September 18, Colombo (LNW): Minister of Transport Bimal Rathnayake has delivered a sharp ultimatum to senior officials within the Railway Department, making it clear that continued negligence in the upkeep of railway infrastructure will no longer be tolerated.
Those failing to meet expected standards should be ready to relinquish their posts, he warned.
The warning came during a high-level meeting at the Kalutara District Secretariat, where Rathnayake met with Members of Parliament and key stakeholders in the transport sector to address longstanding deficiencies in the nation’s rail services.
His remarks followed a string of public complaints about deteriorating train conditions, particularly on major commuter routes such as the Galle–Colombo line.
The Minister did not mince his words in condemning the current state of many train compartments. He drew attention to a host of recurring issues, including shattered windows, broken or non-functioning ceiling fans, and appallingly unhygienic toilets—all of which contribute to a daily ordeal for thousands of working commuters.
“What we have right now is not a public transport service; it’s a disgrace,” Rathnayake remarked, expressing deep frustration. “How can ordinary workers depend on trains like these? Windows hanging off their frames, no ventilation, and toilets that are simply unusable—it’s unacceptable by any standard.”
He also highlighted a deeply troubling incident in which a young child lost two fingers during his first-ever train journey, after falling against a malfunctioning window. The case has sparked widespread public outcry and brought the issue of rail safety back into sharp focus.
Asserting that immediate action is non-negotiable, Rathnayake instructed officials to initiate visible repairs within the next four weeks. He demanded that improvements to critical components—such as windows, fans, and sanitation facilities—be treated as an urgent priority. Moreover, he insisted that each department head communicate their immediate action plans directly to him via WhatsApp within three days.
“This is not a request; it’s a final warning,” the Minister stated firmly. “If you cannot guarantee even the most basic service for our people, you have no business staying in your position. I am utterly fed up with the excuses.”
Transport Minister Demands Immediate Overhaul of Railway Services Amid Mounting Safety Concerns
Showers, thundershowers expected across many districts in SL (Sep 18)
September 18, Colombo (LNW): Showers or thundershowers will occur at times in Western, Sabaragamuwa, Central, Northern and Northwestern provinces and in Galle and Matara districts, the Department of Meteorology said in its daily weather forecast today (18).
Fairly heavy falls about 75 mm are likely at some places in Western, Sabaragamuwa and Northern provinces and in Galle and Matara districts.
Showers or thundershowers will occur at several places in the other areas of the island after 1.00 p.m.
The general public is kindly requested to take adequate precautions to minimise damages caused by temporary localised strong winds and lightning during thundershowers.
Marine Weather:
Condition of Rain:
Showers or thundershowers will occur at times in the sea areas off the coast extending from Kankasanthurai to Matara via Colombo and Galle. Showers or thundershowers may occur at several places in the other sea areas during the evening or night.
Winds:
Winds will be south-westerly and wind speed will be (30-40) kmph.
Wind speed can increase up to (50-55) kmph at times in the sea areas off the coast extending from Matara to Pottuvil via Hambantota.
Wind speed can increase up to 50 kmph at times in the sea areas off the coast extending from Chilaw to Kankasanthurai via Mannar.
State of Sea:
The sea areas off the coast extending from Matara to Pottuvil via Hambantota may be rough at times.
The sea areas off the coast extending from Chilaw to Kankasanthurai via Mannar may be fairly rough at times.
A Strategic Imperative: Restoring the Medical Backbone of the Sri Lanka Army
Narahenpita Military Hospital, an establishment critical in providing a backbone to the military forces during the civil conflict, is now facing multitudes of crises, from drug shortages to systemic failures and brain drain.
A ‘brain drain’ of over 1,000 medical specialists and one million skilled individuals has left military healthcare critically understaffed
85% of drugs and 80% of medical supplies are imported; their scarcity has forced reliance on costly or substandard substitutes
The Narahenpita crisis is not merely a welfare issue; it is a strategic vulnerability that threatens morale, retention, and the nation’s defence readiness
This article provides a critical assessment of the profound challenges facing the Sri Lanka Army’s premier medical facility, the Narahenpita Military Hospital. For sixteen years since the conclusion of the civil conflict, this institution has served as the vital medical hub for thousands of serving and retired service members, upholding a national commitment to those who sacrificed for the country. However, a detailed analysis reveals that this central pillar of military welfare is at a breaking point due to a convergence of systemic failures, a severe and accelerating shortage of medical professionals, a critical collapse in the supply of essential medicines and equipment, and a fundamental misalignment in fiscal priorities. These issues, while symptomatic of a broader national crisis, pose a direct and escalating threat to the morale, retention, and long-term operational readiness of the armed forces.
