By: Staff Writer

December 12, Colombo (LNW): Sri Lanka may be heading toward another debt-pressure cycle as external repayment obligations are set to accelerate sharply from 2028 onward, despite significant progress in restructuring arrangements with its major creditors.

The latest Quarterly Debt Bulletin issued by the Public Debt Management Office highlights the scale of the challenge: Sri Lanka’s external debt stock rose to USD 37.24 billion by end-September 2025, an increase of USD 100 million.

Although the country remains shut out of international capital markets, it continues to access and service loans from multilateral partners, which now dominate the portfolio alongside restructured commercial and bilateral exposures.

Multilateral lenders account for 37% of the debt stock, commercial creditors 34%, and bilateral partners 29%. Notably, ISBs account for roughly 81% of commercial liabilities, reflecting the weight of past borrowing choices.

Sri Lanka has already repaid USD 1.36 billion in the first half of 2025 over half of the USD 2.45 billion due for the year. But Central Bank Governor Dr. Nandalal Weerasinghe warned that the real stress point lies beyond 2027.

Under current commitments, annual servicing will average USD 2.75 billion until then. From 2028 onward, however, repayments will surge to between USD 3.2–3.5 billion, peaking at nearly USD 4 billion in certain years.

This shift reflects the maturity structure of pre-crisis borrowings, the phased-in repayments from restructuring agreements, and debt taken after the 2022 collapse to stabilise the economy. Analysts argue that without robust export-led growth, stronger fiscal consolidation, and improved governance, Sri Lanka will struggle to meet post-2028 obligations without courting new financial stress.

Restructuring progress has been substantial. Agreements concluded in June 2024 with the Official Creditor Committee and China’s EXIM Bank, alongside amendment arrangements, paved the way for debt treatment implementation. The China Development Bank restructuring was finalised in December 2024.

Commercial debt restructuring has also advanced, with an agreement in principle reached with ISB holders in September 2024 and a bond exchange completed in December with 98% participation. Bilateral restructuring continued through 2025, with Sri Lanka signing agreements with Japan, India, France, Hungary, and the UK, pushing total completion to 94%.

Even SriLankan Airlines, long considered a fiscal risk, has reached an agreement in principle with external bondholders holding USD 175 million in instruments.

Despite these achievements, the reality remains sobering. Restructuring may have eased debt service pressures temporarily, but the medium-term outlook suggests rising risk. Without stronger revenue mobilisation, disciplined spending, and export expansion, Sri Lanka may once again face a sustainability crisis precisely when repayments begin to spike after 2028.

By: Staff Writer

December 12, Colombo (LNW): Sri Lanka’s Inland Revenue Department (IRD) is confronting one of its most difficult enforcement years as officials warn that revenue targets may be increasingly unrealistic in the face of collapsing vehicle imports, stagnant taxpayer expansion, and widespread disruptions caused by the recent cyclone and floods.

A high-level meeting chaired by Deputy Minister of Economic Development Nishantha Jayaweera has now placed urgent pressure on the IRD to produce a “practical and achievable programme” to meet the government’s ambitious annual revenue goals.

The meeting brought together senior Finance Ministry leadership and Commissioner General Rukdevi Fernando, who acknowledged the need to widen the tax net while also reducing procedural burdens that discourage compliance.

According to the Finance Ministry statement, the discussion focused heavily on simplifying tax-return filing, accelerating public awareness programmes, and encouraging voluntary compliance to reduce enforcement costs.

However, senior officials privately admit that the environment has become far more challenging. The near-total halt in vehicle imports once a reliable source of indirect taxes—has severely weakened collections under goods and services levies. Compounding this, the cyclone that inundated large swathes of the country has disrupted livelihoods, destroyed business assets, and delayed the reopening of thousands of micro and small enterprises that make up a significant segment of VAT and income-tax contributors.

For 2025, the government revised its tax revenue target upward by 2.9%, raising it from Rs. 4,590 billion to Rs. 4,725 billion, banking on stronger income-tax performance and increased levies on goods and services. The income-tax target alone has been raised 3.7% to Rs. 1,210 billion, while goods-and-services levies were pushed up 6.5% to Rs. 2,953 billion.

Yet these expectations clash with field realities. Officials on the ground report that audit teams are operating with limited mobility due to flood-damaged roads, while taxpayers in the worst-affected districts have sought extensions, citing loss of records, damaged premises, and disrupted business activity

. Many provincial IRD offices are functioning with reduced staff due to displacement and transport challenges.

The push to expand the tax net long seen as the country’s most urgent revenue reform faces further constraints. Informal-sector workers and small traders, who should form a large share of new taxpayers, have been hit hardest by weather-related losses.

For many, tax registration has become a lower priority than rebuilding livelihoods. Officials warn that without targeted relief or phased filing arrangements, enforcement may be counterproductive and further erode compliance.

Deputy Minister Jayaweera has instructed the IRD to urgently outline a roadmap that considers these economic setbacks while ensuring the state does not fall short of its fiscal commitments under the IMF programme.

But revenue experts caution that without restoring trade flows especially vehicle imports and deploying stronger digital systems to widen the tax base, this year’s targets risk becoming mathematically unattainable.

By: Staff Writer

December 12, Colombo (LNW): Jetstar’s newly announced direct service between Melbourne and Colombo is expected to significantly strengthen travel demand, tourism flows and aviation competition between Australia and Sri Lanka, as the carrier prepares to operate the only low-cost non-stop link between the two countries starting 25 August 2026.

