In response to the United States’ recent announcement of a 44% reciprocal tariff on Sri Lankan exports, the Sri Lankan government confirmed that Washington has officially requested proposals to address its trade deficit with Sri Lanka. This move has prompted swift diplomatic and economic actions between the two nations.

At a press briefing, Economic Development Deputy Minister Prof. Anil Jayantha Fernando and Finance and Planning Deputy Minister Dr. Harshana Suriyapperuma outlined the government’s efforts to tackle the situation. Both emphasized that a strategy is quickly taking shape to manage the challenge effectively.

Prof. Fernando explained that the US has communicated its expectations for concrete proposals to narrow the existing trade gap, which currently favors Sri Lanka. “We are examining various strategies, including revising our tariff structures. A dedicated committee has been formed and is working diligently to prepare proposals,” he added. The government assured that updates on the progress would be shared transparently as they unfold.

The 44% tariff is being imposed primarily due to the 88% import tariffs that Sri Lanka has placed on US goods. Despite the tariff, Sri Lanka remains a significant trading partner for the US, with the country accounting for 27% (around $3 billion) of Sri Lanka’s total manufactured exports, which amounted to $12.8 billion in 2024. Apparel and textiles alone represent 64% of these exports.

Although the tariff is set to take effect tomorrow (April 9), Sri Lanka is not part of the “Dirty 15” list of countries facing even harsher tariffs, leaving room for potential diplomatic negotiation, according to officials. “This is a national issue, and we are using every diplomatic, policy, and commercial channel available to ensure Sri Lanka is not unfairly impacted, and our economic recovery remains on course,” Prof. Fernando stated.

Dr. Suriyapperuma highlighted that preliminary discussions had already taken place with the US regional delegation prior to the official tariff announcement. “While we do have a trade deficit with the US, its value is not as large compared to other countries. This context was acknowledged during our initial talks,” he noted.

In response to the announcement, a high-level virtual meeting was held between Sri Lankan officials and senior US representatives. The meeting, which lasted nearly an hour, allowed Sri Lanka to present its ongoing economic recovery efforts under the International Monetary Fund (IMF) Extended Fund Facility (EFF), as well as its commitment to structural reforms and revenue growth.

Dr. Suriyapperuma clarified that Sri Lanka would only face the 44% tariff, and not an additional 10% baseline duty as had been initially feared. He also emphasized that the situation remains fluid, with further discussions scheduled and Sri Lanka awaiting confirmation of a proposed meeting date with Washington.

The severe impact of the 44% tariff imposed by US President Donald Trump on Sri Lankan products was felt sharply on Monday, April 8, when the Colombo Stock Exchange (CSE) suffered significant losses. The market experienced a trading suspension as the benchmark ASPI fell by 4.6%, or 712 points, while the S&P SL20 plummeted by 6%, triggering a temporary halt in trading.

 Since the announcement of the tariff, the CSE has seen a loss of nearly Rs. 500 billion in value. Over the past three days, Rs. 435 billion was wiped off the market. As a result, the year-to-date negative returns of the ASPI and S&P SL20 have surged to over 8% and 12%, respectively. This drastic drop reflects global market sell-offs, with analysts calling it a “bloodbath,” particularly in Asia, following the US tariff announcement.

 Monday’s trading was marked by panic-driven selling, particularly by retail investors, which led to a sharp decline in turnover to Rs. 6.47 billion. The Banking sector bore the brunt of the losses, with significant declines in shares of Commercial Bank (COMB), Hatton National Bank (HNB), and Sampath Bank (SAMP). Other notable stocks like MELS and John Keells Holdings (JKH) also contributed to the downturn.

 The market saw heavy selling in the early session, and the 5% drop in the S&P SL20 triggered a 30-minute circuit breaker. Although there was a brief recovery after the halt, it couldn’t be sustained, and selling pressure resumed, pushing indices lower. The Banking sector led the decline, followed by the Capital Goods and Retail sectors.

 Despite the market’s decline, foreign investors recorded a net inflow of Rs. 300.3 million, with net buying in BUKI.N and net selling in JKH. High net worth and institutional investors were active in stocks like Diesel & Motor Engineering, John Keells Holdings, and Teejay Lanka, while retail investors showed interest in RIL Property and LOLC Finance.

 The overall sentiment was negative, with 220 decliners and only 19 gainers. The sharp downturn reflects the broader global uncertainty and the immediate effects of the US tariff on Sri Lanka’s economy.

A meeting between Secretary to the President Dr. Nandika Sanath Kumanayake and key ministry officials was held today at the Presidential Secretariat to review national development plans in collaboration with Singapore’s Surbana Jurong Institute and 18 government ministries.

The discussion focused on the Colombo Metropolitan Region Plan, the Eastern Development Plan, and the Greater Hambantota Project. Officials from Surbana Jurong joined the meeting virtually.

Progress reports on the three projects were reviewed in detail. Dr. Kumanayake instructed officials to identify any shortcomings and finalize required actions within two weeks.

