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SL Government to Introduce Digital Currency in Economic Modernization

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By: Staff Writer

February 18, Colombo (LNW): Sri Lanka is on the verge of a major digital transformation as the government accelerates efforts to modernize the economy.

 Recognizing the potential of digital financial systems, President Anura Kumara Dissanayake has unveiled strategic initiatives to position Sri Lanka as a leading digital economy in South Asia.

The government is committed to strengthening regulatory frameworks, fostering technological innovations, and enhancing financial inclusion to drive economic growth in the coming years.

Sri Lanka is on the verge of a major digital transformation as the government accelerates efforts to modernize the economy.

Recognizing the potential of digital financial systems, President Anura Kumara Dissanayake has unveiled strategic initiatives to position Sri Lanka as a leading digital economy in South Asia.

The government is committed to strengthening regulatory frameworks, fostering technological innovations, and enhancing financial inclusion to drive economic growth in the coming years.

In his 2025 Budget Speech, President Dissanayake announced the establishment of a Digital Economic Authority to oversee and regulate the expanding digital sector.

 Additionally, new legal frameworks will be introduced to facilitate digital payments, ensuring security and efficiency in financial transactions.

The President emphasized the need to move away from a cash-based economy, citing the recently launched ‘GovPay’ platform as a crucial step in this transition. He assured that the shift would be implemented in carefully planned phases with clear communication to the public.

To encourage technological advancements, the government aims to attract investments in emerging sectors such as Artificial Intelligence, Robotics, and Financial Technologies. 

With a goal of expanding Sri Lanka’s digital economy to exceed USD 15 billion or contribute more than 12% of the national GDP, the President proposed an allocation of Rs. 3,000 million for digital development in 2025.

Sri Lanka has already emerged as the fastest adopter of digital payments in South Asia. 

The post-pandemic landscape has witnessed a significant increase in digital transactions, with at least a 20% growth since 2019, particularly among debit card users. 

Global payment leader Visa has recognized Sri Lanka as one of its fastest-growing markets in the region. 

According to Ramakrishnan Gopalan, Visa’s Vice President and Head of Products for India & South Asia, the country has demonstrated strong economic recovery and increasing consumer engagement with digital payment systems.

Visa anticipates sustained double-digit growth in digital payments over the coming years, with greater penetration of card-based transactions. 

The company is preparing to relaunch its Infinite card initiative, targeting high-affluent consumers, who are reportedly adopting digital payment methods at rates nearly three times higher than other demographics.

 Gopalan noted that demand for credit cards is rising among emerging affluent consumers, prompting financial institutions to enhance their offerings.

IMF to review Sri Lanka’s EFF Programme, finalising access to $333 mn

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February 18, Colombo (LNW): The Executive Board of the International Monetary Fund (IMF) is set to convene on February 28, 2025 to review and approve the third assessment of Sri Lanka’s Extended Fund Facility (EFF) programme.

This meeting will be a crucial step in securing further financial support for the country, with the IMF staff having reached a staff-level agreement with Sri Lankan authorities on November 23, 2024. If approved, Sri Lanka will gain access to approximately US$ 333 million in additional funding.

Previously, the IMF had made it clear that the disbursement of the fourth tranche of the EFF programme hinged on the approval of the IMF’s Executive Board, which in turn was dependent on the fulfilment of specific conditions by the Sri Lankan authorities.

Amongst these conditions was the submission of the 2025 Budget, which must align with the parameters set forth under the terms of the EFF.

During a press briefing on 6th February 2025, IMF Spokesperson Julie Kozack commended Sri Lanka for the progress made in its ambitious reform agenda. She highlighted that the economy had grown by 5.5 per cent in the fourth quarter of 2024, demonstrating resilience despite the ongoing challenges.

Additionally, she noted that inflation had remained well within target, and the country’s international reserves had risen to US$ 6.1 billion by the end of 2024, marking a positive shift in Sri Lanka’s economic stability.

In response to queries about Sri Lanka’s 2025 Budget, Kozack reiterated that while the staff-level agreement had been reached in November, the approval of the third review by the IMF’s Executive Board was contingent upon the successful implementation of certain prior actions.

These actions include the submission of a 2025 budget that aligns with the agreed-upon parameters of the programme.

The timing of the IMF’s Executive Board meeting closely follows a significant event in Sri Lankan politics—the presentation of the 79th Budget Speech of Independent Sri Lanka by President Anura Kumara Dissanayake on February 17.

This is Dissanayake’s first full budget since taking office, marking an important milestone in Sri Lanka’s fiscal planning and its ongoing collaboration with the IMF.

