By: Staff Writer

December 23, Colombo (LNW): The appointment of M.G. Hemachandra as Chairman of the Urban Development Authority (UDA) comes at a decisive moment for Sri Lanka’s urban planning sector, long burdened by allegations of corruption, tender manipulation, institutional inertia and costly project failures.

As the country grapples with cyclone- and flood-related devastation of an unprecedented scale, expectations are mounting that the UDA, often branded a symbol of bureaucratic excess must undergo structural transformation rather than cosmetic change.

Hemachandra arrives with a professional background that sharply contrasts with the Authority’s troubled reputation.

A former Senior Specialist and Chief of Loan Projects at the Japan International Cooperation Agency (JICA), he brings decades of experience in development policy formulation, infrastructure financing, procurement governance, project evaluation and contract administration. These are precisely the areas where the UDA has drawn sustained criticism, particularly over opaque tender processes and poorly coordinated urban interventions.

The immediate challenge before the new Chairman is not merely institutional cleanup but strategic repositioning. With urban flooding, drainage failures and climate-induced displacement now recurring realities, the UDA’s role must shift from ad-hoc construction to resilient, data-driven urban planning.

Observers argue that Hemachandra’s exposure to international development standards positions him to recalibrate the Authority’s priorities toward disaster-responsive urban design, transparent procurement systems and measurable outcomes.

His earlier service at the National Water Supply and Drainage Board and the Central Engineering Consultancy Bureau further strengthens his understanding of infrastructure interdependencies, an essential requirement as flood mitigation, housing, transport and drainage can no longer be treated as isolated mandates.

Equally significant is his long-standing involvement with the Institution of Engineers Sri Lanka (IESL), where he currently serves as Vice President and previously chaired the IESL Policy Forum, advocating evidence-based policymaking.

During the COVID-19 crisis, Hemachandra demonstrated a hands-on approach by developing a digital support platform for Mahaweli farmers, signalling his willingness to combine technology with public service delivery. Analysts believe this experience could translate into improved project monitoring and public accountability mechanisms within the UDA.

However, expectations alone will not reform an institution. Critics’ stress that Hemachandra’s success will depend on whether he can assert independence, overhaul procurement practices, strengthen professional oversight and insulate planning decisions from political interference. In a period when climate disasters are exposing the cost of urban mismanagement, the UDA’s credibility and Hemachandra’s leadership will be judged by results, not résumés

By: Staff Writer

December 23, Colombo (LNW): The Government’s portrayal of the IMF’s Rapid Financing Instrument (RFI) as a low-interest, stabilising solution following Cyclone Ditwah deserves careful scrutiny. While Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando has highlighted favourable borrowing terms and swift disbursement, the broader economic trade-offs associated with the facility remain underplayed.

The IMF approved SDR 150.5 million (around US$206 million) to help Sri Lanka cope with the cyclone’s aftermath, citing urgent humanitarian and reconstruction needs. There is little dispute that immediate liquidity support is necessary. However, framing the RFI as an almost cost-free intervention risks blurring the line between emergency assistance and additional debt accumulation.

Dr. Fernando has pointed to the current SDR-linked interest rate of approximately 3.27% as evidence of affordability. Yet, IMF lending costs evolve over time. SDR rates are influenced by global monetary conditions, meaning Sri Lanka remains exposed to external interest rate movements beyond its control. Furthermore, IMF surcharges triggered by access levels and duration can significantly raise effective borrowing costs in later years.

Equally important is the question of impact. The RFI is designed to plug short-term balance-of-payments gaps, not to finance long-term reconstruction or growth-enhancing investment. As such, its capacity to “protect recovery momentum,” as claimed by the Deputy Minister, may be limited unless accompanied by decisive domestic reforms, targeted public investment, and disaster-risk financing strategies.

The Government has also announced temporary banking relief measures, including repayment moratoriums and concessional loans. While welcome, these interventions primarily defer financial stress rather than resolve it. Businesses facing destroyed assets, disrupted supply chains, and weakened demand may struggle once moratoriums expire, particularly if interest costs accumulate in the background.

A further concern is the signalling effect. Repeated reliance on emergency IMF facilities may reinforce investor perceptions of vulnerability rather than stability, especially if shocks whether climatic or fiscal continue to push the economy back into crisis mode. Confidence is built not only through access to funding, but through credible medium-term planning and institutional preparedness.

None of this diminishes the immediate value of IMF support in a humanitarian emergency. However, a balanced narrative must acknowledge that emergency financing is a stopgap, not a solution. The real test lies in how Sri Lanka uses the limited fiscal space created by the RFI to build resilience, reform public finance, and reduce exposure to future shocks.

Absent such a strategy, low-interest emergency loans risk becoming another layer in an already complex debt landscape, postponing rather than preventing the next crisis.

By: Staff Writer

December 23, Colombo (LNW): While immediate relief efforts following Cyclone Ditwah have stabilised conditions across most plantation areas, industry stakeholders warn that short-term responses alone will not secure the future of Sri Lanka’s plantation sector. The Planters’ Association of Ceylon (PA) says the disaster has once again exposed deep structural vulnerabilities that require urgent and coordinated intervention.

Plantation communities face a dual challenge: recovering from climate-induced shocks while navigating long-standing economic pressures. RPCs have ensured access to food, temporary shelter, and medical care for affected workers, with special attention given to children, the elderly, and those with existing health conditions. Yet, as damage assessments continue, the broader needs of the sector are coming into sharper focus.

One critical concern is estate housing and infrastructure. Many line rooms and access roads, already in poor condition, have suffered further deterioration. Without targeted public investment and concessional financing, RPCs may struggle to undertake large-scale rehabilitation while maintaining wage payments and essential welfare services.

