Sri Lanka’s Board of Investment (BOI) has claimed that the country secured USD 787 million in foreign direct investment (FDI) during the first nine months of 2025 a figure that, on close examination, appears inflated and methodologically inconsistent with the Central Bank’s balance-of-payments (BoP) data and the nation’s economic realities.

An independent review of Central Bank BoP tables and CEIC quarterly data shows that net FDI inflows for January-September 2024 measured under internationally accepted IMF-BPM6 accounting standards were only around USD 300 to 320 million.

Given the country’s unchanged investment climate, policy uncertainty, and limited project pipeline since late 2024, a 2.5-fold increase within one year is implausible without corresponding evidence of large-scale project disbursements or foreign-funded industrial ventures. No such evidence has been publicly documented.

Discrepancies in BOI Accounting

The BOI’s headline figure lumps together foreign equity, reinvested earnings, intra-company loans, and foreign commercial borrowings of BOI-registered firms. By treating internal financing and retained profits of existing investors as “new FDI,” the BOI effectively pads its total with domestic reinvestment and inter-company debt, rather than recording fresh cross-border capital inflows.

Such inclusion distorts the real FDI picture, since these funds neither add foreign exchange reserves nor represent new foreign ownership in local enterprises. In contrast, the Central Bank’s BoP methodology isolates only genuine cross-border capital contributions and profit reinvestments consistent with global standards.

 Under that framework, Sri Lanka’s net inflows have rarely exceeded USD 1 billion annually in recent years and typically average below 1 percent of GDP one of the lowest ratios in Asia.

Lack of Transparency and Verification

The BOI’s refusal to publish a category-wise breakdown for its USD 787 million claim further undermines confidence. Without specifying how much was equity, reinvested earnings, or loans, it is impossible for analysts or Parliament to verify the claim’s validity.

 Moreover, no matching rise in project approvals, construction starts, or foreign remittances has been reflected in parallel economic indicators such as imports of investment goods or employment data.

 Independent Assessment

Given the CBSL’s BoP-based net inflow estimate of only USD 300–320 million for the comparable period in 2024, a realistic projection for 2025 factoring in modest improvement in investor sentiment but persistent structural barriers would be in the USD 400–500 million range at best. That still marks incremental progress, but falls far short of the BOI’s USD 787 million claim.

Conclusion: Numbers in Search of Credibility

On balance, available macroeconomic evidence strongly suggests that the BOI’s reported USD 787 million FDI inflow is overstated. The figure appears to reflect accounting aggregation rather than a true surge in foreign capital. Until the BOI releases audited, disaggregated data distinguishing new cross-border equity from internal re investments and loans, its FDI announcements should be treated with caution.

For policymakers and investors alike, transparency not political optics must define Sri Lanka’s investment reporting if the country is serious about restoring credibility in global capital markets.

Foreign Affairs Minister Vijitha Herath announced in Parliament yesterday that the Government plans to hold the long-delayed Provincial Council Elections within the next year.

“We will decide on the election once the ongoing delimitation process is completed. Afterwards, a decision will be made on whether the election will be held under the proportional representation system or a mixed electoral system,” the Minister stated.

He added that the final decision rests with Parliament, emphasizing that the necessary legal and administrative steps will follow the completion of the delimitation process.

Minister Herath made these remarks in response to questions raised by opposition MPs Jeevan Thondaman and S. Rasamanickam regarding the timeline for holding Provincial Council elections.

Foreign Affairs Minister Vijitha Herath told Parliament yesterday that for the past 16 years, resolutions against Sri Lanka have been passed at the United Nations Human Rights Council (UNHRC) due to the failure of previous governments to resolve the national question and address human rights concerns locally.

He said successive governments had politicised national and human rights issues for short-term political gain, which ultimately led to the internationalisation of Sri Lanka’s human rights situation.

“By the time this Government took office in 2024, the human rights issue had already been internationalised and made more complex,” Minister Herath noted.

