Sri Lanka’s state-owned enterprises (SOEs), long burdened by inefficiency and financial mismanagement, have racked up a staggering cumulative loss exceeding Rs. 8 trillion over the past 30 years—an amount nearly equivalent to the country’s pre-2022 sovereign external debt. This stark figure underscores the urgency of structural reforms under the government’s IMF-supported economic recovery program.

According to senior Finance Ministry officials, the government currently spends nearly Rs. 300 billion annually to keep these underperforming institutions afloat. This fiscal drain has diverted public funds away from critical sectors such as healthcare, education, and infrastructure.

Despite years of losses, the tide may be turning. Thanks to macroeconomic stabilization and corrective measures initiated in 2023 and 2024, the SOE sector has begun to show signs of recovery. Reforms include cost-reflective pricing for electricity and fuel, the introduction of a water tariff formula, and significant balance sheet restructuring for key entities.

“These reforms were not based on a fixed model but are being adapted case by case,” said Deputy Minister of Economic Development Anil Jayantha Fernando. Key restructuring actions included transferring legacy debts to the government’s balance sheet, settling cross-liabilities, and enhancing institutional management.

Results are beginning to show. In 2024, the combined profits of the 52 strategically important SOEs rose by 19.9% to Rs. 534.1 billion from Rs. 445.3 billion in 2023. Among 41 non-financial SOEs, 24 returned profits, though the number of loss-making entities rose to 17, up from 13 the previous year. Data reveals that nearly Rs. 2.9 trillion was lost by 450 SOEs between 2012 and 2022, with 55 key enterprises accounting for Rs. 1.2 trillion in losses from 2006 to 2020.

Persistent losses have largely been driven by mismanagement, political interference, and lack of financial discipline. In response, the Cabinet has approved the drafting of the Public Commercial Business Management Bill, spearheaded by President and Finance Minister Anura Kumara Dissanayake. The proposed legislation seeks to overhaul governance of SOEs by enforcing performance-based management, mandating audited financial disclosures, and enhancing fiscal oversight.

The government also sees potential for divestiture in select SOEs as part of its long-term strategy. However, officials stress the importance of public awareness and support to sustain reform momentum and prevent reversals.

With more than 400 SOEs operating across vital sectors such as energy, water, aviation, and finance—and 52 classified as strategically important—turning them into value-generating institutions is crucial for Sri Lanka’s fiscal health and economic stability.

The Central Bank of Sri Lanka (CBSL) has released its third Market Operations Report (MOR) for 2025, detailing key developments in monetary policy, liquidity trends, interest rates, and foreign exchange management during the first half of the year. 

The report aims to raise public awareness of CBSL’s ongoing efforts to stabilize the economy under the Flexible Inflation Targeting (FIT) framework and a flexible exchange rate regime.

 A key highlight of the report is the persistent surplus liquidity in the domestic money market, a trend that has continued since April 2024.

 As of end-June 2025, the liquidity surplus stood at Rs. 138.1 billion, down from Rs. 168.1 billion at end-2024, with an average surplus of Rs. 154.6 billion for the first six months of the year. 

The surplus was primarily driven by the Central Bank’s aggressive foreign exchange purchases to strengthen the country’s external reserves, resulting in a net injection of Rs. 408.7 billion.

 However, this surplus was partially offset by net foreign loan repayments (Rs. 231.9 billion), currency withdrawals (Rs. 106.4 billion), coupon payments on Treasury bonds (Rs. 95 billion), and bond maturities (Rs. 6.7 billion). 

Due to improved liquidity conditions, the CBSL discontinued its reverse repo auctions from January 2025, opting instead to monitor liquidity and short-term interest rate trends more passively.

 On the monetary policy front, CBSL continued its accommodative stance, reducing the Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) in May 2025 by 25 basis points. 

The new rates were set at 7.25% and 8.25%, respectively, forming a symmetric corridor around the reduced policy rate of 7.75%. This easing facilitated lower short-term market interest rates, with the Average Weighted Call Money Rate (AWCMR) aligning closely with the policy rate by the end of June.

 Meanwhile, under the flexible exchange rate regime, the Sri Lankan rupee depreciated marginally by 2.46% against the US dollar over the first half of the year. CBSL intervened selectively in the domestic foreign exchange market to absorb volatility and accumulate reserves without distorting market functions.

 In total, the Bank absorbed USD 1,077.4 million and injected USD 63.3 million, resulting in a net absorption of USD 1,014.1 million. Consequently, gross official reserves rose to USD 6,081.4 million by end-June.

