By: Staff Writer

February 02, Colombo (LNW): Sri Lanka’s ongoing shortage of raw cashew nuts has evolved into a wider socio-economic crisis, threatening thousands of jobs across the island and placing immense pressure on an already fragile industry. While consumers face rising prices, workers in processing and shelling communities are confronting the loss of their primary source of income.

Cashew producers and importers attribute the shortage largely to delayed and restricted import licensing. Licenses issued during recent months were valid only until December 31, leaving importers unable to complete shipments due to logistical disruptions, natural disasters, and administrative delays. Requests to extend these licenses by two or three months until February or March remain unresolved.

Sri Lanka’s domestic cashew production is insufficient to meet year-round demand, making imports essential. In past years, imported raw cashews were shelled locally, providing employment to thousands of workers, particularly women, in regions such as Gampaha, Kurunegala, Kuliyapitiya, Chilaw, and Eravur. Today, many of these factories stand idle.

Workers say they have been pushed into severe financial hardship. Many invested in cashew-processing machinery through bank loans, only to see those machines lie unused due to lack of raw materials. With no alternative income sources, families are struggling to meet daily expenses, repay loans, and support their children’s education.

Traders warn that the situation could worsen as demand rises sharply during festive seasons and peak tourist periods. Cashews are widely favored by both local consumers and foreign visitors, and shortages are expected to intensify by April if imports do not resume soon. Industry representative’s stress that even limited imports before the festive season could help stabilize prices and revive processing activities.

It has also emerged that some small-scale traders who obtained licenses were unable to import adequate quantities, further deepening the supply gap. While the ministry’s decision to allow last-minute imports offered temporary relief, stakeholders say it was insufficient to address structural issues.

Appeals have been made to the President, relevant ministers, and regulatory authorities to take immediate action. Workers fear that losing an occupation sustained over decades would leave them without viable alternatives.

Without timely policy intervention, the cashew shortage threatens not only market stability but also the livelihoods of thousands who depend on one of Sri Lanka’s most labor-intensive agro-industries.

By: Staff Writer

February 02, Colombo (LNW): Sri Lanka must move beyond cautious, piecemeal policy changes and embrace sweeping economic reforms if it hopes to turn its fragile post-crisis recovery into sustained, investment-driven growth, ODI Senior Fellow Dr. Ganeshan Wignaraja said this week.

Delivering the keynote address at the Asia Securities Investor Conference 2026, Dr. Wignaraja cautioned that while the country has stabilised since its 2022 sovereign default, the recovery remains vulnerable to both domestic and external shocks.

He argued that Sri Lanka’s traditional approach of gradual reform has repeatedly failed to deliver lasting results. “Incremental change has been our default setting, but it often means moving backwards before making limited progress,” he said, calling instead for a “big bang” reform agenda that tackles structural weaknesses head-on.

Placing Sri Lanka’s experience in a broader global context, Dr. Wignaraja noted that debt crises in developing economies often leave long-lasting economic scars. He warned that climate-related disasters could deepen those impacts, making recovery more difficult and prolonging social and economic hardship.

Reflecting on the recent stabilisation phase, he credited the IMF-supported programme launched in March 2023, emergency financing from development partners, and firm monetary policy actions by the Central Bank for preventing a deeper financial collapse. According to him, investors are less concerned about how crises originate and more focused on how governments respond under pressure.

Dr. Wignaraja also highlighted the lessons from Cyclone Ditwah, which caused widespread destruction across the island. Unlike past natural disasters that were geographically limited, the cyclone affected large parts of the country, with damages estimated at around $4.1 billion, or nearly 4% of gross domestic product.

The disaster, he said, once again exposed gaps in disaster preparedness, coordination, and response capacity. He stressed that recovery efforts must be closely linked with reform, rather than treated as short-term relief exercises.

Drawing on joint research by ODI and the Centre for Poverty Analysis, Dr. Wignaraja outlined key priorities for post-disaster recovery. These include developing a credible reconstruction plan, improving domestic revenue mobilisation to complement foreign assistance, and engaging with the IMF to allow some fiscal flexibility to address rising poverty levels.

Beyond recovery, he argued that Sri Lanka urgently needs to dismantle bureaucratic obstacles, reduce high energy costs, raise labour productivity, and integrate more effectively into global supply chains. Long-standing issues such as excessive regulation, skills shortages, and high input costs continue to deter both domestic and foreign investors.

Without decisive reforms, Dr. Wignaraja warned, Sri Lanka risks slipping back into familiar cycles of debt distress. The durability of the current recovery, he concluded, depends on political resolve and a broad-based consensus that signals long-term policy stability to investors and markets.

By: Staff Writer

February 02, Colombo (LNW): The Sri Lanka–United Kingdom Chamber of Commerce in London (SLUKCC), in collaboration with the Sri Lanka High Commission in the United Kingdom, hosted a high-level panel discussion aimed at strengthening bilateral trade relations between the two countries. Titled “Building Stronger Trade Bridges between Sri Lanka and the United Kingdom,” the event was held at the Sri Lanka High Commission in London on 27 January 2026 and attracted more than 40 representatives from business, government and industry.

Opening the forum, SLUKCC President Eranga Pathirage highlighted the Chamber’s growing role in facilitating commercial engagement between Sri Lanka and the UK. He noted that SLUKCC continues to serve as a vital platform linking enterprises, institutions and communities, working closely with the High Commission and UK stakeholders to convert commercial interest into concrete trade, investment and service-sector partnerships.