Tracing the history of UNHRC resolutions on Sri Lanka, the Minister explained that both the Human Rights Commission (the predecessor to the current Council) and the Human Rights Council have adopted multiple resolutions on Sri Lanka since the 1980s — including 11 resolutions since 2009 alone.

He said that calling for votes at the Council, as done by previous administrations, was “a futile exercise” that wasted public resources, knowing the outcome would not change.

“Instead of resolving these issues locally and building unity, previous governments engaged in divisive racial and religious politics, further isolating the country internationally,” he added.

Minister Herath pointed out that the 2009 Geneva resolution called for a sustainable national solution to address the grievances of all communities, but this was never implemented. Subsequent resolutions in 2012 and 2013 urged the implementation of the Lessons Learned and Reconciliation Commission (LLRC) recommendations, but those, too, were ignored.

“If those recommendations had been implemented through a national mechanism, there would be no Geneva resolutions today,” he observed.

He emphasised that the current Government under President Anura Kumara Dissanayake, which came to power in October 2024, is committed to eradicating poverty and corruption while building a united, rights-respecting nation.

Engagement with the UNHRC

Minister Herath also briefed Parliament on his recent engagements with the UN Human Rights Council in Geneva. He said that during the 60th Human Rights Session earlier this year, the Council members took note of Sri Lanka’s domestic initiatives to protect the political and economic rights of all citizens and promote reconciliation.

He highlighted that the visit of UN High Commissioner for Human Rights Volker Türk to Sri Lanka in June 2025 — the first such visit in nine years — resulted in positive observations about the country’s progress.

“The High Commissioner commended the genuine openness of the Sri Lankan Government, the progressive change in society, and the steps taken to address issues through domestic mechanisms,” the Minister said, adding that the High Commissioner’s report to the Council in September reflected these positive developments.

Domestic Reforms and Human Rights

Minister Herath reaffirmed that the Government’s goal is to strengthen national institutions and pursue truth and reconciliation through local processes, rather than international mechanisms such as the Sri Lanka Accountability Project established under Resolution 46/1 (2021).

“We have clearly stated that Sri Lanka will not accept non-domestic mechanisms,” he said. “Our aim is to resolve these issues through our own independent processes and institutions.”

He announced several upcoming reforms, including:

• The Truth and Reconciliation Commission Act, to be presented to Parliament soon.
• The establishment of an independent Public Prosecutor’s Office.
• The repeal of the Prevention of Terrorism Act (PTA) and introduction of a new law that balances counterterrorism and human rights.
• Amendments to the Security of Online Systems Act to better protect citizens’ rights.

Herath stressed that these initiatives are not intended to “impress Geneva” but arise from the Government’s genuine commitment to human rights and justice for all victims.

“We are not targeting military personnel or any section of the population,” he clarified. “Our responsibility is to protect human rights, ensure the rule of law, build unity, and prevent the recurrence of conflict.”

Geneva Resolution of October 2025

Referring to the resolution on Sri Lanka adopted without a vote on October 6, Herath said the Government decided not to call for a vote, in keeping with its policy against “futile demonstrations.”

He noted that the latest resolution was more balanced than previous ones, as it recognised Sri Lanka’s democratic transformation, economic recovery efforts, anti-corruption measures, and reconciliation initiatives.

However, he reiterated that the Government rejects the continuation of the Sri Lanka Accountability Project, as it remains an external mechanism.

The Minister concluded that Sri Lanka’s domestic approach has earned growing recognition from member states, with 43 countries at the September 8 UNHRC dialogue expressing appreciation for the Government’s steps toward reconciliation and human rights protection.

“Protecting the human rights of our people is not a matter for debate — it is our duty and responsibility as representatives of the people,” he said.
“Our vision is of a peaceful, prosperous, and united Sri Lanka where all citizens can live in freedom and dignity. We are committed to making this dream a reality.”