 To improve transparency and price discovery in the foreign exchange market, the Central Bank, in collaboration with Bloomberg, launched the “BMatch” platform. This real-time matching tool allows anonymous spot trading and enables CBSL to monitor market dynamics more efficiently.

 Overall, the first half of 2025 saw a steady consolidation of monetary and foreign exchange conditions, with CBSL leveraging a surplus liquidity environment to scale down operations while focusing on stability and reserve accumulation.

Showers or thundershowers will occur at several places in Northern, North-Central, Uva, Eastern, Central and Sabaragamuwa provinces and in Kurunegala and Hambantota districts after 1.00 p.m. Fairly heavy falls above 75 mm are likely at some places in these areas.

Several spells of showers will occur in Western province and in Galle, Matara and Puttalam districts.

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

The Colombo District Court has issued an injunction against the publication and distribution of the book “Kapati Upasakaya” (The Deceitful Devotee), which makes serious allegations against Mr. Pradeep Nilanga Dela, the incumbent Diyawadana Nilame (Chief Custodian) of the Sacred Temple of the Tooth Relic in Kandy.

The book, authored by Dr. K. A. Dharanitha, a senior lecturer at the University of Kelaniya, has been challenged in court by Mr. Dela, who claims the contents are completely false and defamatory. He filed a lawsuit requesting the court to prevent the book from being printed, distributed, or published until the case is concluded.

Presiding over the case, Colombo District Judge Sadun Withana, on July 17, issued an interim injunction and restraining order, granting the request based on the merits of the complaint submitted by Mr. Dela.

According to Mr. Dela’s petition, “Kapati Upasakaya” accuses him of corruption, misappropriation of temple funds, antiquities theft, and other criminal activities, all of which he vehemently denies. He emphasized that all accusations made in the book are untrue and that previous legal proceedings on similar claims have already resulted in his exoneration.

The book allegedly mentions:

• Illegal sale of lands belonging to the Temple of the Tooth
• Disappearance of a golden Buddha statue
• Misplacement of 38 kg of gold from the Sabaragamuwa Saman Devalaya
• Abduction of baby elephants from the Pinnawala Elephant Orphanage
• Creation of a Mini Cooper’s buffer and handles using stolen gold

Dela asserts that none of these allegations hold legal ground and confirms that no laws were broken concerning temple property, which, under the Temple and Devalagam Ordinance, cannot be sold or transferred.

He further stated that the publication appears to be politically motivated, as he is preparing to recontest the upcoming election for the position of Diyawadana Nilame, scheduled for September. He believes the defamatory narrative is an attempt to tarnish his reputation and undermine his candidacy.

Additionally, an injunction has also been obtained against Nishshanka Mayadunne, also known as Nishshanka of Galkanda Puravantalaya, for conducting media discussions based on the book’s allegedly false contents. That case too remains under court examination.

Dela emphasized that the false and malicious claims published in Kapati Upasakaya have caused significant damage to his personal integrity, honor, and dignity. The court’s injunction stands as a legal safeguard until the matter is fully adjudicated.

The Sri Lankan government has launched a full-scale forensic audit into the controversial importation of electric vehicles by a local agent of Chinese automaker BYD, following allegations of under-invoicing and misrepresentation in Customs declarations.

The probe will scrutinize all relevant documents and import records submitted by the company over several months, even as previously cleared vehicles of the same model continue to raise questions.

A senior Treasury official confirmed that the forensic audit will be carried out by a special team in collaboration with the Department of Customs. The scope of the audit includes not only the latest batch of detained vehicles but also all earlier imports of the same model that were cleared and sold to buyers across the country.

In a parallel move, the government has sought the expertise of the University of Moratuwa’s engineering faculty to carry out a technical investigation to verify whether the disputed vehicles match the declared specifications and classifications provided during the clearance process.

The controversy erupted when a consignment of BYD electric vehicles, imported under the classification of “motor cars,” was held at Colombo Port after Customs suspected a possible misclassification. Preliminary investigations suggested that the vehicles might actually fall under a different classification, potentially attracting higher import duties.

Adding another layer to the saga, Customs and Finance Ministry officials are now examining whether the importer had followed the same practice with previous consignments and whether duties were accurately paid. Dozens of units of the same model have already been cleared and sold in the domestic market.

Analysts say this raises a critical legal and policy question: Can the government apply retrospective tax claims or reclassifications on vehicles that were previously cleared and sold under existing approvals?

Legal experts note that retrospective tax application is a grey area under Sri Lankan customs law and could lead to significant public backlash or legal challenges, especially from buyers who had no role in the import process.