Equally pressing is the impact on cultivations. Flooding, soil erosion, and prolonged water saturation threaten tea and rubber yields over the coming months. Replanting and land restoration are capital-intensive processes, and delays could weaken productivity in an industry that already lags behind regional competitors in yield per hectare.

Labour remains another structural challenge. Estate employment has steadily declined due to migration, ageing workforces, and rising living costs. Extreme weather events further discourage retention, making improved living conditions, healthcare access, and education facilities central to long-term workforce stability.

From a policy perspective, industry observers argue that disaster recovery must be integrated into a broader plantation reform strategy. This includes climate-resilient infrastructure, land-use planning to reduce exposure to landslides, and incentives for mechanisation and diversification. Greater coordination between RPCs, provincial authorities, and national agencies is seen as essential to avoid fragmented responses.

Export competitiveness is also at stake. Sri Lanka’s tea sector continues to rely heavily on premium branding, but quality and consistency depend on uninterrupted cultivation cycles. Recurrent disruptions risk eroding buyer confidence at a time when global demand is increasingly price-sensitive.

The PA has called for collaborative solutions involving Government agencies, development partners, and financial institutions to support both immediate rehabilitation and long-term adaptation. As climate volatility becomes the norm rather than the exception, the sector’s survival will depend not only on resilience in crisis but on reform in recovery.

Cyclone Ditwah, the PA notes, should serve as a catalyst prompting decisive action to secure livelihoods, protect exports, and future-proof one of Sri Lanka’s most historically significant industries.

By: Staff Writer

December 23, Colombo (LNW): Sri Lanka’s tea export earnings reached an estimated $1.4 billion during the first 11 months to November 2025, reflecting a resilient performance despite softer global pricing trends, according to Sri Lanka Customs data analysed by Forbes & Walker Research. The earnings marked a 13% increase year-on-year, up from approximately $1.3 billion in the corresponding period of 2024.

The growth was largely driven by a notable expansion in export volumes, which offset a marginal decline in average Free On Board (FOB) values when measured in rupee terms. Cumulative tea exports during the January–November period climbed to 239.57 million kilograms, an increase of 16.35 million kilograms compared to the same period last year.

November 2025, however, recorded a modest slowdown in monthly shipments. Total exports for the month stood at 19.36 million kilograms, down from 20.07 million kilograms a year earlier. Traditional categories such as Bulk Tea, Tea Packets, and Tea Bags posted year-on-year declines, while Instant Tea and Green Tea showed encouraging growth, reflecting gradual diversification in product demand.

FOB prices displayed mixed trends. In rupee terms, the average FOB value for November increased to Rs. 1,768.82 per kilogram, up nearly Rs. 50 from a year earlier. In dollar terms, however, the average declined slightly to $5.77 per kilogram, down $0.12 year-on-year, largely due to exchange rate movements rather than underlying market weakness.

Over the full 11-month period, the average FOB value eased to Rs. 1,755.45 per kilogram, down Rs. 14.48 from last year, while the dollar-denominated average edged marginally higher to $5.85 per kilogram. Despite pricing pressures, the volume-led expansion ensured that export revenues remained firmly on a growth trajectory.

Market diversification continued to play a key role. Iraq retained its position as Sri Lanka’s largest tea buyer, importing 36.77 million kilograms, a 21% increase from last year. Russia ranked second with 19.94 million kilograms, although volumes declined by 13%, while Türkiye followed closely with a strong 21% growth.

Emerging markets also delivered strong momentum. Libya more than doubled its imports to 18.30 million kilograms, while the UAE, Chile, Iran, China, Azerbaijan, and Saudi Arabia remained among the leading destinations.

Industry analysts note that sustaining earnings growth amid volatile prices underscores the sector’s adaptability, though long-term competitiveness will depend on productivity gains, value addition, and stable access to key export markets.

By: Staff Writer

December 23, Colombo (LNW): Sri Lanka’s Micro, Small and Medium Enterprise (MSME) sector has raised concerns over what it describes as excessive lending rates charged by licenced commercial and specialised banks, arguing that reductions in policy interest rates were not passed on proportionately to borrowers.

In a detailed submission to financial authorities, the Ceylon Federation of MSMEs said the interest-rate transmission mechanism had remained distorted well after the peak of the 2022 economic crisis, placing a sustained cost burden on businesses already weakened by the downturn.

The Federation pointed to the sharp tightening of monetary policy in 2022, when the Central Bank of Sri Lanka (CBSL) raised its Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) to historic highs as part of crisis stabilisation measures. While acknowledging the necessity of those actions at the time, it said subsequent policy easing had not been reflected adequately in retail lending rates

Even when the Average Weighted Prime Lending Rate (AWPLR) had peaked at 29.67% in September 2022, the policy rate was 15.50%. While policy rates have since decreased, market rates continue to trail much higher. According to the submission, by 5 December, the Overnight Policy Rate (OPR) stood at 7.75%, while the AWPLR remained significantly higher at 8.74%, indicating a persistent gap between policy intent and market outcomes.

The Federation argued that this divergence disproportionately affected MSMEs, which rely heavily on bank credit and have limited pricing power to absorb higher financing costs. It said elevated borrowing rates constrained recovery, investment, and employment at a time when economic normalisation was expected to support growth

To underline its case, the submission included profit-after-tax figures of several licenced commercial banks for the 2022-2024 period, showing a marked improvement in earnings during the same years when MSMEs faced elevated interest expenses.

The Federation called on regulators to make fuller use of existing legal and supervisory powers to ensure fair transmission of monetary policy and prevent what it described as unjustified widening of lending spreads. It warned that failure to address the issue could undermine broader economic recovery and weaken confidence among small and medium-scale entrepreneurs. It called on the CBSL to ensure that the banking system paid back the excess interest charged on MSME borrowers.