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Sri Lanka Urged to Tap Old and Classic Car Exports to Boost Economy 

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By: Staff Writer

August 10, Colombo (LNW): Sri Lanka should urgently develop a policy framework to promote the export of old and classic vehicles, turning a growing global demand into a revenue stream that can both revitalise the country’s automotive sector and reduce the burden of high import taxes on new vehicles, industry experts say.

Sajeev Kshathriya Rajaputhra, General Secretary of the Global Federation of Sri Lankan Business Council (GFSLBC), said exporting old vehicles at competitive prices could allow the government to use profits to lower taxes on new imports, phasing out outdated models and modernising the nation’s vehicle fleet.

“Currently, a 300% tax is imposed on imported vehicles, and the domestic resale market inflates prices to more than three times their original cost,” Rajaputhra noted. “If exporters were given permits allowing them to offset losses against duties on their next import, it would create a sustainable cycle—old vehicles go out, new vehicles come in.”

He pointed out that Sri Lanka, along with Ethiopia, is one of the few countries where a car can sell for more than its purchase price even after years of use, due to artificially inflated values. Over time, these vehicles deteriorate into scrap metal. “The price should reflect the true worth of a vehicle, not an artificially created premium,” he said.

The GFSLBC has proposed three steps to the government: granting it a clear mandate, establishing a global branch, and ensuring direct access to the President’s Secretariat to strengthen public-private collaboration. Rajaputhra stressed that Sri Lankan entrepreneurs abroad have the expertise to help drive economic growth if the government engages with them.

While old vehicle exports could help modernise the local market, experts say Sri Lanka is also missing a lucrative opportunity in the booming global trade of classic cars and motorcycles. Once seen as luxury toys for the wealthy, these vehicles have become high-performing investment assets in the US and Europe, outperforming bank deposits, art, coins, stamps, and even major stock indexes over the past decade.

A pioneer in the vintage car market explained that collectors and investors alike are drawn to the sector’s unique mix of aesthetic appeal and financial returns. “Classic cars are an investment you can enjoy while also using them as a currency hedge—they can be sold in markets offering the highest returns,” he said. Motorcycles, he added, have even greater export flexibility as they avoid left- or right-hand-drive restrictions and are easier to transport.

 Condition plays a decisive role in value: well-maintained original vehicles can command a 50% premium over poorly restored ones. With restoration costs high, export markets pay top dollar for authentic, running-condition classics.Industry advocates believe Sri Lanka could develop both old and classic vehicle exports into a niche economic sector, bringing in foreign exchange, creating jobs, and giving local investors a foothold in a lucrative global market—while simultaneously refreshing the country’s aging vehicle fleet and easing the tax burden on new imports.

SL record Rs. 221Bn Private Credit Surge, Sparks Growth Hopes and Fresh Warnings

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By: Staff Writer

August 10, Colombo (LNW): Sri Lanka’s private sector credit expanded by an unprecedented Rs. 221 billion in June 2025, the highest monthly increase on record, according to official data. The surge, driven by a rebound in private investment, improved fiscal discipline, and the impact of a recent policy rate cut, has sparked optimism for stronger economic activity — but also renewed caution over potential financial stability risks.

The June expansion surpassed the previous record of Rs. 193 billion in December 2024. While December’s credit jump was largely due to short-term import financing that later reversed, analysts note that the latest rise reflects longer-term investment credit, which tends to sustain import demand and can strain foreign reserves if funded through central bank liquidity instead of real deposits.

Private Sector Leads Borrowing Boom

During the first half of 2025, private borrowings totaled Rs. 700 billion — outpacing central government borrowings (Rs. 178.4 billion) by a staggering Rs. 521 billion. In June alone, the government borrowed Rs. 98.3 billion from banks, reversing a Rs. 53 billion repayment in May, while state enterprises recorded a net repayment of Rs. 1.2 billion. The Central Bank also contracted its own credit by Rs. 51 billion.

The Central Bank’s deflationary stance and a stable exchange rate have been credited with creating a predictable environment for investment. Prices — including for construction materials — have remained stable or declined, boosting disposable incomes and enabling salary increases to be channeled into productive activity. Analysts note that, if the government maintains fiscal restraint and avoids non-priority capital spending, this stability could strengthen tax revenues and reduce budget deficits.