The meeting also addressed regulatory delays affecting investment approvals and the need to revise outdated legislation to better support national development goals.

Attendees included Secretary to the Prime Minister G.P. Saputhanthri, Senior Additional Secretary to the President Russel Aponsu, Secretary to the Ministry of Urban Development, Construction and Housing U.G. Ranjith Ariyaratne, and senior officials from the participating ministries.

Sri Lanka Cricket (SLC) awarded annual contracts to 45 First-Class cricketers for the 2025 Domestic Cricket Season as part of its ongoing program to strengthen the country’s talent pool.
This initiative, spearheaded by the Executive Committee of Sri Lanka Cricket, under the leadership of Honorary President Mr. Shammi Silva, aims to support and develop promising first-class players.

SRI LANKA CRICKET

Italian Diplomat Highlights Untapped Tourism Potential Between Italy and Sri Lanka at Colombo Forum

Dr. Alberto Arcidiacono, Deputy Head of Mission at the Italian Embassy in Sri Lanka, delivered a keynote address at a recent forum co-hosted by the Sri Lanka–Italy Business Council, the Embassy of Italy, and Cinnamon Life. His speech underscored the vast yet underutilized potential of Italian tourism to Sri Lanka and outlined several strategic opportunities for growth and collaboration.

Sri Lanka’s Global Appeal and Missed Italian Market Potential

With eight UNESCO World Heritage Sites and a site-to-area ratio higher than any neighboring country, Sri Lanka continues to impress the global travel community. It was recently named one of BBC Travel’s top ten destinations to visit in 2025. In 2024, the country welcomed two million tourists and earned over $3 billion in revenue. However, just 39,000 of these visitors were from Italy, placing the country at only 14th on Sri Lanka’s tourism source market list—despite Italy’s strong travel record to nearby destinations like the Maldives, which received over 144,000 Italian visitors that same year.

Dr. Arcidiacono pointed out that other European countries with comparable or smaller populations—such as the UK, France, the Netherlands, and Poland—sent far more travelers to Sri Lanka. He emphasized the significant room for growth and the missed opportunities in attracting Italian tourists.

Why Italians Choose Other Destinations

Thailand remains the top Asian destination for Italians, drawing nearly 300,000 visitors annually. Dr. Arcidiacono highlighted that Sri Lanka offers many of the same attractions—stunning beaches, rich culture, diverse wildlife, and great food—all of which Italians cherish. One possible reason for the lower Italian numbers could be a lack of visibility and direct connectivity. Currently, there are no direct flights between Italy and Sri Lanka. Introducing a direct route, along with marketing and potentially a visa-free policy, could dramatically change the equation.

Understanding Italian Travel Demographics

Italian tourists come in three primary categories:

1. Budget Travelers: Often younger and adventurous, these tourists prefer homestays, public transportation, and cultural immersion. They bring value to rural areas and represent an important segment.
2. High-End Travelers: This group seeks seamless luxury, quality service, and often uses tour operators. They avoid public transport and expect premium experiences, and Sri Lanka’s luxury properties, including its new seven-star hotel, are well-positioned to serve them.
3. Mid to High-Range Travelers: Representing 44% of the Italian demographic, this group seeks a balance of adventure and comfort. They are open to boutique hotels, self-booked itineraries, and expect reliability and value for money. A dependable transport system and clear digital presence can significantly influence their destination choice.

Adventure Travel and the Rise of the Pekoe Trail

Dr. Arcidiacono also touched on the growth of adventure tourism. Sri Lanka’s Pekoe Trail—recently recognized by TIME Magazine as one of the Greatest Places of 2025—has growing potential to become a standalone reason for Italians to visit, similar to Spain’s Camino de Santiago or Italy’s Via Francigena.

Key Strategies to Grow Italian Arrivals

1. Promote Twin-Destination Packages: Combine Sri Lanka with the Maldives to create dual-nature itineraries that offer culture, tea country, and beach relaxation—perfect for honeymooners, families, and explorers.
2. Maximize Digital Marketing: Leverage social media, influencers, and Italy’s Sri Lankan diaspora to build online visibility. Italians are driven by trends, trust networks, and visual storytelling, making platforms like Instagram and TikTok essential.
3. Focus on Seasonality: Target marketing campaigns around key Italian travel periods—December to February and July to August—to maximize engagement and bookings.

Call for Responsible Safari Tourism and Infrastructure Upgrades

The diplomat noted concerns regarding overcrowding and disorder in national parks. Social media depictions of chaotic safaris deter potential visitors. Regulating the number of vehicles per day and focusing on high-quality, low-impact wildlife experiences could attract a growing niche of luxury safari travelers.

On a positive note, Sri Lanka’s efforts toward sustainable tourism—including the expansion of Bandaranaike International Airport and discussions around direct flights and visa-free access for Italians—are seen as encouraging steps forward.

Conclusion

With over €800 million in total economic exchange between the two countries, Italy is already Sri Lanka’s fifth-largest trading partner. Dr. Arcidiacono closed by emphasizing that there is no reason why Italy should not rise to become one of Sri Lanka’s leading tourism source markets as well. With the right infrastructure, visibility, and marketing, Sri Lanka is well-positioned to unlock a powerful wave of Italian travelers in the years ahead.