The move comes at a time when Sri Lanka’s tourism sector is rebuilding momentum and Australia has emerged as one of its fastest-growing long-haul visitor markets. Jetstar CEO Stephanie Tully said the decision reflects both rising customer interest and the airline’s wider international expansion drive.

“This new route is a major step in our growth strategy. It creates an affordable pathway for Australians to experience Sri Lanka’s beaches, culture and heritage while supporting two-way tourism,” she said.

Industry analysts say the route could deliver a significant economic boost, with more than 100,000 budget-friendly seats annually expected to stimulate both leisure and diaspora travel.

They note that the lack of direct flights from Australian carriers has long been a gap in the market, often forcing travellers onto longer, costlier connections through Southeast Asian hubs.

Melbourne Airport CEO Lorie Argus hailed the launch as a milestone that strengthens Victoria’s link to South Asia. She highlighted that Sri Lanka is among the region’s fastest-emerging destinations and said the new flights would support both tourism and family travel.

“Jetstar’s long-standing partnership with Terminal 4 has grown dramatically over the past decade. This new Colombo route reinforces Melbourne’s position as the airline’s main international base,” she said.

Jetstar’s Boeing 787 Dreamliners, which will operate the year-round service, are in the midst of a major overhaul. Beginning early next year, the airline will more than double its business-class capacity, improve economy seating, install Wi-Fi connectivity and modernise cabin interiors.

Additionally, the addition of a lie-flat crew rest module allows flights of up to 16 hours, enabling the airline to unlock more long-haul destinations beyond Colombo.

The airline has been on an aggressive expansion path, unveiling 14 new routes in 2025, nine of which are international. Over two years, Jetstar has added 13 aircraft, allowing the carrier to scale operations rapidly. The Colombo launch forms part of this broader aviation rebound.

Jetstar is also preparing for an unprecedented Christmas travel period, forecasting nearly six million passengers over December and January. Melbourne alone is expected to handle 1.7 million travellers during the summer peak.

The Colombo flights will run thrice weekly, with departures from Melbourne at 12:00, arriving in Colombo at 17:50, and returning from Colombo at 19:50, landing in Melbourne at 10:00 the next morning.

December 12, Colombo (LNW): Blue Skies Aviation Solutions (Pvt) Ltd has stepped in to support nationwide relief efforts by contributing aviation lubricants valued at Rs. 5 million to the Sri Lanka Air Force, which has been heavily engaged in disaster-response missions in recent weeks.

The handover took place on December 10 at the Defence Ministry, where the company’s Managing Director, Wing Commander Don Asitha Manage (Retd), presented the consignment to Defence Secretary Air Vice Marshal Sampath Thuyacontha (Retd).

The ceremony, though modest, underscored the private sector’s growing involvement in strengthening emergency operations.

The donation comprises high-performance AeroShell 500 lubricants used in the upkeep of Bell 412 and Bell 212 helicopters—two aircraft types currently at the forefront of the Air Force’s humanitarian sorties.

These helicopters have been flying continuous missions, from evacuating stranded families to airlifting medical supplies, prompting an increased demand for reliable maintenance materials.

Defence officials noted that sustaining the airworthiness of the fleet is paramount at a time when air support remains one of the fastest and safest means of reaching remote communities affected by the recent calamity.

They also welcomed the contribution as an example of meaningful collaboration between the armed forces and Sri Lanka’s aviation industry, particularly during periods of heightened national need.

December 12, Colombo (LNW): Colombo Dockyard PLC (CDL) has gained a vital breathing space after regulators granted a six-month extension that allows its shares to continue trading while the company prepares for a major ownership transition involving India’s Mazagon Dock Shipbuilders Limited.

The shipyard confirmed on Wednesday that the Securities and Exchange Commission of Sri Lanka (SEC) had postponed a trading suspension—initially expected to take effect on December 11, 2025—until June, 11, 2026.

The threatened suspension stemmed from the company’s prolonged presence on the Watch List, a consequence of auditors flagging concerns over CDL’s long-term financial viability.

In a significant parallel development, the SEC has also approved the transfer of CDL’s controlling interest. Onomichi Dockyard Company Limited, which has held the dominant stake for decades, has now been authorised to sell its entire shareholding to Mazagon.

The handover is to be completed after Mazagon carries out a Mandatory Offer following the conclusion of CDL’s pending Rights Issue.

CDL clarified that the regulator’s green light comes with firm conditions: Mazagon must successfully participate in the Rights Issue and proceed with the mandatory offer in line with Sri Lanka’s Takeovers and Mergers Code.

The dockyard has endured a bruising few years. Onomichi’s withdrawal from management in 2024 came after the pandemic and domestic economic turmoil choked the company’s access to financing, undermining its efforts to compete for international contracts.

After reviewing several potential investors, CDL selected Mazagon—one of India’s leading state-owned shipbuilders—to inject new capital and technical capacity aimed at revitalising the shipyard.

Despite these upheavals, CDL has continued to deliver on key projects. The firm recently handed over the third vessel in a hybrid bulk-carrier series to a Norwegian client, completing the job ahead of schedule on 27 November 2025. Work on the fourth vessel is reportedly advancing smoothly, with a launch anticipated before the end of the month.

In addition, CDL has inked agreements to design and construct two cable-laying and repair ships for Orange Marine, though these contracts depend on meeting several financial requirements. The company maintains that, with Mazagon’s backing, it is poised to reclaim stability and pursue larger international orders in the coming years.