By: Staff Writer

September 07, Colombo (LNW): Japan’s ongoing support for Sri Lanka’s health sector reached another milestone this week, with the Japan International Cooperation Agency (JICA) reinforcing its decades-long partnership to strengthen public healthcare and environmental safety.

As part of its broader assistance program, JICA officially handed over a modern incinerator to the Trincomalee District General Hospital, a step aimed at addressing the country’s mounting medical waste challenges while safeguarding communities and healthcare workers.

The official handover ceremony was attended by a high-level delegation, including Health and Mass Media Minister Dr. Nalinda Jayatissa, Eastern Province Governor Prof. Jayanthalal Ratnasekera, Deputy Minister of Foreign Affairs and Foreign Employment Arun Hemachandra, and Trincomalee District MP Roshan Akmeemana. The Japanese delegation was led by Ambassador of Japan to Sri Lanka Akio Isomata and JICA Sri Lanka’s Chief Representative Kenji Kuronuma.

The incinerator was supplied under JICA’s Grant Aid Project for the Improvement of Infectious Waste Management, valued at JPY 503 million. This initiative was conceived in response to the spike in infectious waste during the COVID-19 pandemic, which exposed both frontline health workers and the wider public to heightened risks, while also creating environmental hazards.

Under this project, 15 modern incinerators are being distributed to public hospitals across nine provinces, providing Sri Lanka with a more resilient healthcare waste management system. The newly installed equipment features advanced temperature controls and emission treatment systems, ensuring that waste disposal is both safe and environmentally sound.

Speaking at the event, JICA’s Chief Representative Kuronuma stressed that the project represents more than just infrastructure investment. “The installation of medical infectious waste treatment facilities at 15 hospitals, including Trincomalee General Hospital, marks a new chapter in Japan’s cooperation in the healthcare sector,” he noted, adding that the initiative symbolizes the “enduring friendship” between the two nations.

The project also aligns with the Sri Lankan government’s “Clean Sri Lanka” initiative, which promotes sustainable waste management practices nationwide. Beyond providing equipment, JICA has rolled out a comprehensive training program for hospital staff and health officials, ensuring that the new technology is properly operated and maintained to deliver long-term benefits.

For over four decades, JICA has been a central partner in Sri Lanka’s healthcare journey, supporting projects that range from hospital development to infectious disease control. By addressing the pressing issue of medical waste, JICA not only contributes to safer healthcare delivery but also strengthens environmental safeguards.

Reaffirming its commitment, JICA pledged to continue assisting Sri Lanka in achieving higher standards of healthcare and environmental safety, underscoring its vision of building sound, healthy livelihoods for all Sri Lankans.

By: Staff Writer

September 07, Colombo (LNW): Sri Lanka’s fragile foreign reserve recovery is under fresh pressure as private credit expansion accelerates, threatening the Central Bank’s ability to meet the USD 7 billion IMF year-end reserve target. Despite gross reserves edging up to USD 6.166 billion in August 2025, analysts warn that reserve collection could stall or even reverse unless deflationary monetary policy is re-applied to neutralize liquidity injections that accompany rising credit.

Reserves: Modest Gains, Lingering Vulnerabilities

Gross official reserves climbed USD 19 million in August, maintaining coverage above USD 6 billion.

However, this is still USD 306 million below October 2024 levels, when the Central Bank began operating an “abundant reserve regime” that injected liquidity to stabilize rates. Net reserves tell a more worrying story: in June 2025, they dropped from USD 1.541 billion to USD 1.414 billion, the sharpest fall since stabilization began in 2023. The decline coincided with faster private credit growth, raising concerns that reserve accumulation is being undermined by domestic lending booms.

Credit Expansion: Fuel for Growth, Risk for Stability

Private credit has expanded steadily in 2025 as interest rates were trimmed, giving businesses and households easier access to loans. While credit growth supports short-term economic activity, it injects liquidity into the banking system, weakening the Central Bank’s ability to purchase dollars and sterilize rupee flows. Without offsetting deflationary operations such as selling down government securities rising credit could push the exchange rate down and limit reserve build-up.

