Gold prices in the local market continued their upward trend yesterday (27), in line with a sharp increase in global gold rates.

In the international market, gold prices climbed to a record level, exceeding US$ 4,553 as of today.

Reflecting this global surge, gold prices in Sri Lanka increased for the second time today, pushing the total price hike for the day to Rs. 12,000.

Accordingly, a 22-carat gold sovereign was priced at Rs. 340,400 this morning at the Colombo Pettah Gold Market.

Meanwhile, traders at the Pettah gold market said that the price of a pound of 24-carat gold, which stood at Rs. 356,000 yesterday, has risen to Rs. 368,000 today.

Market analysts attribute the continued rise in local prices to volatility in global markets and strong international demand for gold.

Colombo Mayor Vraie Cally Balthazar on Saturday outlined the process behind the preparation of the Colombo Municipal Council (CMC) 2025 budget, which is due to be resubmitted for a second reading on December 31, after it was defeated at a council vote on December 22.

In a statement issued following the setback, the mayor said the budget was not simply a collection of figures, but a reflection of the council’s performance and a roadmap for development in the year ahead. She noted that budget preparation was particularly challenging as there had been no elected council during the 2023/24 period, with municipal affairs managed under a commissioner system.

Despite the defeat at the December 22 meeting, the mayor emphasized that the administration remains committed to presenting a transparent, people-focused budget.

She explained that the budget formulation process began within weeks of the new council being appointed. In July, all 16 municipal institutions were requested to submit proposals, with submissions accepted until August. Councillors from both the ruling party and the opposition were also invited to submit proposals, all of which were reviewed without political bias and evaluated based on public interest.

For the first time, written proposals were sought from municipal employees as well — a move the mayor described as a step toward fostering a new political culture within the council.

According to the mayor, the most difficult phase involved assessing financial feasibility and reaching agreement on funding priorities. These discussions continued until November, followed by further reviews to address omissions and ensure accuracy.

The draft budget was then examined by 23 standing committees, with participation from both government and opposition councillors. It was also opened for public inspection for seven days, with notices published in all three official languages as required by law. Copies were made available at the public library and the municipal treasury.

Following additional scrutiny by two finance committees comprising members from all political parties, further revisions were introduced.

Although the budget failed to secure approval at the December 22 council meeting, it will now be resubmitted for consideration at the second reading scheduled for December 31.

Reaffirming her administration’s position, Mayor Balthazar said the objective of building “a prosperous city and a better quality of life” for the residents of Colombo remains unchanged despite the initial defeat.

The Disaster Management Centre (DMC) has activated nationwide preparedness measures in response to forecasts of increased rainfall issued by the Department of Meteorology.

DMC Director General Major General (Retired) Sampath Kotuwegoda stated that all relevant authorities have been placed on standby, including naval units, aircraft squadrons, and boat teams, to ensure rapid response if required.

According to meteorological forecasts, a wave-like wind pattern is expected to influence the country from December 29, bringing above-normal rainfall to the Northern, North Central, Central, Eastern, and Uva provinces.

Major General Kotuwegoda emphasized that these precautionary steps are intended to reduce potential disaster risks and safeguard public safety. In line with the northeast monsoon emergency response plan, the DMC has also alerted the Sri Lanka Armed Forces, Sri Lanka Police, and the Civil Security Department to prepare personnel, aircraft, naval resources, and boats for deployment if necessary.

The DMC has urged the public to remain vigilant and follow official advisories during this period of heightened weather activity.

Several spells of showers will occur in Northern, North-central, Eastern, Uva and Central provinces and in Hambantota district. 

Showers or thundershowers will occur at several places in Sabaragamuwa province and in Galle, Matara and Kaluthara districts after 2.00 p.m. Fairly heavy falls above 50 mm are likely at some places in these areas. 

Fairly strong winds of about 40 kmph can be expected at times over Eastern slopes of the central hills, Northern, North-central and North-western provinces and in Hambantota, Monaragala and Trincomalee districts. 

Misty conditions can be expected at some places in Western, Sabaragamuwa and Central provinces and in Galle and Matara districts during the early hours of the morning.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.

The government has approved a new concessional loan scheme titled the Sustainable Agriculture Program, positioning it as a cornerstone policy to revive rural livelihoods and expand agriculture’s role in national economic growth. Set to begin next year, the program will channel Rs. 800 million into the sector through a revolving credit fund. Yet its launch comes as farming communities struggle to recover from recent cyclone-related devastation, raising questions about risk, readiness, and resilience.

Cabinet approval was granted this week for the program to operate annually, using Participatory Finance Institutions as its primary delivery mechanism. The initiative is anchored to the existing Smallholder Agribusiness Partnerships Program, funded jointly by the Government and the International Fund for Agricultural Development, with all loan recoveries redirected into a newly created Sustainable Agricultural Fund. Officials argue this revolving structure will ensure continuity of low-cost credit for future borrowers.