The report identifies three primary vulnerabilities: first, a “brain drain” of skilled medical personnel, a problem exacerbated by a failure to provide basic incentives and infrastructure, such as dedicated quarters for intern house officers. Second, a crippled supply chain, where a national economic crisis has left hospitals devoid of life-saving medications and medical supplies, forcing a dangerous reliance on costly, or at times, substandard alternatives. Third, a budgetary paradox, where a significant increase in the overall defence budget has not translated into sufficient, ring-fenced funding for military healthcare, creating a resource scarcity for urgent and critical needs. Addressing these issues is not merely a matter of social responsibility; it is a strategic imperative for the Commander-in-Chief. This article outlines a three-tiered framework for reform, proposing immediate, mid-term, and long-term interventions to restore the integrity of the military medical system and, in doing so, to reassert the nation’s unwavering commitment to its protectors.
The Legacy and Role of the SLAMC
The Sri Lanka Army Medical Corps (SLAMC) possesses a rich and commendable history, from its origins in 1881 to its formal establishment as a regular force in 1950. The Corps’ evolution culminated in a period of unprecedented service during the prolonged civil conflict, where it forged a formidable, integrated medical system meticulously organised into “echelons of care”. This tiered approach allowed for the rapid medical evacuation of battle-injured personnel from the point of injury to definitive care facilities, an operational model that saved countless lives. The wartime success of the SLAMC was not a matter of chance; it was a result of a comprehensive, integrated system of both military and civilian health assets, orchestrated at the highest administrative levels to achieve a singular objective.
In the post-conflict era, the role of the SLAMC and the Narahenpita Military Hospital has undergone a significant yet challenging pivot. Sixteen years after the cessation of hostilities, the hospital has transitioned from a primary trauma centre to the central hub for long-term care, rehabilitation, and management of non-communicable diseases for serving personnel and a vast population of disabled and retired veterans. This ongoing commitment is evidenced by the Sri Lanka Army’s continuous organisation of island-wide medical camps for disabled and retired personnel, a programme that has reached over 10,000 beneficiaries and their families. These efforts underscore the Army’s enduring commitment to its veterans. However, while these initiatives are commendable, their ad-hoc nature highlights a critical vulnerability: they are not a sustainable substitute for a robust, permanently funded central medical institution. The current crisis at the Narahenpita Military Hospital suggests that the integrated, high-capability system of the war years has been allowed to deteriorate, leaving the core medical facility ill-equipped to meet the complex, long-term healthcare needs of its constituency.
Analysis of the Multi-faceted Challenges
The difficulties facing the Narahenpita Military Hospital are not isolated but are a direct manifestation of wider systemic and economic pressures. An analysis of the current situation reveals a confluence of factors that threaten the very foundation of military healthcare.
The Erosion of Human Capital
The most immediate and critical threat to the military medical system is the severe shortage of skilled personnel, a problem that mirrors a devastating nationwide trend. Sri Lanka is currently grappling with a “huge brain drain,” with over 1,000 medical specialists and an estimated one million skilled individuals having left the country during the past few years. This mass migration is driven by uncompetitive wages, high taxation, and the spiralling cost of living, which have made professional life unsustainable for many.
This national crisis has a particularly acute impact on military healthcare. The user query highlights a severe shortage of medical officers and a specific lack of intern house officers, which it attributes to the “non-availability of quarters”. While the research does not provide direct evidence of a complete absence of such facilities, it does indicate that the Army manages a variety of residential quarters for officers of different ranks in the Narahenpita area. This suggests that the problem is not a simple lack of physical infrastructure, but a more complex failure in administrative prioritisation and allocation. Intern house officers are the first point of contact for patients and are vital to the smooth, round-the-clock operation of any hospital. The inability to retain this critical cohort due to a solvable, administrative issue, rather than an insurmountable economic one, is a strategic vulnerability that directly draws the attention of military leadership to address. The inability to attract and retain these entry-level professionals undermines the entire medical hierarchy and the quality of care it can provide.