Warnings over ‘Late-Cycle’ Cuts

However, concerns have emerged over the recent policy rate reduction. Economists warn that similar late-cycle cuts in 2012, 2016, 2018, and 2019 — implemented amid a private credit upswing — ultimately triggered balance of payments stress, currency depreciation, increased foreign borrowing, and, in the lead-up to 2022, sovereign default.

June’s rate cut came at a time when banks were raising deposit rates, a move that could have moderated consumption while providing deposit-funded credit for imports. Instead, central bank liquidity injections — including swaps with domestic banks, where past-accumulated dollars are used as collateral — have supported rupee credit expansion. Analysts caution that such measures create contingent liabilities for the Central Bank and may erode net foreign assets if they reduce the Bank’s capacity to purchase dollars outright.

Balancing Growth and Stability

While the credit surge reflects a revival in domestic investment and consumption, analysts stress that this momentum is sustainable only if monetary and fiscal policy remain disciplined. Over-accommodation — described by some as the “dreaded” phase of economic cycles — risks undermining stability, repeating the policy errors that have led to past currency crises.

Bond sales, some argue, offer a safer tool for liquidity management, as interest costs can be rolled over without immediate cashflow strain, unlike private credit expansion funded by excess liquidity. The challenge now lies in ensuring that Sri Lanka’s record credit growth fuels long-term productivity — rather than another cycle of debt, reserve depletion, and economic instability.

Sri Lanka’s Foreign Reserves Inch Up, but Policy Risks Cloud Outlook

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By: Staff Writer

August 10, Colombo (LNW): Sri Lanka’s gross official foreign reserves rose by 64 million US dollars in July 2025 to 6.14 billion dollars, Central Bank data show, marking a modest gain after months of stagnation.

 However, concerns are mounting that recent interest rate cuts could undermine reserve accumulation and debt repayment capacity.

The latest figure remains below the 6.47 billion dollars recorded in October 2025. For the past nine months, the Central Bank has struggled to expand reserves, hampered by policy decisions and debt servicing obligations.

 In late 2024, the bank’s strategy of injecting liquidity to maintain a single policy rate disrupted the interbank money market and contributed to foreign currency shortages.

At current interest rate levels, the Central Bank has been able to collect some dollars from the banking system, helped by halting inflationary open market operations. Still, a significant share of inflows is committed to external obligations. 

The bank must supply foreign currency to the Finance Ministry for sovereign debt and interest payments, while also servicing its own liabilities—around 75 million dollars monthly to India—and repaying IMF loans from past crises.

Analysts warn these commitments leave little room for an independent monetary policy. Cutting rates to target inflation without considering reserve sustainability could edge the country closer to another sovereign default, they caution.

Reserve stability in recent months has partly relied on buy-sell swap arrangements, which provide short-term support but carry foreign exchange risk. 

The Central Bank maintains that the rupee operates under a flexible exchange rate, yet depreciation pressures from rate cuts and liquidity injections could magnify losses.

Market swaps allow banks to issue loans without boosting rupee deposits, keeping deposit rates artificially low. According to economic analyst Bellwether, this could weaken the financial system’s ability to sustainably fund lending or government security purchases. 

While gross reserves may appear steady under these swaps, net foreign reserves could decline—a reversal of the steady improvement seen even after October 2025, when rate cuts and open market operations slowed reserve growth.

In July, for instance, the Central Bank purchased 81 million dollars from the market under the current policy framework. However, nearly the entire amount—75 million dollars—was allocated to repay India before any funds could be directed to government debt servicing.

Economists have criticised the continued reliance on “flexible inflation targeting” and the belief that rates can be cut solely on the basis of past inflation trends. 

They argue that such policies, coupled with currency depreciation and excess liquidity, contradict classical economic principles and risk long-term stability.

Sri Lanka’s exchange controls further complicate monetary management, creating “anchor conflicts” that intensify as economic growth and private credit rebound. 