According to Cabinet Spokesman and Minister Dr. Nalinda Jayatissa, Rs. 800 million is expected to be allocated in 2026. Loans will be offered under two categories. Individual borrowers and institutions can access up to Rs. 5 million through agricultural and Samurdhi banks at a highly concessional 2% annual interest rate, with repayment periods extending to five years and grace periods of up to one year. Bulk loans, capped at Rs. 500,000 per beneficiary, will carry similar interest rates with shorter three-year repayment terms.

The scope of eligible activities is broad, covering cultivation, processing, value addition, input supply, crop procurement, exports, and other agri-related ventures. Policymakers see this as a pathway to boost productivity, strengthen value chains, and increase rural incomes while recycling public funds through loan recoveries.

 However, analysts warn that the program’s timing presents significant risks. Cyclone-related flooding and infrastructure damage have disrupted planting cycles, destroyed stored harvests, and weakened farmers’ repayment capacity. In such a context, even low-interest loans may increase indebtedness if climate shocks continue and insurance or disaster-relief mechanisms remain limited.

There are also operational concerns. Participatory Finance Institutions vary widely in capacity and oversight standards. Without strong monitoring, concessional funds could be diverted to low-impact projects or politically connected borrowers, undermining both equity and repayment rates. Economists further note that a revolving fund depends on consistent recoveries something that extreme weather events and volatile commodity prices could easily derail.

From a macroeconomic perspective, the program could stimulate rural demand, generate employment, and support export earnings if implemented effectively. But failure to integrate climate-risk screening, crop insurance, and technical extension services could expose the Rs. 800 million investment to high default risk, ultimately burdening public finances.

As Cabinet approval clears the way for implementation, the Sustainable Agriculture Program stands at a crossroads. Its success will hinge not only on cheap credit, but on whether policymakers can align financial support with climate resilience, accountability, and post-disaster recovery in a sector increasingly shaped by extreme weather.

 Sri Lanka’s emergency request for $200 million from the IMF under the Rapid Financing Instrument (RFI) has ignited debate among economists and policymakers about the financial prudence of the move. While the Government views the facility as a necessary tool to address urgent foreign exchange pressures following Cyclone Ditwah, independent analysts caution that the decision could prove costly in both the short and long term.

 Verité Research, a prominent economic think tank, warned that RFI borrowing, when adjusted for exchange rate effects and Special Drawing Rights (SDR) valuations, could cost Sri Lanka more than 6% in dollar terms and over 11% in rupee terms. Time-based surcharges levied by the IMF further increase the long-term repayment burden. Dr. Nishan de Mel, Verité’s Executive Director, described the approach as potentially replicating past “knee-jerk” debt decisions, which contributed to Sri Lanka’s fiscal stress during the COVID-19 pandemic and the subsequent debt restructuring process.

 The think tank emphasized that alternative funding mechanisms may offer significant savings. Domestic rupee bonds, currently yielding around 9% for three-year tenures, could be cheaper than the effective cost of an RFI loan. In parallel, local US dollar markets show potential, with Sri Lankans and diaspora investors willing to lend at rates near 5%. This market appetite suggests that targeted bond issuance for cyclone recovery could meet financing needs at lower interest costs while engaging local investors.

 Verité also highlighted innovative strategies such as issuing ESG-linked International Sovereign Bonds backed by cyclone recovery KPIs and underwritten by multilateral development banks. Such instruments could attract socially responsible investors, reduce borrowing costs, and enhance transparency in disaster-related spending.

 The think tank strongly recommended non-debt options, urging the Government to secure disaster recovery grants equivalent to 1% of GDP (approximately $1 billion) from multilateral and bilateral partners. Additionally, legal adjustments to temporarily lift spending caps under the Public Finance Management Act could enable effective recovery efforts without inflating debt.

 Government officials remain confident that the RFI is justified under IMF rules. Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando explained that the request targets urgent foreign exchange needs caused by Cyclone Ditwah while maintaining broader reform objectives under the IMF-supported framework. Originally expecting a $347 million disbursement under the Extended Fund Facility (EFF), the Government opted for the RFI to manage immediate pressures. IMF engagement will continue next month to revise the staff-level agreement in line with updated fiscal projections.

 The decision underscores the tension between immediate disaster response and long-term fiscal sustainability. Analysts argue that careful, evaluation-driven choices could minimize future costs and reduce reliance on high-interest emergency borrowing. Sri Lanka’s experience illustrates the importance of strategic debt management, especially in a post-crisis recovery scenario where both urgency and cost-efficiency must be balanced.

 Sri Lanka’s decision to seek emergency financing from the International Monetary Fund (IMF) under the Rapid Financing Instrument (RFI) has sparked caution among economic analysts, who warn the move could impose significant long-term costs amid the country’s already strained debt situation.

 Economic think tank Verité Research highlighted that the effective cost of IMF RFI borrowing may exceed 6% in US dollar terms and more than 11% in Sri Lankan rupee terms when factoring in exchange rate fluctuations, Special Drawing Rights (SDR) valuations, and time-based surcharges. These surcharges alone add 2.75% to the loan after three years, making the debt potentially more expensive than other available financing alternatives.