Moreover, the case has cast a spotlight on a common practice in the global automotive trade—where manufacturers, especially from China, tailor vehicle specifications to suit importer demands.

If it is established that the vehicles were specially configured for the Sri Lankan market, it may undermine allegations of deception and instead point to potential policy or procedural loopholes in classification.

However, the government remains cautious. “We are not accusing any manufacturer at this stage. But if specifications were altered to fit a lower tax bracket, that could have serious consequences under anti-avoidance laws,” a senior Customs official said.

The incident has also triggered widespread media and public debate, with critics accusing authorities of failing to exercise due diligence during the earlier clearance of similar vehicles.

Officials stress that any punitive action will be based strictly on evidence from the audit and technical investigation, with recommendations to improve classification processes and strengthen post-clearance audit mechanisms.

Meanwhile, buyers of the cleared vehicles wait anxiously, fearing possible consequences if the government attempts retroactive revaluation or seizure.

Sri Lanka has launched a fresh support mechanism to rescue struggling small and medium enterprises (SMEs), amid mounting pressure from parate executions and loan defaults that threaten to cripple the sector—the backbone of the island’s economy.

In response to increasing financial distress faced by SMEs due to high interest rates, declining demand, and cash flow constraints, the Ministry of Industries and Enterprise Development unveiled a strategic programme to offer grassroots-level assistance to affected businesses.

The new initiative involves the transformation of existing Development Officers (DOs) and Enterprise Development Training Officers (EDTOs) into a dynamic cadre of ‘Relationship Officers’ under the Small Enterprise Development Division (SEDD). These officers will act as field-level business advisors capable of delivering hands-on support to revive and restructure SME operations.

The first phase of the programme, launched on July 29 at the Sri Lanka Foundation Institute, covers 53 officers from the Western Province. These officers will undergo a capacity-building programme designed around experiential learning principles—‘Learn by Doing’. The focus is on equipping them with essential skills, entrepreneurial mindsets, and strategic know-how to support financially distressed SMEs.

The initiative is a joint effort between the Ministry and the Sri Lanka Institute of Marketing (SLIM), which has pledged Rs. 100 million towards the programme. SLIM has already allocated Rs. 40 million for the pilot phase, with its academic faculty providing services on a voluntary basis.

This effort comes at a critical time. According to Central Bank data, over 30% of the SME loan portfolio in Sri Lanka is currently classified as non-performing. Banks, under mounting pressure to clean up balance sheets, have resumed parate executions—legal actions that allow financial institutions to auction mortgaged properties without court proceedings.

 This has caused widespread alarm across the SME sector, especially among small manufacturers, traders, and service providers who were battered by the pandemic and the 2022 economic crisis.

The Central Bank of Sri Lanka (CBSL) has acknowledged the rising SME debt distress and has taken steps to ease the burden.

These include encouraging banks to offer restructuring and rescheduling facilities, as well as pushing for more inclusive credit evaluation models that consider alternative data for loan appraisals.

A credit guarantee scheme and partial risk-sharing facility are also under consideration to incentivize lending to high-risk but viable SME ventures.

However, industry associations argue that these measures must be accompanied by a moratorium on parate executions and more aggressive debt restructuring mechanisms. “The SME sector is not just a loan portfolio; it’s the engine of employment, innovation, and regional development,” a senior official at the National Chamber of Commerce stated.

The government’s deployment of Relationship Officers marks a shift towards proactive and decentralised enterprise development. By bridging the information and advisory gap between policymakers and entrepreneurs on the ground, the move aims to prevent further erosion of the SME base, which accounts for over 75% of all businesses and nearly 45% of employment in Sri Lanka.

With financial institutions tightening credit and legal actions on the rise, the success of this hands-on advisory network could determine the survival and revival of thousands of small businesses in the coming months.

:Sri Lanka’s inland and lagoon fishermen—who make up one of the country’s most vulnerable yet vital livelihoods—are now eligible for a much-needed safety net through a newly introduced insurance scheme by the Agricultural and Agrarian Insurance Board. This initiative aims to offer relief to thousands of fishing families who continue to battle economic hardship, unpredictable weather patterns, and a lack of state support.

According to official data, over 120,000 individuals are engaged in lagoon and inland fishing across Sri Lanka, depending solely on this traditional vocation to feed their families and sustain their lives. Despite their contribution to the local economy and food security, these communities have long operated on the margins, with little to no formal protection or welfare.

The newly announced insurance scheme offers Rs. 1.2 million in compensation in the event of sudden death due to accidents while fishing or during adverse weather events. Fishermen will need to pay a modest annual premium of Rs. 2,000 to benefit from the cover. In addition to fatal accidents, the policy also includes compensation for total or partial disability, and even serious injuries that may occur during or outside of active fishing periods.