Analysts say the country’s high private savings rate could make exchange rate stability, reserve accumulation, and debt repayment far easier—if Parliament imposes tighter constitutional and operational constraints on discretionary monetary policy.

For now, the July reserve uptick offers limited comfort, with underlying vulnerabilities suggesting that without structural reforms, the improvement may prove short-lived.

Scheduled water interruption to affect parts of Gampaha District

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August 10, Colombo (LNW): Residents in several areas of the Gampaha District are advised to prepare for a scheduled disruption to their water supply, as the National Water Supply and Drainage Board (NWSDB) has announced a 10-hour water cut set to take place tomorrow (11).

The temporary suspension of water services is due to essential maintenance work being carried out on the main transmission pipeline that connects Nittambuwa to Minuwangoda.

This pipeline is a crucial component of the Gampaha–Attanagalla–Minuwangoda Integrated Water Supply Scheme, and the maintenance is part of routine efforts to ensure its continued efficiency and safety.

According to the NWSDB, the water cut will be in effect from 10:00 a.m. until 8:00 p.m. and will impact a wide range of areas across the district. Key affected localities include Attanagalla, Pasyala, Bataliya, Ranpokunagama, and Nittambuwa.

Several smaller towns and residential zones within the network will also experience interruptions, including Kandahena, Mapagolla, Kongasdeniya, Pinnagollawatta, Kolawatta, Gorakadeniya, the Ranpokunagama Housing Scheme, Urapola, Dikkanda, Meevitigammana, Maimbula, Mathalana, Haggalla, Alawala, Kalalpitiya, and Ellamulla.

Sri Lanka voices alarm over Israeli push into Gaza City, citing rising humanitarian risks and collapse of peace prospects

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August 10, Colombo (LNW): Sri Lanka has voiced strong concern over Israel’s decision to intensify its military operations by taking control of Gaza City, warning that such action will only deepen the crisis in the region and worsen the already dire humanitarian conditions for civilians trapped in the conflict.

In an official statement issued by the Ministry of Foreign Affairs, Foreign Employment and Tourism, the government cautioned that the move could inflame tensions further and exacerbate instability across the Palestinian territories. The statement underscored the urgent need for restraint and renewed calls for an immediate ceasefire, reiterating Sri Lanka’s support for a negotiated settlement to the long-standing conflict.

The response follows the Israeli security cabinet’s recent approval of a plan to seize Gaza City, a decision that has provoked widespread condemnation from several nations and international organisations. Critics argue the move risks escalating the violence, further displacing civilians, and undermining the path toward a political solution.

Opposition Leader Sajith Premadasa also weighed in on the development, warning that Israel’s occupation of Gaza City would have lasting consequences beyond the immediate battlefield. In a statement posted on X, Premadasa said, “If Israel takes Gaza, it’s not just about land—it will shatter the trust that has kept alive the hope for a two-state solution. Countries that once stood united on this principle will begin to drift apart. And once that trust is broken, peace will become nearly impossible.”

His remarks echo growing global concern that a military-first approach could derail decades of diplomatic effort aimed at securing a viable, lasting peace between Israelis and Palestinians. With civilian casualties mounting and prospects for dialogue diminishing, Sri Lanka joined a chorus of voices urging both restraint and a return to negotiations grounded in international law and mutual recognition.

Sri Lanka honours its indigenous heritage with national commemoration in Dambana

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August 10, Colombo (LNW): Sri Lanka today marked the International Day of the World’s Indigenous Peoples with a national ceremony held at the Indigenous Museum in Dambana, under the leadership of President Anura Kumara Dissanayake.

The occasion served not only as a formal tribute to the island’s indigenous heritage but also as a vibrant celebration of the traditions and wisdom preserved by the Vedda community.

The day’s proceedings unfolded with reverence and symbolism. President Dissanayake began the morning by offering floral tributes to the memorial of the late indigenous elder Uruwarige Tisahami Aththo, a respected figure within the community.

A white sandalwood sapling was also ceremonially planted in the museum’s courtyard—a gesture intended to symbolise continuity, renewal, and respect for ancestral land.