The Shortage of Essential Medicines and Equipment
The second major pillar of the crisis is the breakdown of the medical supply chain. Sri Lanka’s economic downturn and the suspension of foreign debt repayment have left the country with severely limited foreign reserves. This has had a catastrophic effect on a healthcare system that relies on imports for an overwhelming majority of its pharmaceutical and medical supplies; 85% of drugs and 80% of supplies are imported. The consequences are dire: hospitals across the country are facing shortages of everything from basic painkillers and antibiotics to life-saving drugs for chronic diseases like cancer and diabetes.
This instability has a cascading effect. The lack of reliable supplies forces clinicians to use less effective substitute medicines or, in some cases, to halt essential therapies altogether, which raises long-term public health concerns such as the rise of antibiotic resistance. Furthermore, the scarcity of materials for medical tests forces patients to seek and pay for these services at costly private laboratories, leading to a rise in “out-of-pocket expenditure” (OOPE). For many veterans and their families who lack the financial means, this results in delayed diagnoses and postponed treatments for potentially life-threatening conditions. The government’s ad-hoc reliance on donations and credit purchases from countries like India has been necessary, but the quality of these donated drugs is now a point of national concern. This dangerous stopgap highlights the urgent need for a resilient, sustainable, and transparent procurement strategy.
A Disconnect Between Budget and Need
The user query raises the critical issue of a lack of funds to acquire urgent medical necessities. However, a deeper look into the national budget reveals a profound paradox. Sri Lanka’s 2025 defence budget is estimated at a staggering LKR 437 billion to LKR 442 billion, a significant increase over the previous year. The Sri Lanka Army, which manages the Narahenpita hospital, receives the largest portion of this allocation. This robust funding is intended for recurrent expenditures, including a notable pay increase for military personnel, and for capital investments in modernising the armed forces.
This financial scenario presents a glaring contradiction: how can a sector with a rapidly expanding budget face a critical lack of funds for its core medical services? A lack of publicly available, detailed breakdowns of how the defence budget is allocated to healthcare prevents a precise answer, but it points to a significant strategic misprioritisation. A large budget for troop salaries and equipment is meaningless for soldier welfare if it does not translate into high-quality medical services when they are most needed. The paradox suggests that a large portion of the military budget is being directed away from the very support services that are essential to maintaining the long-term well-being and confidence of the troops. The issue is not the absence of funds in the defence sector, but the lack of a transparent and targeted allocation for medical services.
Military Healthcare, Morale, and National Security
Providing for the health and welfare of serving and retired service members is a non-negotiable responsibility of the state. This is not merely a moral obligation but a strategic imperative that directly impacts national security. The health and well-being of a nation’s military are inextricably linked to its operational readiness and its ability to project a credible defence posture.
A robust, reliable, and accessible healthcare system is a fundamental pillar of soldier morale. If serving members and retired veterans face frustration and “agony” in seeking care, as the user query suggests, it sends a powerful negative signal throughout the ranks. It erodes the confidence of those currently in service and discourages new recruits, thereby undermining the military’s long-term ability to attract and retain the best talent. This has a direct impact on the nation’s “soft power projection,” as a country’s ability to care for its own stands as a testament to its strength and values.
The strategic nature of Narahenpita Military Hospital
Its failure would create a cascading crisis, impacting not only the Army but also the Navy, Air Force, and Police, who also maintain their own medical facilities. A collapse in military healthcare would also contribute to a broader public health crisis, as it could lead to widespread dissatisfaction and potential social instability. Therefore, the President, as the Commander-in-Chief, must recognise that the crisis at the Narahenpita Military Hospital is a strategic threat that requires an urgent and comprehensive response.
Actionable Recommendations
To address this multifaceted crisis, a clear, phased, and actionable framework for reform is proposed, based on the analysis of the current challenges. The plan is designed to move from immediate, targeted relief to a fundamental, long-term restructuring of military healthcare.