This move comes at a time when many fisherfolk are reeling under economic pressure. Rising costs of fishing gear, lack of infrastructure, limited market access, and erratic weather have all made their survival increasingly difficult. Most fishermen operate small, non-motorized boats and often risk their lives navigating shallow inland waters, particularly during the monsoon seasons.

In the past, successive governments have attempted to support the fishing community through kerosene subsidies, concessional loan schemes, and the provision of fishing gear and equipment. However, much of this assistance has been ad hoc and often delayed due to bureaucratic inefficiencies and poor coordination among agencies. The discontinuation of the kerosene oil subsidy—once a crucial lifeline for small-scale fishermen—has further pushed them into financial distress, especially in rural and remote areas.

The new insurance scheme is being hailed as a step in the right direction, offering some level of security to these fishermen and their families. However, experts stress that comprehensive and sustained support—including fuel subsidies, access to modern equipment, and proper market linkages—are still essential if Sri Lanka’s inland fishing sector is to be revived and safeguarded.

While the insurance initiative provides a ray of hope, the broader plight of the inland fishing community underscores the urgent need for a national policy framework that guarantees social protection, livelihood sustainability, and long-term development for this neglected sector.

Digital Mobility Solutions Lanka PLC, the parent company of Sri Lanka’s leading ride-hailing and delivery platform PickMe, has posted stellar financial results for the first quarter of the financial year 2025/26, showcasing strong growth across all key performance indicators.

The company recorded a consolidated revenue of Rs. 1.8 billion for Q1, marking a remarkable 50% increase compared to Rs. 1.2 billion in the same period last year. This surge in earnings was fuelled by a 43% year-on-year increase in platform volume, driven by a record number of monthly active users leveraging PickMe’s diverse mobility and delivery solutions.

Gross Transaction Value (GTV)—which represents the cumulative value of all trips and deliveries conducted via the platform—grew by 36%, climbing to Rs. 16.6 billion from Rs. 12.3 billion a year earlier. This increase in GTV reflects higher user engagement and increased transaction frequency on the platform.

PickMe’s relentless focus on operational efficiency paid off handsomely, as operating profit more than doubled—rising 106% to Rs. 602 million, compared to Rs. 292 million in Q1 of the previous year. This growth was attributed to higher volumes, greater economies of scale, and strategic cost-control measures, particularly within its IT infrastructure.

On a quarter-over-quarter basis, operating profit also saw a healthy 13% growth, indicating sustained momentum built on robust volume expansion and refined cost structures. Net profit soared to Rs. 437 million, a substantial 96% increase over the Rs. 223 million reported in the same period last year. Sequentially, net profit grew 16%, further underlining PickMe’s consistent performance.

In addition to financial performance, the company focused on strengthening its operational capabilities. Strategic investments were made to expand and stabilise the driver base, ensuring platform reliability and service continuity. As a result, both monthly active users and independent third-party drivers hit all-time highs during the quarter, reaffirming PickMe’s strong market presence and scalable growth potential.

Commenting on the results, PickMe Chairman Ajit Gunewardene stated, “Our Q1 results reflect the power of our platform and the soundness of our strategic direction. Strong user engagement and a growing network of independent drivers position us for continued, sustainable growth.”

Founder and CEO Jiffry Zulfer echoed the sentiment, noting, “The 106% jump in operating profit highlights our commitment to disciplined cost management and technological efficiency. Our focus on IT infrastructure optimisation continues to yield significant operational benefits.”

 With a strong start to the financia

The Presidents’ Entitlements (Repeal) Draft Bill, which seeks to revoke special privileges granted to former Presidents and their widows, was officially gazetted on July 31, 2025.

The Draft Bill, ordered to be published by Justice and National Integration Minister Harshana Nanayakkara, proposes to repeal the Presidents’ Entitlements Act, No. 4 of 1986 in its entirety.

According to the gazette notification, the Bill aims to abolish all special benefits previously provided under Sections 2 and 3 of the Act. These include residences, monthly allowances, secretarial support, official transport, and similar facilities afforded to former Presidents and their widows.

Furthermore, the Bill proposes to cease the monthly pension currently paid to the widow of a former President, as outlined under Section 4 of the repealed legislation.

The Cabinet of Ministers granted approval last week to proceed with the gazetting and tabling of the Bill in Parliament, following a proposal submitted by Minister Nanayakkara.

The Draft Bill also clarifies that all entitlements and payments provided prior to the date of commencement of the new law shall be discontinued from the date it comes into effect.