage workers to remit funds through formal channels while providing long-term financial security for expatriates.

Despite the optimism, challenges remain. While remittance inflows have surged, reliance on foreign labor leaves the economy vulnerable to global labor demand fluctuations and geopolitical risks. Furthermore, sustaining this growth requires continuous monitoring of interest rates, exchange policies, and banking sector efficiencies to prevent a repeat of the informal remittance surge seen in 2021. Back then, a spike in informal transfers led to a sharp decline in official remittances as higher parallel rates offered better returns outside the banking system.

Analysts caution that while remittances provide critical short-term liquidity and foreign exchange, they are not a substitute for long-term structural reforms. Investments in domestic industries, infrastructure, and professional skill development are essential to balance the economy and reduce overreliance on overseas earnings.

Sri Lanka’s record remittances reflect a combination of strategic policy shifts, labor migration, and global economic factors. The central challenge now lies in sustaining this growth while leveraging these inflows to build a more resilient and diversified economy.

By: Staff Writer

January 12, Colombo (LNW): As Sri Lanka navigates the complex task of post-cyclone recovery and economic stabilisation, China has signaled that it intends to remain a central player in the country’s rebuilding programme despite India’s rapid and high-profile humanitarian and financial intervention.

This message was reinforced by the arrival of Chinese Foreign Minister Wang Yi in Sri Lanka next week, during a transit stop on his official African tour. According to diplomatic and media briefings in Colombo, Wang Yi is scheduled to meet President Anura Kumara Dissanayake, Prime Minister Harini Amarasuriya and Foreign Minister Vijitha Herath, with expectations that China will formally announce a major assistance or development project during the visit.

The visit follows closely on the heels of another significant Chinese engagement. In late December, Wang Junsheng, a member of the 20th Central Committee of the Chinese Communist Party and Secretary of the Party Committee of the Xizang Autonomous Region, visited Colombo and met the President at a time when Sri Lanka was reeling from the destruction caused by Cyclone Ditwah. During that meeting, Wang conveyed Beijing’s readiness to support Sri Lanka’s recovery through a large-scale project, the details of which would be revealed at a later stage.

Taken together, the two visits appear coordinated rather than coincidental suggesting a two-track Chinese approach: political signalling through the Communist Party and policy execution through the foreign ministry.

China has already provided limited but targeted humanitarian assistance, including emergency relief supplies and financial support, since the cyclone. However, Chinese officials have consistently framed their engagement not as short-term relief but as long-term reconstruction and development cooperation, aligned with Sri Lanka’s “Rebuilding Sri Lanka” programme.

This approach stands in contrast to India’s recent diplomatic surge. During his visit to Colombo, Indian External Affairs Minister S. Jaishankar announced a US$450 million equivalent assistance package, largely denominated in Indian rupees, aimed at fast-tracking humanitarian relief, infrastructure repair and economic stabilisation. The move fits squarely within New Delhi’s Neighbourhood First strategy and underscores India’s ability to mobilise rapid, visible support.

Yet Chinese officials appear unperturbed by India’s generosity. Beijing’s emphasis remains on capital-intensive infrastructure, technical expertise and continuity of existing projects, areas where China has invested heavily in Sri Lanka over the past decade.

Diplomatic sources in Colombo caution that while the exact size and structure of the anticipated Chinese project are still undisclosed, it is unlikely to be a simple cash grant. Instead, it may involve concessional financing, technical cooperation or a flagship infrastructure initiative, consistent with China’s established engagement model.

For Sri Lanka, the renewed Chinese signalling provides strategic reassurance. At a moment when the country requires both immediate relief and long-term rebuilding, Colombo appears intent on maintaining a careful balance leveraging India’s speed and proximity while preserving China’s role as a major development partner.

Wang Yi’s brief but symbolically loaded stopover may therefore mark not a response to India, but a reassertion of China’s enduring stake in Sri Lanka’s recovery and future trajectory.