Propose a direct, ring-fenced allocation from the overall defence budget specifically for military healthcare, bypassing traditional bureaucratic bottlenecks. Swift acquisition of urgent necessities and stabilisation of the most critical shortages.
Short term: Implement an emergency procurement plan using the new funds to acquire essential medicines and medical accessories that are critically low. Resumption of life-saving treatments and reduction in patient out-of-pocket expenses.
- Retaining Key Personnel:- Address the critical shortage of intern house officers by immediately renovating and designating quarters for them at the Narahenpita hospital. Improved staff morale, enhanced hospital operations, and better patient care.
- Midterm: A New Retention Policy for Specialists, implement a new, formal retention strategy for specialist doctors and other healthcare professionals, including improved working conditions and a clear career path, such as the proposed MSc in Military Medicine. Reduction in the “brain drain” of skilled medical professionals from the military sector.
- Enhancing the Suwasahana Scheme:- Conducting a comprehensive audit of the scheme to identify and address administrative inefficiencies and targeting errors, proposing a move toward a fully digitised system with direct bank deposits. Increased transparency and equitable, timely access to benefits for all eligible service members.
- Fostering Public-Private Partnerships:- Expand partnerships with private hospitals on a national level with clear oversight, ensuring a wider range of services are available to military personnel. Diversified access to care, reducing the burden on military facilities and providing broader access to specialised services.
- Long term: Dedicated Military Healthcare Budget – Advocate for the creation of a dedicated, separate, and ring-fenced budget for military healthcare within the Ministry of Defence’s overall allocation. Ensures consistent funding for medical services, preventing diversion of funds to other military expenditures.
- A National Medical Technology Assessment Unit:- Establish a unit to assess the necessity and cost-effectiveness of new medical equipment and construction, ensuring sustainable, evidence-based investments. Prevention of unnecessary expenses and a strategic allocation of resources.
- Integrated Civil-Military Healthcare Strategy:- Develop a national strategy that formally integrates military and civilian healthcare systems to build long-term resilience against future health crises and economic shocks. Creates a more robust and responsive national healthcare infrastructure.
The Army Commander’s Commitment to Soldiers’ Welfare
The writer, being a veteran and in addition to being one of the beneficiaries of the Narahenpita Military Hospital, spoke on behalf of both active and retired soldiers, presenting key concerns to the current commander of the army. The commander listened patiently and responded that many of the issues had already been addressed with the Commander-in-Chief, with remedial actions underway. This effort is noteworthy and deserves commendation.
Conclusion: A Nation’s Unspoken Debt
The findings of this report demonstrate that the crisis at the Narahenpita Military Hospital is more than an operational failure; it is a strategic vulnerability that threatens to undermine the morale and integrity of the Sri Lankan Armed Forces. The nation’s profound debt to its service members, who risked their lives to secure its future, is not simply a matter of historical gratitude. It is a continuing obligation to provide them with the highest standard of care in times of peace. The paradox of a massive defence budget coexisting with a struggling medical infrastructure points to a critical need for transparent, targeted, and accountable fiscal management. By implementing the recommendations outlined in this report, the President, as Commander-in-Chief, can take decisive action to rectify these failures, honour the unspoken debt to the armed forces, and ensure that the Narahenpita Military Hospital remains a source of pride and a pillar of national strength for generations to come.
The writer is an Infantry officer who served the Sri Lanka Army for over 36 years, a former Security Forces Commander of the Wanni Region and Eastern Province, and he holds a PhD in economics. He can be reached at: [email protected]
Shame on You JVP – Your Slip is Showing
By Adolf
The JVP has long built its political identity on a narrative of austerity, sacrifice, and fighting corruption. Its leaders have often painted themselves as the voice of the common man, standing against excess, privilege, and corruption in public life. But recent disclosures on the asset declarations of senior leaders have raised serious and troubling questions. If the JVP claims to be different from the mainstream political class, then surely their own conduct must stand up to the highest level of scrutiny. Instead, what we now see is a disturbing gap between rhetoric and reality.