This year’s commemoration, organised through the collaborative efforts of government departments and private entities, highlighted the cultural richness of Sri Lanka’s indigenous population. Among the featured traditions was the sacred kiri koraha ritual, performed to invoke blessings of peace, harmony, and prosperity for all people and the natural world.

Central to the event was the participation of Vishwa Keerthi Sri Vanaspathi Uruwarige Vannila Aththo, the current leader of the Vedda people. He presented President Dissanayake with a commemorative plaque along with a message detailing the community’s ongoing concerns and aspirations—ranging from environmental protection and cultural preservation to access to education and healthcare.

In a gesture of mutual respect, the President offered a symbolic gift to the indigenous leader, acknowledging the enduring contributions of the community to the nation’s cultural identity and environmental stewardship.

A key highlight of this year’s observance was the introduction of Sri Lanka’s first indigenous herbal soap, Kairie, developed using traditional botanical knowledge and native ingredients. The initiative aims to blend ancestral wisdom with modern economic opportunity, providing sustainable income sources for indigenous women.

Certificates were also awarded to the inaugural group of female participants who completed a training programme in Ayurvedic soap production, marking a step forward in community-led enterprise.

The event additionally saw the commencement of construction on market stalls intended to showcase and sell indigenous crafts and products—a move designed to further integrate the community into the local economy while safeguarding their traditions.

Among those in attendance were Minister of Buddhasasana, Religious and Cultural Affairs Dr Hiniduma Sunil Senevi, several government ministers and officials, as well as the Canadian High Commissioner to Sri Lanka and the Maldives, Eric Walsh, accompanied by representatives from the Canadian High Commission and other distinguished guests.

Sri Lanka sees over 1.4 million international visitors in 2025

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August 10, Colombo (LNW): Sri Lanka is witnessing a robust upswing in international tourism this year, with over 1.4 million foreign visitors having entered the island nation by early August, according to recent data released by the Sri Lanka Tourism Development Authority (SLTDA).

This marks a notable rise in tourist arrivals compared to the corresponding period in 2024, reflecting renewed global interest in the country as a travel destination.

India remains Sri Lanka’s most significant source of inbound travellers in 2025, with 286,085 Indian nationals having visited so far. The United Kingdom follows with 135,722 visitors, while Russia ranks third, contributing 116,257 tourists to the overall count.

In the first five days of August alone, Sri Lanka welcomed 40,047 international travellers, underscoring the continuing momentum of the tourism rebound. Among them, Indian tourists accounted for the largest proportion, with 6,963 arrivals—making up 17.4 per cent of the total for that period.

Other key source markets for August include the United Kingdom, which sent 4,345 tourists, while China contributed 3,090 visitors. France and Italy also made strong showings, with 3,049 and 2,739 arrivals respectively.

A number of districts to witness showery trend (Aug 10)

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August 10, Colombo (LNW): Several spells of light showers will occur in the Western and Sabaragamuwa provinces and in Nuwara-Eliya, Kandy, Galle and Matara districts.

Showers or thundershowers may occur at a few places in Northern province and in Trincomalee and Batticaloa districts after 2.00 p.m.

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

Marine Weather:

Condition of Rain:

Showers are likely at a few places in the sea areas off the coast extending from Puttalam to Matara via Colombo and Galle.

Winds:

Winds will be south-westerly and wind speed will be (30-40) kmph.

Wind speed can increase up to (50-55) kmph at times in the sea areas off the coast extending from Kalpitiya to Mullaittivu via Mannar and Kankasanthurai and from Matara to Pottuvil via Hambantota.

State of Sea:

The sea areas off the coast extending from Kalpitiya to Mullaittivu via Mannar and Kankasanthurai and from Matara to Pottuvil via Hambantota may be rough at times.

Opposition Leader Sajith Premadasa Questions Vehicle Import Tax Irregularities in Parliament

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Opposition Leader Sajith Premadasa raised concerns in Parliament over ongoing irregularities in Sri Lanka’s vehicle import tax system, highlighting that the complex and opaque structure currently in place allows certain parties to evade taxes, depriving the government of significant revenue.