In the first half of 2025, the Central Bank also transferred USD 770 million to the government through unsterilized transactions. While necessary for fiscal financing, such outflows further constrained the space for genuine reserve accumulation.

IMF Target: A Narrow Window to Deliver

The IMF has set a USD 7.0 billion gross reserve target by December 2025, higher than the original USD 5.6 billion benchmark. With only USD 834 million still to accumulate, the target is technically achievable but only if credit expansion is restrained and fiscal authorities step in to purchase dollars directly. Treasury-led dollar buying, funded by market borrowings or tax revenues, would provide neutral reserve inflows without inflationary side-effects.

Tourism inflows (USD 401 million in January alone) and steady worker remittances continue to offer support, while IMF disbursements have provided a crucial cushion. Yet, analysts stress that these inflows are insufficient if domestic liquidity remains unchecked. Rate cuts, implemented through “signalling” rather than tight operations, risk undoing earlier stabilization gains.

Outlook: Tightrope between Growth and Reserve Security

Sri Lanka’s economy is forecast to grow 4.5% in 2025, with inflation stabilizing near 5% by mid-2026. Growth momentum has eased social tensions, but the danger lies in repeating past cycles: stimulating credit at the expense of external stability. Unless the Central Bank re-applies deflationary tools and coordinates closely with the Treasury on dollar purchases, the USD 7 billion reserve goal could slip beyond reach.

By: Staff Writer

September 07, Colombo (LNW): In its first move to broaden foreign relations since the United States imposed a 20 percent tariff hike on Sri Lankan exports, the new government has approved the establishment of formal diplomatic relations with Antigua and Barbuda, a small but strategically positioned Caribbean nation.

Cabinet approval for the initiative, announced by Foreign Minister Nalinda Jayatissa, marks Colombo’s 14th formal diplomatic engagement in the Latin American and Caribbean region. The decision reflects a wider strategy to diversify Sri Lanka’s global partnerships, particularly as the island nation navigates shifting trade dynamics and external economic pressures.

Antigua and Barbuda, despite its modest size, holds significant clout within multilateral forums. As a member of the Commonwealth, the United Nations, the Organisation of American States, and the Alliance of Small Island States (AOSIS), the country offers Colombo an avenue to build solidarity with other small island economies facing similar vulnerabilities from climate change and global economic shifts.

Analysts note that strengthening ties with Antigua and Barbuda could also boost Sri Lanka’s presence in the Caribbean trade bloc CARICOM, opening the door for new commercial, tourism, and investment opportunities. “While trade volumes between the two countries remain negligible today, diplomatic recognition is the first step toward expanding networks in the Caribbean and Latin America,” one senior trade expert observed.

Tourism is expected to be an area of early collaboration. Both nations rely heavily on international tourism revenues and are keen to explore knowledge exchange in hospitality management, sustainable island tourism, and direct marketing in non-traditional markets. Aviation linkages, although presently indirect, could also be developed through codeshare agreements, creating new travel routes for Sri Lankan travelers heading westward and Caribbean visitors looking east.

Beyond economics, diplomatic ties are likely to enhance cooperation in climate diplomacy. With Antigua and Barbuda frequently voicing concerns over rising sea levels and natural disasters in global forums, Colombo stands to gain an ally in pushing for international climate finance and technology transfer to safeguard vulnerable island states.

The timing of the initiative is notable. Following Washington’s tariff hike, Sri Lanka has been under pressure to reduce dependence on traditional Western markets. Establishing ties with Antigua and Barbuda signals Colombo’s intent to hedge risks by engaging with emerging and geographically diverse partners.

As Sri Lanka charts its post-tariff course, the move underscores a pragmatic shift: cultivating allies wherever mutual benefit can be found, regardless of size. If effectively pursued, ties with Antigua and Barbuda could serve as a gateway for Sri Lanka into the wider Caribbean—opening fresh diplomatic, trade, and tourism prospects while strengthening the island nation’s global bargaining power.