Sri Lanka’s High Commissioner to the UK, Nimal Senadheera, emphasised the UK’s importance as Sri Lanka’s second-largest export destination and a long-standing economic partner. He reaffirmed Sri Lanka’s commitment to expanding economic cooperation with the UK, describing the relationship as one that extends beyond trade to long-term investment and innovation collaboration.

The High Commissioner encouraged Sri Lankan exporters, particularly small and medium-sized enterprises, to take full advantage of the UK’s Developing Countries Trading Scheme (DCTS). He pointed out that the scheme offers enhanced market access and noted the recent relaxation of Rules of Origin requirements for apparel exports, effective from January 2026, which is expected to significantly benefit Sri Lankan manufacturers.

Delivering the keynote address, the UK’s Trade Envoy to Sri Lanka, Lord John Hannett OBE of Everton, outlined emerging opportunities across trade, investment and modern value chains. He stressed the importance of close coordination between the public and private sectors to unlock sustainable, long-term commercial partnerships. Lord Hannett also urged businesses to leverage institutional platforms such as SLUKCC to explore new areas of cooperation and maximise the benefits of existing trade frameworks.

The discussion was moderated by SLUKCC Director Simon Culhane and featured a distinguished panel including Ambassador Senadheera, Lord Hannett, Board of Investment Chairman Arjuna Herath, Global Sourcing Association CEO Kerry Hallard, and Marks and Spencer UK PLC Head of Finance Suraj Wijendra.

Concluding the event, participants engaged in a lively question-and-answer and networking session. Key themes included Sri Lanka’s strategic position as a regional gateway to Asia, opportunities in tourism, IT and business process outsourcing, skilled labour availability, and prospects linked to the Colombo Port City project. The forum underscored renewed momentum to strengthen Sri Lanka–UK economic ties and expand collaboration across global value chains.

By: Staff Writer

February 02, Colombo (LNW): Sri Lanka’s failure to appoint a permanent Auditor General since April 2025 has triggered a cascading institutional crisis that now threatens the credibility of public financial oversight, parliamentary accountability, and foreign-funded governance reforms. Nearly a year after the retirement of Auditor General Chulantha Wickramaratne on April 8, 2025, the country’s supreme audit institution remains leaderless, operating under a fragile acting arrangement that has steadily eroded its authority.

Despite repeated assurances from the Government, the appointment process has been mired in political deadlock. Health and Mass Media Minister and Cabinet spokesperson Dr. Nalinda Jayatissa recently told the Sunday Observer that the long-vacant post would be filled “within three days,” following deliberations by the newly constituted Constitutional Council. Yet, this promise follows months of deferrals. The Council’s first sitting on January 29, 2026, which included newly appointed civil society representatives, failed to reach a decision, with sources confirming that the matter was postponed to its next meeting.

At the heart of the impasse is a prolonged standoff between the Executive President and the Constitutional Council. At least four presidential nominees have reportedly been rejected for failing to secure the constitutionally required five-member majority. More controversially, the Council has not moved to appoint the most senior officer currently serving as Acting Auditor General, deepening perceptions of arbitrariness and institutional drift.

The consequences have been severe. The National Audit Office (NAO), stripped of a permanent head for over nine months, has seen routine audit operations grind to a near halt. Supervision, coordination with line ministries, and engagement with parliamentary oversight mechanisms have been critically disrupted. Without a fully empowered Auditor General, audit reports have stalled, creating a ripple effect across governance structures.

Parliamentary oversight bodies, including the Committee on Public Accounts (COPA) and the Committee on Public Enterprises (COPE), have been rendered virtually inactive. These committees depend on timely audit reports to scrutinize public expenditure and state-owned enterprises. Their suspension has effectively removed a key layer of democratic accountability at a time when fiscal discipline is essential.

Perhaps most alarming is the impact on foreign-funded governance reforms. The delay has directly affected oversight of World Bank and European Union–supported initiatives, particularly the Public Financial Management Strengthening Project (PFMSP), funded through a EUR 9.8 million grant (approximately US$11.74 million). The project is designed to modernize Sri Lanka’s public financial management systems, enhance transparency, and strengthen audit capacity within the NAO itself.

Any suspension or derailment of the PFMSP carries grave implications. The project underpins reforms in budget execution, procurement modernization, internal controls, and digital financial management systems. Without these reforms, procurement remains vulnerable to inefficiency and corruption, fiscal reporting weakens, and institutional transparency deteriorates. The project also supports capacity building for public officials training that is now at risk of being abandoned.

With a strict completion deadline at the end of 2026, delays could render the project unsustainable, wasting already committed funds and undermining donor confidence. More broadly, Sri Lanka risks jeopardizing its credibility with international partners at a time when the country is navigating an IMF-supported economic recovery.

Legal and civil society organizations have raised red flags. The Bar Association of Sri Lanka and Transparency International Sri Lanka warn that the prolonged vacuum undermines the constitutional independence of the supreme audit institution, creating a dangerous concentration of financial control. Reports that certain approval functions have been temporarily transferred to the Finance Ministry only deepen concerns over blurred institutional boundaries.

As of early 2026, the crisis remains unresolved. What began as a delayed appointment has evolved into a systemic governance failureone that continues to weaken public trust, stall reform, and expose Sri Lanka’s financial system to unacceptable risk.