Speaking under Standing Order 27(2), Premadasa noted that both economists and the Samagi Jana Balawegaya (SJB) believe the current tax framework is designed in a way that enables loopholes, delaying the introduction of a simplified and transparent taxation method. He stressed that this delay not only reduces government income but also distorts fair market competition and places consumers at a disadvantage.

Premadasa questioned whether import taxes on electric vehicles are calculated based on maximum battery capacity or rated capacity. He requested that the specific criteria and tax slabs be presented, along with data on whether the imported BYD electric vehicles—particularly the ATTO 3 and other models—were taxed according to their actual or rated capacity. He further inquired whether investigations have begun to verify the actual battery capacity of these vehicles amid growing public concern.

Highlighting the scale of the issue, Premadasa claimed that improper tax application could result in the loss of LKR 4–4.5 million in revenue per vehicle. He asked for clarification on how many vehicles are currently being held at customs due to tax disputes and whether they will remain there until a resolution is reached.

The Opposition Leader also alleged reports that some parties are attempting to release detained vehicles by placing bank guarantees for the disputed tax amounts. He urged the government to recover any lost revenue if wrongdoing is proven.

Premadasa called on the government to learn from effective tax policies in developed countries, revise Sri Lanka’s vehicle import tax structure accordingly, and ensure the system is fair, transparent, and resistant to manipulation

https://youtu.be/beUPFRiDvIQ?si=NVQE_rLVhshTgG3Y

SAARC Launches US $3.97m AquaLivelihood Project to Boost Small-Scale Fish Farming

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The SAARC Development Fund (SDF), in collaboration with national institutions and technical agencies from five member states, has officially launched the AquaLivelihood Project in Colombo, marking a significant regional push to uplift smallholder fish farmers and tackle nutrition challenges across South Asia.

Fisheries Minister Ramalingam Chandrasekar, who attended as Chief Guest, described the three-year initiative as “a transformative journey” that will enhance livelihoods, strengthen food systems, and unite regional stakeholders in a common mission.

The project represents a total investment of $3.97 million, with $3.23 million provided as an SDF grant and $739,109 as in-kind co-financing. It aims to benefit over 120,000 rural households—30% of them women—in Bangladesh, Bhutan, India, Nepal, and Sri Lanka.

Formally titled “Livelihood Enhancement of Small-Scale Fish Farmers and Nutrition Security of Rural Masses in the SAARC Region through Aquaculture Development”, AquaLivelihood is led by India’s ICAR-Central Institute of Freshwater Aquaculture (ICAR-CIFA) in partnership with fisheries authorities from each participating country, including Sri Lanka’s National Aquaculture Development Authority (NAQDA).

The project focuses on three strategic components:

Survey and technology identification – mapping aquaculture resources, feed, and seed, and promoting inclusive practices.

Infrastructure development – establishing pilot-scale feed mills and hatcheries to boost local fish production.

Capacity building – organising cross-border training, on-farm demonstrations, and gender-focused knowledge exchange.

SDF Officer-in-Charge Irosha Cooray emphasised that the initiative aligns with the SAARC Charter and Social Charter, promoting poverty reduction, women’s empowerment, and regional integration. “By empowering small-scale farmers and fostering knowledge exchange, we strengthen food security, sustainable development, and regional solidarity,” she said.

Fish remains a vital protein source in South Asia, providing over 60% of animal protein in countries such as Bangladesh, Sri Lanka, and Nepal. Aquaculture growth has been robust in the past decade—11% in Nepal, 5.4% in Bangladesh, and 6–8% in India—while the fisheries sector significantly contributes to agricultural GDP and rural livelihoods.

ICAR Deputy Director General (Fisheries Science) Dr. Joykrushna Jena said India is proud to lead this collaborative effort, while Project Coordinator Dr. Shiba Shankar Giri noted that the project builds on nine policy briefs developed during the COVID-19 pandemic. NAQDA Director General Dr. J.M. Asoka highlighted its importance for Sri Lanka’s rural economy and regional partnerships.

Implementation will cover selected districts across all five countries, with Sri Lanka focusing on the North Central and North Western Provinces. A two-day inception workshop will follow the launch to align strategies and ensure coordinated execution across the region.