Assets Declaration
The issue of asset declarations is not a matter of political nitpicking. It is central to public trust. Every parliamentarian is required by law to submit a declaration of assets and liabilities. The spirit of that law is to ensure that public servants are accountable and that their lifestyle matches their legitimate income. When politicians amass properties, luxury vehicles, or other assets far beyond what their known earnings can support, the public has every right to ask: where did this money come from?
The case of Anura Kumara Dissanayake, the JVP’s leader, has naturally come under the spotlight. Reports based on his declaration suggest he owns a house valued at over 40 million rupees. That is no small sum, especially for a politician who has spent his career in parliament on a Member of Parliament’s salary. The people deserve an explanation. Was this house purchased through bank loans, family wealth, or some other legitimate means? Has he paid the due taxes on it? And most importantly, has this been properly declared to the Inland Revenue Department before now?
How did they acquire?
These questions are not character assassinations – they are the same questions the JVP itself has repeatedly asked of other politicians. For decades, the JVP has demanded to know how ministers and MPs acquired their luxury mansions, fleets of cars, or overseas investments. They have accused others of corruption, abuse of office, and tax evasion. But now that the spotlight has turned on them, their explanations appear thin and defensive.
The opposition, civil society, and indeed all citizens should press for clear answers. Asset declarations should not be pieces of paper locked away in parliamentary files. They should be made public, open to scrutiny, and verified against tax records. The Inland Revenue Department must confirm whether taxes were paid on these declared assets and whether the valuations given are realistic. If there is nothing to hide, the JVP should welcome such scrutiny as a way of proving their integrity.
The real danger for the JVP lies in hypocrisy. Their supporters rallied behind them because they seemed different – disciplined, honest, and principled. If that image crumbles, the JVP will be seen as just another political party that says one thing to the people and does another for themselves. That would be the ultimate betrayal of their base. Accountability is not optional. It is the price of claiming moral superiority in politics. The JVP must come clean, explain how such assets were acquired, and prove that all taxes were duly paid. Until then, the mask has slipped – and the people are watching.
Sri Lanka’s Banks Show Strength on Paper as Reserves Slip Backward
Sri Lanka’s banking sector, long considered the backbone of economic recovery efforts, is facing renewed scrutiny as foreign reserve buffers show signs of weakening even while capital and profitability indicators appear robust. The data reveal a complex picture: on one hand, banks are reporting stronger capital adequacy and asset quality; on the other, the system’s net foreign assets are eroding, exposing a vulnerability that has historically triggered crises.
Reserves under Pressure
Central Bank of Sri Lanka (CBSL) data show that net foreign assets (NFA) of the banking system peaked at US$3.3 billion in April 2025, just before a rate cut aimed at stimulating credit. But the momentum was short-lived: NFAs fell to US$3.15 billion in May, US$2.96 billion in June, and further down to US$2.90 billion by July.
The central bank’s own position mirrored this decline. CBSL’s NFA stood at US$1.54 billion in May, dipped to US$1.41 billion in June, and saw only a modest recovery to US$1.46 billion in July. Though the bank purchased US$142 million from the interbank market in August, this was overshadowed by recurring debt repayments about US$75 million monthly to India for Asian Clearing Union loans and additional outflows for IMF liabilities.
Commercial banks have also seen their reserves shrink. Many had earlier borrowed from abroad to provide dollar loans domestically including to the Ceylon Petroleum Corporation during the forex crisis and are now repaying those obligations. Some have also invested in international sovereign bonds or extended dollar loans to private borrowers, reducing net foreign assets further.
Capital and Profitability Cushion
Despite this external weakness, the banking system’s prudential indicators show resilience. Sector-wide Capital Adequacy Ratios (CAR) are around 18–19% in mid-2025, comfortably above regulatory minima and higher than 2024 levels, supported by retained earnings and capital injections. Liquidity ratios also remain solid, even as reserves decline.
A closer look at major banks underscores this strength:
Hatton National Bank (HNB) reported a Net Stage-3 (NPL) ratio of 1.59% and stronger profits in H1 2025.Sampath Bank posted robust profit growth with stable asset quality.Commercial Bank of Ceylon maintained a CAR of around 18%, boosted by earlier capital raising.Bank of Ceylon (state-owned) disclosed a CAR of 17.4%, alongside steady deposit growth.