The Central Bank of Sri Lanka (CBSL) has released its Financial Stability Review (FSR) 2025, providing a comprehensive assessment of the country’s financial system, identifying potential risks and vulnerabilities, and outlining the policy measures taken by the Central Bank and other regulatory authorities to safeguard stability.

This statutory report has been published in accordance with Section 70(1) of the Central Bank of Sri Lanka Act, No. 16 of 2023.

Key highlights of the FSR 2025 and the financial stability outlook:

1. Improved sector resilience: The overall resilience of the financial sector strengthened during the first half (H1) of 2025 compared to H1 of 2024, supported by favorable domestic macroeconomic conditions despite global uncertainties and the lingering effects of the past economic crisis.
2. Subdued market stress: The Financial Stress Index (FSI) remained low during the eight months ending August 2025, indicating improved market conditions relative to the previous year.
3. Banking sector recovery: The banking sector showed enhanced strength across key indicators, including profitability, capital adequacy, efficiency, and asset quality. This progress was reflected in the improved Banking Soundness Index.
4. Expansion in finance companies (FCs) sector: The FCs sector experienced robust credit growth in H1 2025, driven by higher demand for vehicle and gold-backed loans following the lifting of vehicle import restrictions, rising gold prices, and declining market interest rates.
5. Growth in household and institutional credit: Credit to both households and institutions expanded during H1 2025, supported by lower interest rates and improved macroeconomic stability.
6. Policy measures for stability: The Central Bank implemented several policy actions aimed at bolstering financial system stability, while continued fiscal consolidation and economic recovery are expected to reinforce these gains.
7. Outlook and monitoring: The performance of banks and FCs is projected to improve further with increased lending to productive sectors. However, the Central Bank cautioned that credit quality and impairment coverage for Stage 3 loans will require close monitoring to ensure continued resilience.

The CBSL noted that, going forward, financial system stability is expected to be maintained alongside further improvements in macroeconomic conditions.

The full publication is available on the Central Bank’s official website:
🔗 Financial Stability Review 2025 – Central Bank of Sri Lanka

Leader of the Samagi Jana Balawegaya (SJB) and Leader of the Opposition, Sajith Premadasa, announced that the SJB has decided to enter into a political collaboration with the United National Party (UNP) under a joint program guided by the leadership of the SJB.

Premadasa stated that this unanimous decision was reached during the SJB Working Committee meeting held yesterday (09), following two prior discussions at the party’s Management Committee meetings.

Elaborating further, Premadasa emphasized that the SJB and UNP will work together on practical, people-centered policy initiatives aimed at tackling the nation’s pressing challenges, while ensuring that both parties maintain their distinct political identities.

Sri Lanka’s palm oil based industry, once a promising foreign exchange earner under the Indo-Sri Lanka Free Trade Agreement (ISFTA), continues to suffer heavy losses due to lingering policy confusion stemming from the crude palm oil (CPO) imports ban imposed by the Gotabaya Rajapaksa regime in 2021–2022.

At the heart of the issue is the continued restriction on crude palm oil imports, which has disrupted the operations of a BOI-approved companies that manufactures and exports hydrogenated palm oil, bakery shortening, margarine, and specialty fats.

Sri Lanka is to incur a potential loss of around US$ 40 million due to the ban on the importation of crude palm oil (CPO), which is used in the production of bakery fats and margarine for export mainly to Indian market, companies operating under the Board of Investment reiterated.

The importation of crude palm oil (CPO) was banned during the 2021/2022 period under a policy decision taken by the administration of President Gotabaya Rajapaksa  . The related gazette notification also restricted the issuance of import and export licenses for the commodity.

Additionally, the importation of palm-related raw materials such as crude palm olein (CPOL), palm stearin, and crude palm kernel oil has been brought under a licensing system.

Companies operating under the BOI, which manufacture goods for export to India, are now required to obtain special bulk shipment import licenses for their raw materials. These companies have described this as a highly unfortunate situation.