TRAVEL AND TOUR WORLD

Sri Lankan parliamentarian Namal Rajapaksa said that the island nation ignored certain development projects based on political reasons. Rajapaksa, the National Organizer of the Sri Lanka Podujana Peramuna (SLPP), was speaking at the Rising Bharat Summit 2025 in New Delhi.

His remarks came in the wake of Indian Prime Minister Narendra Modi’s visit to Sri Lanka, during which Modi pledged support to Colombo in dealing with newly imposed tariffs by the United States.

Rajapaksa emphasized the importance of regional cooperation, highlighting the potential benefits of enhanced collaboration between Sri Lanka and India. “With Prime Minister Modi’s visit to Sri Lanka, there are many areas where Sri Lanka and India can collaborate, especially in regional cooperation. It’s in the best interest of each country to build strong regional ties,” he said.

He noted that while global priorities have often taken precedence, focusing on regional partners like India—one of the largest and fastest-growing economies—could bring significant advantages. “Countries like Sri Lanka, Maldives, and others in the region can benefit greatly if we pursue the right path and establish effective contracts,” he added.

When asked about Sri Lanka’s way forward amid economic and political challenges, Rajapaksa stressed the need for timely implementation of key projects. “We must execute what needs to be done at the right time. Delays in projects like Sampur and Uma Oya due to political reasons led to an energy crisis that later turned into a financial crisis in 2022,” he explained.

He also called for greater collaboration among Indian Ocean countries to develop new trade partnerships, especially in light of recent global trade shifts. “The recent developments in Washington will affect Sri Lanka’s apparel exports and maritime industry. We need to work together with countries like India to form new alliances and partnerships within the region,” he said.

A ‘Coffee Heritage Trail’ showcasing the island’s history in growing the bean was launched in partnership with Tree of Life Nature resort in the island’s central hills city of Kandy, Australia’s Market Development Facility said.

“This coffee tour has the potential to diversify Sri Lanka’s offerings and position our coffee in global markets,” Tree of Life Founder and Managing Director Shelton Thenuwara said.

The 1.5 kilometre trail will immerse tourists in the history of ceylon coffee, from cultivation to brewing.

“Sri Lanka’s coffee story is one of resilience and revival, and Australia is proud to be part of this journey,” Australian High Commissioner to Sri Lanka Paul Stephens said.

“Through MDF we have supported the re-emergence of specialty coffee, helping it gain both local and international recognition. We remain committed to showcasing Sri Lanka’s unique coffee to the world and ensuring its well-deserved place on the global coffee map.”

Ceylon coffee was a commercial crop since its inception in the 1790s, but the sector shrunk due to leaf rust in 1868 which decimated plantations across the country, before its recovery in the late 1990s.

The coffee trail features the bean to cup journey, from coffee nursery to a guided coffee tasting session led by the inhouse barista.

Visitors will be able to hike through the plantation, learn about seed selection, planting, processing and roasting in traditional and modern methods.

Tree of Life Nature resort offers an opportunity to plant participants’ very own coffee tree and receive regular updates on the growth of the tree, creating a long lasting relationship with the continuous growth of the coffee industry.

The project aim is to create opportunities, boost tourism, facilitate the discovery of local flavors, tradition and culture and increase the export potential of the homegrown coffee in the world market. 

ECONOMY NEXT

The Ceylon Petroleum Corporation (CPC) has invited bids from registered suppliers for the purchase of five shiploads—totaling approximately 300,000 barrels (+/- 5%)—of Petrol 92 Unl for the period from April 15, 2025, to October 14, 2025.

Seven suppliers submitted bids for the procurement. The Cabinet approved the proposal from the Minister of Energy to award the contract to M/s Vitol Asia Pte. Ltd., Singapore—the lowest bidder—based on the recommendations of both the Standing Technical Evaluation Committee and the Special Standing Procurement Committee appointed by the Cabinet.

Sri Lanka’s foreign reserves reached USD 6,517 million in March 2025, recovering from declines over the past few months and surpassing the recent high of USD 6,472 million recorded in October 2024, according to data from the Central Bank.

Amid a credit recovery in late 2024, the Central Bank injected large volumes of liquidity to suppress short-term interest rates. This raised concerns that banks might issue loans without adequate deposits, limiting the Central Bank’s ability to accumulate dollars and increasing the risk of having to sell reserves.

Following October’s peak, gross official reserves declined, especially after November, due to external debt payments and weak dollar collections in early 2025. However, by January, credit contracted, easing pressure on reserves.

To support the reserve position, the Central Bank executed swap arrangements, though these created liquidity from borrowed dollars — a practice previously linked to external instability. Direct domestic liquidity injections had been halted.

In March 2025, the Central Bank made a decisive move by purchasing USD 400 million from the market. As a result of the credit contraction, commercial banks were also able to increase their dollar holdings, contributing to the reserve buildup.