At the sector level, CBSL data confirm the trend: the average regulatory capital to risk-weighted assets rose to 19.3% in Q1 2025, up from 17.7% the year before. Non-performing loans (NPLs) are manageable, with most large banks reporting ratios under 3%.
Fragile Gains, Familiar Risks
While capital and liquidity look sound, analysts caution that strong balance sheets do not offset the risks of falling reserves. Net foreign assets plunged to negative US$6.4 billion in April 2022, after CBSL used borrowed reserves to defend the rupee. That collapse set the stage for the sovereign default, a reminder that Sri Lanka’s banks remain vulnerable when external buffers evaporate.
Recent CBSL practices such as using inflationary swaps with commercial banks to boost gross reserves have raised concerns of returning to post-war style reserve management, when borrowed dollars were presented as reserves but later proved unusable for debt repayment.
Moreover, the Treasury’s reliance on the central bank to source dollars for external debt repayments has created a policy trap. Instead of independently sourcing foreign exchange, fiscal authorities depend on CBSL’s interventions, tightening monetary policy options and raising the specter of a second default if inflows stall.
The Bigger Policy Picture
Sri Lanka’s policy framework itself remains a subject of debate. Critics argue that IMF-inspired single-policy regimes, designed around “abundant reserves,” have historically destabilized the rupee by undermining classical monetary anchors. By contrast, Asian economies that stuck to stricter reserve discipline maintaining credible external anchors—achieved long-term stability and growth.
For Sri Lanka, the lesson is that capital buffers and profitability cannot shield banks from external shocks if net foreign assets continue to deteriorate. Without disciplined reserve-building and fiscal independence in managing foreign debt, the sector’s apparent strength risks becoming a mirage.
Outlook
As of mid-2025, Sri Lanka’s banks appear healthier on paper: they are well capitalised, profitable, and reporting improved loan books. Yet beneath the surface, the system is once again dependent on fragile reserve management, exposed to government borrowing needs, and pressured by accelerating private credit.
The real test lies ahead. Unless policymakers pair monetary discipline with a fiscal strategy that reduces reliance on CBSL reserves, Sri Lanka’s banking stability could unravel as quickly as it was built.
Colombo Port Gridlock Threatens Sri Lanka’s Export Competitiveness
Sri Lankan exporters are once again facing mounting uncertainty as operational delays at the Port of Colombo cause international shipping lines to bypass the island’s main maritime hub. The latest disruption has highlighted deep-rooted inefficiencies at the country’s largest port and raised concerns over the government’s lack of far-reaching policies to address structural issues in shipping and customs operations.
Last week, ZIM Integrated Shipping Services Ltd. informed its Sri Lankan clients that its vessel, MV Shanghai 018W, due in Colombo on 14 September, would instead omit the port and discharge cargo in India before returning more than 10 days later.
Such last-minute decisions leave exporters stranded, forcing them to cope with delays of up to two weeks. For industries dependent on time-sensitive raw material imports and export deadlines — apparel, rubber, and electronics in particular these disruptions translate directly into financial losses and missed opportunities.
The root of the problem lies in congested terminal yards and the absence of an efficient Inter-Terminal Transport (ITT) system. Colombo’s multiple terminal operations require transshipment cargo which makes up the bulk of throughput to be moved between terminals using conventional prime movers, an outdated and slow method.
In contrast, India’s newly opened Vizhinjam port, designed as a single-basin facility, offers faster vessel turnaround, posing a real threat to Colombo’s regional hub status.
Despite these challenges, Colombo Port handled 4.7 million TEUs in the first seven months of 2025, a 4% increase compared to last year. However, industry analysts warn that growth in volumes masks the inefficiencies exporters endure. Shipping lines are increasingly prioritizing Indian ports such as Mundra, Cochin, and Vizhinjam, where infrastructure is modernized and delays are minimal.
Exporters argue that under the present National People’s Power (NPP) government, there has been little policy direction to tackle structural weaknesses at Colombo.
Neither customs bottlenecks nor terminal coordination have seen meaningful reforms, while crucial projects including the East Container Terminal (ECT) and West Container Terminal (WCT) remain behind schedule.