 Dr. Nishan de Mel, Executive Director at Verité Research, stressed that “knee-jerk” borrowing decisions in response to Cyclone Dakwah-related recovery spending could replicate past fiscal missteps. According to him, domestic funding options, including three-year rupee bonds yielding around 9%, or US dollar borrowing from local markets where Sri Lankans and the diaspora lend at approximately 5%, could provide cheaper alternatives.

 Verité proposed creative financing mechanisms to mitigate costs. These included issuing a domestic US dollar bond through a yield-capped second-price auction or an ESG-linked International Sovereign Bond (ISB) tied to cyclone recovery KPIs and underwritten by a multilateral development bank. Both approaches could attract investment at lower yields while ensuring transparency in the use of funds.

 The think tank also advocated for non-debt solutions, recommending that the Government pursue disaster recovery grants equivalent to 1% of GDP (around $1 billion) from multilateral and bilateral partners. Legal adjustments, such as temporarily lifting the 13% of GDP cap on primary expenditure under Section 16 of the Public Finance Management Act, were suggested to allow more flexible spending on recovery without worsening debt.

 Despite these warnings, the Government expressed confidence in its RFI request, valued at SDR 150.5 million (approximately $200 million), noting that it would address immediate foreign exchange needs triggered by Cyclone Ditwah while keeping Sri Lanka’s broader IMF-supported reform program on track. Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando stated that the emergency support was fully justified under IMF rules and would prevent destabilization of ongoing fiscal reforms.

 Originally expecting a $347 million disbursement under the Extended Fund Facility (EFF) for December, Sri Lanka opted for the RFI after cyclone-related pressures intensified. An IMF team is slated to visit next month to adjust the staff-level agreement in line with the revised fiscal outlook, while safeguarding critical social protection measures.

 Verité Research’s analysis underscores the delicate balancing act facing Sri Lanka: immediate relief versus long-term fiscal sustainability, urging policymakers to explore lower-cost and non-debt alternatives before committing to expensive emergency borrowing.

Sri Lanka’s Western Province retained its position as the country’s economic powerhouse in 2024, contributing nearly half of the national output, though growth in other regions signaled a subtle rebalancing of economic activity. Provisional data from the Central Bank of Sri Lanka, based on Statistics Department estimates, show that the Western Province accounted for 42.4% of nominal Gross Domestic Product (GDP) last year, down from 44% in 2023.

 The decline, while modest, reflects comparatively stronger growth in other provinces, particularly the North Western and Central regions. The North Western Province secured the second-largest share at 11.5%, followed closely by the Central Province at 10.7%. Other provinces also increased their economic contribution, with the Southern Province at 8.9%, Sabaragamuwa at 7.7%, and notable gains across Uva and Eastern provinces.

 Sri Lanka’s overall nominal GDP grew to Rs. 29.9 trillion in 2024, up from Rs. 27.4 trillion in 2023, indicating a steady expansion of economic activity amid lingering post-pandemic recovery challenges. The Western Province generated Rs. 12.66 trillion of output, while the North Western and Central provinces produced Rs. 3.45 trillion and Rs. 3.20 trillion respectively.

 Sectoral performance highlighted distinct provincial strengths. The North Western Province dominated agricultural production, contributing 20% of national agricultural value added, followed by the Central Province (13.9%) and Southern Province (11.8%). Industrial activity remained heavily concentrated in the Western Province, which accounted for 47.6% of total industry output, with North Western (12%) and Central (9.6%) provinces trailing. In services, the Western Province again led with 44.5% of national output, while Central (10.7%) and North Western (10.1%) maintained significant shares.

 Economists suggest that while the Western Province continues to drive national growth, the rising contributions from other provinces may foster a more balanced regional development in the medium term. Analysts note that policy measures aimed at enhancing industrial infrastructure, agricultural productivity, and service-sector expansion in non-Western regions could sustain this diversification trend, with potential implications for employment generation and regional investment flows in 2026.

 The Central Bank emphasizes that provincial GDP estimates are derived through a top-down approach, disaggregating national GDP figures based on relevant indicators, with 2024 figures currently classified as provisional. The data provides an early signal for policymakers seeking to prioritize resource allocation, regional investment, and sector-specific interventions as Sri Lanka navigates a year of economic consolidation.

Media Minister Nalinda Jayatissa has rejected allegations that the government is suppressing media freedom, stating that criticism from all forms of media is fully permitted, but action must be taken against the deliberate spread of false information.

“There is absolutely no media suppression. Social, electronic, and print media are free to criticize us and point out our weaknesses,” Jayatissa said, responding to recent claims of media restrictions.

However, he expressed concern over what he described as the intentional dissemination of fake news by certain media outlets and social media groups. He warned that such misinformation is especially harmful as the country seeks to recover from a recent disaster, citing false reports related to the health sector and national security.

“These are not mere criticisms, but calculated attempts to create public distrust and threaten national stability,” the Minister said, adding that the government is legally bound to act under existing laws.

Jayatissa also noted that there is growing public pressure on the government to address misinformation. “People are accusing us of not taking action. They have given us a mandate, and the public call is for the government to act against fake news and false reports,” he said.