Ongoing dry spell causes water supply interruptions and heatwave concerns across island

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February 18, Colombo (LNW): Sri Lanka is currently experiencing disruptions to its water supply as a result of the ongoing dry weather, affecting several regions across the country.

The National Water Supply and Drainage Board (NWSDB) has issued a warning that some areas may face interruptions to their water supply during peak hours, particularly in the mornings and evenings.

Other regions may continue to receive water, but at lower pressures.

The NWSDB has attributed these challenges to a significant rise in water consumption, driven by the prolonged dry conditions that have seen rainfall levels dip considerably.

Whilst the Board has assured the public that it has not yet made a decision to implement planned water cuts, it is encouraging residents to conserve water and use it responsibly during this period of scarcity.

To mitigate the potential impact, the NWSDB is urging households to store water in advance, should the situation worsen.

Whilst the situation is being closely monitored, the Board continues to explore ways to manage water distribution in the face of these challenging weather conditions.

In addition to water supply issues, the Department of Meteorology has issued an urgent heatwave warning, alerting the public to exceptionally high temperatures across several provinces.

The warning, which covers the Northern, North Central, North Western, Western, and Southern provinces, as well as specific areas within the Ratnapura district, highlights the danger posed by the high heat index.

This index, which measures how hot it feels on the human body, has now reached levels that warrant caution and awareness.

The Department has advised the public to take appropriate precautions, including staying well-hydrated, avoiding strenuous outdoor activities, and seeking shelter in shaded areas when possible.

Special care is urged for vulnerable groups, such as children, the elderly, and those with pre-existing health conditions, who are particularly susceptible to heat-related illnesses.

The highest temperature recorded in the past 24 hours was in Ratnapura, where the mercury hit a sweltering 36.6°C, further underscoring the extreme conditions being faced by many areas.

LG Polls set to proceed after Bill’s passage: Election Commission informed

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February 18, Colombo (LNW): The Election Commission has been officially informed that the Local Authorities Elections (Special Provisions) Bill has been passed in Parliament with overwhelming support, securing a significant milestone in the legislative process.

The bill was approved without any amendments, and accordingly, will pave the for the much anticipated Local Government Elections.

The Ministry of Public Administration, Provincial Councils, and Local Government confirmed the bill’s passage, with Professor Chandana Abeyratne, the Minister overseeing the department, announcing that the Speaker of Parliament signed the bill into law last night.

This final step confirms the bill’s passage, bringing it one step closer to being implemented.

With the official notification now in the hands of the Election Commission, the necessary preparations for conducting the elections will be set in motion.

The Commission will now begin its work to organise the elections, a key moment for local governance across the country.

During the bill’s third reading in Parliament, it received a resounding 158 votes in favour, with no opposition members casting votes, highlighting the strong bipartisan support for the legislation.

The Supreme Court had previously ruled on the bill, stipulating that two specific clauses required a two-thirds majority in Parliament due to their inconsistency with Article 12(1) of the Constitution. The Court’s interpretation highlighted the need for a special majority under Article 84(2) for clauses 2 and 3, ensuring that the bill met constitutional standards before being passed.

Government promises fuel tax reduction: Chief Government Whip

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February 18, Colombo (LNW): Chief Government Whip Minister (Dr.) Nalinda Jayatissa has given assurances that the Sri Lankan government is committed to reducing the fuel tax, revealing that steps have already been taken to make this promise a reality.

Speaking in Parliament today (18), Minister Jayatissa announced that a detailed report regarding the fuel tax would be presented to the House in the near future.

This report, according to the minister, will not only outline the plans for the fuel tax reduction but will also delve into the history of how the Ceylon Petroleum Corporation (CEYPETCO) became a financially struggling entity.

We will provide a full account of how the CEYPETCO was driven into losses and the roles played by the ministers at the time. Everything will be revealed, and the relevant minister will address these matters in due course,” Jayatissa said, adding that the government aims to bring transparency to the situation.

The remarks were made in response to a query raised by Sri Lanka Freedom Party (SLFP) MP Dayasiri Jayasekera, who had sought clarification on the government’s commitment to reducing the current fuel tax of Rs. 50, a promise that had been made earlier.

Namal Rajapaksa granted bail in Krrish deal case by Colombo High Court

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February 18, Colombo (LNW): Sri Lanka Podujana Peramuna (SLPP) Parliamentarian, Namal Rajapaksa, was granted bail today by the Colombo High Court following the formal presentation of indictments in the highly debated Krrish deal case.

Judge Manjula Tillekaratne, presiding over the case, set the terms for Rajapaksa’s release, which include a cash bail of Rs. 100,000, along with two sureties of Rs. 10 million each.