Without urgent investment in ITT facilities and a long-term strategy to improve competitiveness, exporters warn Sri Lanka risks losing its transshipment advantage to regional rivals.
Industry sources emphasize that exporters cannot afford repeated disruptions, especially at a time when Sri Lanka is banking on external trade to stabilize foreign reserves. Delays not only undermine export reliability but also discourage international buyers from sourcing through Sri Lanka, weakening the country’s broader economic recovery prospects.
Unless the government takes swift action to accelerate port development and streamline customs processes, the Port of Colombo’s reputation as South Asia’s premier transshipment hub could steadily erode leaving exporters to pay the price.
Manufacturing and Services Sectors Sustain Growth in August amid Challenges
Sri Lanka’s business sector displayed resilience in August 2025, with both manufacturing and services recording strong expansion, according to the latest Purchasing Managers’ Index (PMI) released by the Central Bank. While manufacturing maintained momentum despite global supply chain delays, the services sector continued to outpace expectations, fuelled by robust domestic demand and tourism-led recovery.
The PMI for Manufacturing registered 55.2 in August, signaling continued growth, though at a slower pace compared to July. All key sub-indices new orders, production, employment, and stock of purchases remained above the neutral 50 threshold.
The food and beverage segment was the primary driver, reflecting higher seasonal demand and steady domestic consumption. The employment sub-index also stayed positive, highlighting favourable labour market conditions in the sector. However, delays in international shipping led to longer supplier delivery times, underscoring lingering vulnerabilities in global trade flows.
Manufacturers remain cautiously optimistic about year-end targets, with industry associations projecting output growth of 4–5% in 2025, provided raw material imports remain stable. Export-oriented apparel and rubber product manufacturers, however, continue to face weaker demand from Western markets due to global economic slowdowns.
Analysts warn that sustaining competitiveness will depend on easing import restrictions, reducing energy costs, and improving logistics efficiency.
In contrast, the Services PMI surged to 68.9, marking one of the strongest expansions in recent years. Growth was broad-based, led by wholesale and retail trade, financial services, and tourism-related sectors such as accommodation and food and beverages.
August’s record tourist arrivals of nearly 200,000 visitors, mostly from India, China, and Europe, provided a significant boost to hospitality and personal services. Financial services also strengthened, reflecting increased lending and improved investor confidence.
New business generation in services climbed notably in August, while recruitment trends pointed to higher demand for skilled labour across banking, retail, and IT-enabled services. The slight decline in backlogs of work suggests companies are meeting demand more efficiently, aided by digitalization and productivity improvements.
Looking ahead, Sri Lanka’s services sector is expected to remain the primary growth engine for the economy in 2025, with government targets of 2.5 million tourist arrivals by year-end appearing achievable. The IT and business process outsourcing (BPO) industry is also projected to expand by double digits, reinforcing its role as a foreign exchange earner.
While the services sector outpaces manufacturing, economists caution that balanced growth is crucial for long-term stability. Strengthening manufacturing competitiveness through policy reforms and investments in export diversification will be essential to meet Sri Lanka’s overall GDP growth target of 3% in 2025.
Sri Lanka’s graphite sector struggles with output, licensing, and lost potential
Sri Lanka, home to some of the world’s highest-quality vein graphite, is once again at a crossroads in revitalising its graphite industry.
The government’s recent decision to seek investors to develop the Kahatagaha mine under a public-private partnership marks a significant policy shift.
Minister Nalinda Jayatissa confirmed that the state will retain ownership while private partners will be invited to invest in exploration, processing, and value addition.
The move is seen as an attempt to inject capital and modern technology into an industry that has underperformed in recent years.
Kahatagaha Graphite Lanka Limited, the state-owned operator of the 102-acre mine, remains one of Sri Lanka’s oldest industrial assets.
It produces graphite primarily for export markets, but officials admit that outdated exploration technology has hindered accurate reserve assessment and large-scale commercial development.
The government hopes fresh investment will help unlock deeper veins, improve processing, and diversify into high-value graphite products essential for global electric vehicle batteries, renewable energy storage, and electronic components.