Sri Lanka enjoys a 27 percent cost advantage compared to other countries when exporting bakery fats and hydrogenated fats (vanaspati ghee) to India under the Indo-Sri Lanka Bilateral Trade Agreement.

Although palm oil imports were banned in 2022, the recent reduction of import tariffs in India over the past quarter presented a major opportunity for Sri Lankan companies. However, with India increasing its import tariffs by 32 percent from April 2025, the competitive edge for Sri Lankan products has further improved.

The Indian government has allocated a quota of 250,000 metric tons to Sri Lanka, under which the Sri Lankan companies estimate they need to import at least 6,000 metric tons of palm oil monthly to meet production targets.

Unfortunately, even BOI-registered companies are barred from importing crude palm oil due to the standing gazette notification.

Amid Sri Lanka’s ongoing severe foreign exchange crisis, the government has yet to implement any positive or effective measures to facilitate the importation of essential raw materials without disruptions.

Despite the BOI granting approvals for import licenses, companies have been forced to turn away already imported palm oil shipments at the port, unable to offload them due to the ban

Manufacturers have also pointed out to the government that without this critical raw material, their overall production volume of value-added goods could drop by 25 percent, while the value of primary products relying on the banned raw material may decline by as much as 75 percent.

They claim that there is a complete lack of awareness or understanding of this issue among present government officials. The licensing requirement, introduced in April 2021 under Gazette No. 2222/31, effectively blocked the import of crude palm olein into the country.

Meanwhile, a value-added tax (VAT) of 18% and a social security levy (SSCL) of 2.5% were imposed on locally refined oils from January 2024 and October 2022, respectively.

These changes have paralyzed Sri Lanka’s domestic refining sector. The once thriving local industry is now at a standstill due to price distortions that make imported finished oils cheaper than domestically refined alternatives. 

The United Nations Committee on Enforced Disappearances (CED) has expressed deep concern over Sri Lanka’s minimal progress in addressing the complex legacy of enforced disappearances, highlighting significant gaps in accountability, investigation, and forensic capacity.

The findings, released following the Committee’s review of Sri Lanka’s implementation of the International Convention for the Protection of All Persons from Enforced Disappearance, underscore the persistent impunity surrounding unresolved cases dating back to the country’s armed conflict.

According to the Committee, the Office on Missing Persons (OMP) has successfully traced only 23 individuals out of 16,966 registered cases. This stark figure illustrates a systemic failure in investigating and prosecuting enforced disappearances and reflects a broader climate of impunity. The Committee stressed the urgent need for a comprehensive and up-to-date register of disappeared persons, along with a strengthened mandate for the OMP to ensure accountability across all cases.

The review also highlighted legislative gaps, urging the Sri Lankan Government to incorporate war crimes and crimes against humanity into domestic law and to expedite the establishment of an independent Office of the Public Prosecutor. Such measures, the Committee notes, are essential for bolstering judicial mechanisms and ensuring that perpetrators face consequences.

A particularly alarming aspect of the report pertains to the discovery of at least 17 mass graves across Sri Lanka. The Committee observed that limited forensic capacity and the absence of centralized ante-mortem and post-mortem databases severely hinder proper investigation. Recommendations include developing a national genetic database and enhancing forensic capabilities across competent authorities to locate, identify, and safeguard human remains, ensuring their dignified return to families.

The Committee’s findings are likely to intensify international scrutiny of Sri Lanka’s human rights record. They signal that continued inaction could undermine the country’s global standing and affect its diplomatic relations and access to international support. Moreover, the report emphasizes the critical role of sustained international engagement, including technical and financial assistance from UN bodies, in strengthening domestic institutions to address the legacy of enforced disappearances.

 CED’s observations follow a session in Geneva reviewing Sri Lanka alongside other State parties, reflecting the global community’s growing impatience with protracted delays in accountability. Analysts suggest that the Government must balance political sensitivities with international obligations to achieve meaningful progress, restore public trust, and reconcile with families of the disappeared.