In addition, the court directed that Rajapaksa’s fingerprints be taken to verify whether he has any prior criminal history.

The Attorney General had filed criminal charges against Rajapaksa in connection with the alleged embezzlement of Rs. 70 million, which had been allocated by the Indian-based Krrish Lanka Pvt. Ltd. for the development of rugby in Sri Lanka.

These funds were reportedly misappropriated in relation to a deal with the controversial real estate company, Krrish, further intensifying the scrutiny surrounding the transaction.

The court also scheduled a pre-trial conference for March 27, marking the next step in the legal proceedings.

The case has attracted considerable attention, given the involvement of prominent political figures and the significant sums of money allegedly mishandled.

Tuition for Engineering Technology A/L Subject banned ahead of practical examinations

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February 18, Colombo (LNW): The Department of Examinations has officially declared that all tuition classes, including lectures, seminars, and workshops, for the 2024 Advanced Level Engineering Technology subject will be prohibited from midnight tonight.

This ban will also extend to the printing and distribution of model question papers, which is aimed at ensuring fairness and maintaining the integrity of the upcoming examinations.

Amith Jayasundara, the Commissioner General of Examinations, confirmed that the suspension of all related educational activities will remain in effect until March 01.

This decision has been made to prevent any undue advantages and to ensure a level playing field for all students across the country.

In the meantime, practical examinations for the 2024 Advanced Level Engineering Technology subject will commence tomorrow and run until March 01, taking place at 41 examination centres nationwide.

The Department of Examinations has emphasised that candidates should be aware of the specific details regarding their examination locations and times, which are clearly stated on their admission papers.

No alterations to these details will be entertained under any circumstances.

It is also crucial for candidates to arrive at their designated examination centre at least one hour prior to the start of their scheduled practical exam, as specified on the admission paper.

SriLankan Airlines Engineering Team completes maintenance on Salam Air’s A321neo ahead of schedule

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February 18, Colombo (LNW): The skilled engineering team at SriLankan Airlines has successfully completed a comprehensive base heavy maintenance check on an A321neo aircraft for Salam Air, a valued long-term customer.

Not only was the maintenance finished well before the planned deadline, but the team also ensured that all operations were carried out with precision and efficiency.

A significant part of the work involved the replacement of the aircraft’s right-hand main landing gear seal, an essential component for the safe and optimal operation of the aircraft.

This task was executed to the highest standards, with the engineers demonstrating their expertise in maintaining the sophisticated systems of modern airliners.

SriLankan Airlines Engineering has continued to solidify its reputation as a trusted provider of base maintenance services across the region.

The department has seen an impressive influx of both returning clients and new contracts, reflecting the growing demand for its top-tier services.

BDO expresses support to government’s commitment to fostering market-driven economy via 2025 Budget

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February 18, Colombo (LNW): BDO Partners, a leading professional services firm, has provided its response to the 2025 budget presented by President Anura Kumara Dissanayake.

The firm acknowledges the government’s efforts to balance economic growth with social welfare whilst advancing debt restructuring efforts supported by the International Monetary Fund (IMF).

BDO Partners recognises the government’s projected total expenditure of Rs. 4,218 billion (excluding debt servicing) and appreciates the focus on public services, infrastructure, and social welfare.

The firm supports the administration’s commitment to fostering a market-driven economy, ensuring a competitive market structure, and regulating excessive market power concentration.

Regarding tax reforms, BDO Partners notes the significant modifications to the Value Added Tax (VAT) system, including the shift from the Simplified Value Added Tax (SVAT) to a risk-based refund scheme.

The firm highlights the inclusion of digital services under VAT regulations and the mandatory adoption of Point of Sale (POS) machines for VAT-registered entities as key steps towards strengthening compliance.

BDO Partners welcomes the increase in the personal income tax threshold from Rs. 100,000 to Rs. 150,000 per month and the expansion of the first tax band taxed at 6 per cent.

However, the firm acknowledges concerns over the capital gains tax increase from 10 per cent to 15 per cent, which could pose additional burdens on individuals and partnerships.

The firm also appreciates the government’s targeted social welfare initiatives, particularly the extended exemptions under the Social Security Contribution Levy for petroleum products and international trade-related transportation.

Additionally, the firm’s analysis indicates that tax increases on the betting and gaming industry, including a rise in the Gross Collection Levy from 15 per cent to 18 per cent, will have financial implications for the sector.

In terms of economic modernisation, BDO Partners supports the government’s initiatives to digitise Sri Lanka’s economy, particularly the introduction of a unique digital identification system and the transition towards a cashless economy.

The firm views the projected digital economy growth of US$ 15 billion over five years as an ambitious yet achievable target.