Despite the strategic importance of graphite globally, Sri Lanka’s export earnings from the mineral remain modest. According to trade data, graphite exports generated around US$13 million in 2024, a figure largely unchanged from the past three years.
By mid-September 2025, export earnings are estimated at just under US$10 million, raising doubts about whether the country can break past the stagnation seen since 2020.
This is particularly concerning as global demand for battery-grade graphite has surged, with major producers like China and Mozambique capturing larger market shares.
Industry insiders point to several systemic challenges. First, the sector lacks a clear national strategy for value addition. Most exports are in raw or semi-processed form, depriving the country of higher margins available from refined graphite or spherical graphite used in lithium-ion batteries.
Second, the licensing system has been criticised as opaque and prone to malpractice. Several small-scale operators have allegedly exploited loopholes to secure export permits without proper investment in processing facilities, contributing to inefficiencies and underreporting of revenue.
Experts argue that Sri Lanka risks being left behind unless urgent reforms are introduced. A stronger regulatory framework, greater transparency in issuing exploration and export licenses, and incentives for downstream processing could help attract serious investors.
The government’s pledge to protect existing jobs at Kahatagaha is politically important, but analysts stress that modernisation must not be delayed by bureaucratic caution.
Comparisons with past performance underscore the missed opportunities. In the late 1970s, graphite exports brought in more than US$25 million annually, even without today’s advanced industrial demand. Adjusted for inflation, current export earnings reflect a steep decline in global competitiveness.
For Sri Lanka, the choice is clear: either continue exporting raw graphite with limited gains or move decisively toward value addition and industrial partnerships. If the Kahatagaha experiment succeeds, it could set the tone for broader reforms.
But without a crackdown on malpractice and a transparent investment regime, the industry risks repeating decades of stagnation, missing the graphite boom now reshaping global supply chains.
President Dissanayake Calls on World Bank to Highlight Sri Lanka’s Transparent Governance
President Anura Kumara Dissanayake has urged the World Bank to help convey to the international community the transparent and corruption-free nature of Sri Lanka’s present governance framework, noting that such recognition would strengthen the country’s ability to attract new investment.
He made these remarks on Monday (15) during a meeting with a World Bank delegation led by Johannes Zutt, Vice President for the South Asia Region, at the Presidential Secretariat.
Focus on Development and Investment
The discussions explored how the World Bank could assist Sri Lanka in achieving its development objectives. The World Bank team expressed appreciation for Sri Lanka’s ongoing economic programme and recommended increased emphasis on economic growth and job creation.
They identified key sectors including digitalisation, tourism, agriculture, and infrastructure as areas capable of generating short-term gains, while also stressing the importance of development in the Northern and Eastern Provinces.
Approval has already been granted for several programmes submitted by the Government of Sri Lanka for World Bank support, officials confirmed.
Strengthening Economic Stability
President Dissanayake reiterated that the government is committed to stabilising the economy and building a foundation for growth. He noted that while Sri Lanka was once internationally viewed as a corrupt nation, the current administration’s transparent policies were enabling steady progress not only in the economy but also in political and social stability.
Participants in the Meeting
The World Bank delegation included David Sislen, Division Director for Maldives, Nepal and Sri Lanka, and Gevorg Sargsyan, Country Manager for Sri Lanka and Maldives.
Representing the Government of Sri Lanka were Labour Minister and Deputy Economic Development Minister Dr. Anil Jayantha Fernando, Senior Additional Secretary to the President Russell Aponso, and several other officials.
Chinese Ambassador Meets Former President Sirisena Amid Political Discussions
Chinese Ambassador to Sri Lanka, Qi Zhenhong, met with former President Maithripala Sirisena at his official residence on Hector Kobbekaduwa Mawatha, Colombo, for discussions reportedly centered on the current political situation in the country.
The meeting comes after the Ambassador also held separate discussions with former Presidents Mahinda Rajapaksa and Ranil Wickremesinghe in recent days.
Meanwhile, under the provisions of the Presidents’ Entitlements (Repeal) Bill, official residences allocated to former heads of state must be returned to the government. In this regard, Sirisena has stated that he will hand over his official residence once the relevant documentation is finalized.