BDO Partners commends the investment in tourism infrastructure, including the Rs. 500 million allocation for a city branding campaign and improvements at Bandaranaike International Airport.

The firm also appreciates the proposed development bank for small and medium enterprises (SMEs), the strengthening of research and development funding, and the rationalisation of state agencies to improve efficiency.

On education, BDO Partners acknowledges the Rs. 135 billion investment in university education and school infrastructure, as well as the planned expansion of scholarships.

The firm supports the government’s commitment to healthcare, particularly the Rs. 604 billion allocation, digitalisation of the National Medicines Regulatory Authority, and enhanced primary healthcare services.

BDO Partners also highlights the importance of food security and agriculture, welcoming the Rs. 35 billion fertiliser subsidy and investment in crop production.

The firm supports regulatory reforms aimed at stabilising the paddy and rice market and encourages private investment in underutilised land to boost agricultural output.

Overall, BDO Partners views the 2025 budget as a comprehensive effort to address Sri Lanka’s economic challenges whilst laying a foundation for long-term stability.

The firm emphasises that the success of these initiatives will depend on effective implementation, strong governance, and the ability to navigate global and domestic economic uncertainties.

Full Report: https://lankanewsweb.net/wp-content/uploads/2025/02/BDO-Budget-Overview-2025.pdf

CEB promises immediate, long-term measures to strengthen grid stability following February 9 power outage

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February 18, Colombo (LNW): The Ceylon Electricity Board (CEB) has outlined a series of immediate and long-term actions to address grid stability concerns following the nationwide power failure that occurred on 9 February 2025.

The incident, which took place at 11.13 a.m., left much of Sri Lanka without electricity and caused significant disruption to daily life.

In response, the CEB has assured the public that corrective steps are already underway to ensure a more stable and resilient national grid.

The power failure was traced to a disturbance at the 33kV Panadura Grid Substation, which led to a rapid voltage drop throughout the electricity network.

At the time of the incident, over half of the nation’s electricity demand was being met by solar photovoltaic (PV) generation, with additional power supplied from the Lakvijaya Power Plant in Norochcholai and various hydropower stations.

However, the high share of non-synchronous solar PV generation left the grid vulnerable to instability.

The CEB explained that the lack of synchronous power generation contributed to low system inertia, making the grid prone to faults.

As the disturbance triggered an imbalance between supply and demand, this led to cascading disconnections and, ultimately, the complete loss of power.

Several key factors contributed to the magnitude of the outage. Firstly, the high penetration of solar PV, combined with low grid inertia, left the system exposed to voltage and frequency disturbances.

Secondly, the sharp voltage drop caused many solar PV systems to automatically disconnect, exacerbating the instability.

Additionally, the automatic response by the Norochcholai Power Plant to the disturbance—while preventing potential internal damage—resulted in further strain on the grid.

The power failure was also influenced by the “Sunny Sunday” effect, where a low weekend demand combined with high solar generation created an unstable situation.

With industries and commercial customers offline, the grid was operating with reduced demand and reduced inertia, heightening its susceptibility to such disturbances.

In the wake of this event, the CEB has implemented a number of urgent measures aimed at stabilising the national grid and preventing future outages.

These include ensuring that more synchronous generators are maintained at a minimum generation level and operating selected gas turbines in synchronous condenser mode at critical locations to support voltage stability.

The CEB has also curtailed the generation of ground-mounted solar PV systems during low-demand periods, when necessary, to reduce the risk of grid instability.

Looking ahead, the CEB is pursuing medium-term strategies to further improve grid reliability.

This includes adjusting rooftop solar PV inverter settings to prevent unnecessary disconnections during minor disturbances and introducing special industrial tariffs to encourage industries to operate during off-peak hours.

In addition, the CEB is promoting solar installations paired with Battery Energy Storage Systems (BESS) to improve grid resilience and stability.

The CEB also outlined several long-term solutions to modernise the grid and better integrate renewable energy sources. Key initiatives include deploying grid-forming inverters with BESS to provide synthetic inertia and stabilise frequency fluctuations.

Furthermore, the CEB is working to install emergency backup generators at the Norochcholai Power Plant to ensure rapid reconnection in the event of future disconnections.

The Maha Oya Pumped Hydro Project, a 600 MW storage facility, is also set to play a crucial role in enhancing grid flexibility and energy security.

Additionally, the CEB is advancing investments in Smart Grid technology to improve real-time monitoring and control of renewable energy inputs.

The CEB concluded by acknowledging the significant inconvenience caused to the public by the power outage and reaffirming its commitment to providing a resilient, reliable, and future-proof electricity supply.