By: Staff Writer

June 18, Colombo (LNW): The alleged cyber theft of more than US$ 2.5 million from Sri Lanka’s Treasury has triggered renewed questions about institutional accountability during one of the most sensitive reforms in the country’s public finance administration—the transfer of debt servicing responsibilities from the Central Bank to the newly established Public Debt Management Office (PDMO) under the Treasury.

The controversy has intensified following demands by the Free Lawyers Association (FLA) for a Parliamentary Select Committee to investigate the incident, which occurred during the transition period when debt management functions were being shifted between institutions. The lawyers argue that the cyber heist has exposed serious weaknesses in governance, coordination and oversight within both the Treasury and the Central Bank.

According to the Association, the stolen funds were allegedly transferred to a bank account maintained by a company identified as Mish Global LLC at TD Bank in the United States. The organisation claims the funds may still be traceable, raising questions about the speed and effectiveness of the official response.

More troubling, however, are the inconsistencies that have emerged regarding the value of the loss. While public disclosures have cited a figure of US$ 2.5 million, references by the Auditor General reportedly indicate a significantly smaller amount. The discrepancy has fuelled concerns that key institutions responsible for public debt operations may not possess a complete understanding of the incident.

The timing of the cyberattack has become central to the accountability debate. The transfer of debt servicing functions from the Central Bank to the Treasury represented a major structural reform intended to strengthen public debt management and improve transparency. Yet critics argue that operational responsibilities may have been shifted before adequate safeguards, procedures and regulatory frameworks were fully established.

The FLA alleges that debt settlement activities had already commenced before all regulations governing the Public Debt Management Office had been finalised. If accurate, such claims raise concerns about whether operational readiness assessments were conducted before critical functions were transferred.

Questions have also been directed at coordination mechanisms between the Treasury and the Central Bank. During any institutional transition involving financial transactions worth billions of dollars, responsibilities for cybersecurity, payment verification, authorisation protocols and risk management must be clearly defined. The cyber breach suggests potential gaps in those arrangements.

Equally concerning is the apparent absence of public accountability after the incident. Parliamentary oversight committees, including the Committee on Public Finance and the Committee on Public Accounts, have reportedly examined the matter but have yet to release findings or recommendations.

As Sri Lanka seeks to rebuild confidence in its public financial management systems following its economic crisis, the cyber heist represents more than an isolated security breach. It has become a test of whether institutions entrusted with managing sovereign debt can demonstrate transparency, competence and accountability when failures occur. The calls for a Parliamentary Select Committee reflect growing pressure for answers on who was responsible, what safeguards failed, and whether the transition to the new debt management regime was executed with sufficient preparation.

By: Staff Writer

June 18, Colombo (LNW): Sri Lanka’s services sector recorded a strong resurgence in May, with business activity expanding at a faster pace as financial services, professional activities, and transportation industries drove a broad-based recovery.

Fresh data from the Central Bank of Sri Lanka’s Purchasing Managers’ Index (PMI) survey showed the Services PMI rising to 56.9 in May from 46.7 in April. The increase signals a return to expansion after activity slowed during the previous month, reflecting renewed business confidence across several key sectors of the economy.

A closer review of the figures reveals that new business generation was a major contributor to the sector’s improved performance. The New Businesses Index climbed to 58.0 from 48.9 in April, indicating stronger demand for services and a pickup in commercial activity.

The financial and professional services industries emerged as the primary growth engines. These sectors benefited from increasing customer engagement and improved market conditions. Additional support came from wholesale and retail trade, goods transportation, and other personal services, all of which reported stronger activity levels during the month.

The rebound was not limited to traditional sectors. Real estate services and information technology programming also registered notable growth, highlighting a broader recovery that extends beyond finance and trade. Analysts suggest that increasing economic stability and improving business sentiment may be encouraging companies and consumers to spend more on specialized services.

However beneath the positive headline figures, challenges remain. Employment within the services sector declined during May, raising questions about the sustainability of the recovery. Survey respondents cited contract expirations, retirements, and employee resignations as the main reasons for the reduction in workforce numbers.

At the same time, backlogs of work continued to decrease, and at a faster pace than in April. While a reduction in outstanding work can indicate improved efficiency, it may also suggest that some businesses are managing lower workloads with fewer employees.

Business expectations for the next three months remain firmly positive. Much of that optimism is linked to anticipated increases in tourist arrivals during the upcoming Perahera season, traditionally one of the country’s busiest tourism periods. Industry stakeholders believe stronger visitor numbers could provide a substantial boost to hospitality, transportation, retail, and related services.

Improved domestic economic conditions are also helping to support confidence among businesses. However, executives participating in the survey warned that international uncertainties continue to pose significant risks. Ongoing geopolitical tensions, volatile global markets, and shifting economic conditions abroad could affect demand and investment flows.

The May PMI results suggest Sri Lanka’s services sector is regaining momentum after a temporary setback. While growth has returned and business expectations remain upbeat, the sector’s ability to maintain its upward trajectory will depend on balancing local opportunities against an increasingly uncertain global environment.

By: Staff Writer

June 18, Colombo (LNW): The National People’s Power (NPP) government’s plan to introduce a comprehensive new labour code by the end of 2026 is being promoted as a landmark reform designed to modernize Sri Lanka’s outdated employment laws and improve industrial harmony. However, critics argue that beneath the language of productivity, efficiency and international competitiveness lies a significant shift in the balance of power between workers, employers and the state.

Labour Minister Anil Jayantha Fernando has announced that a cabinet-appointed committee is consolidating multiple labour statutes into a single legal framework intended to replace decades-old legislation. Government officials maintain that the reforms will create a peaceful work environment, reduce industrial disputes and support the country’s export-driven economic strategy.

However concerns are emerging regarding how these changes will function within Sri Lanka’s highly politicized governance structure.

For decades, labour laws have served not only as workplace regulations but also as safeguards protecting employees from arbitrary decisions by employers and political authorities. Trade unions, professional associations and labour activists fear that consolidating multiple legal protections into a single code could weaken existing safeguards if transparency and consultation are not prioritized.

The timing of the reforms is particularly significant. The NPP administration, led by a Marxist-rooted political movement that historically championed workers’ rights, now finds itself advocating productivity-focused policies traditionally associated with market-oriented economic reforms. This ideological transition has sparked debate among labour groups that once viewed the party as a defender of worker interests.

In the public sector, critics warn that a centralized labour framework could increase administrative control over state employees while limiting avenues for collective bargaining and industrial action. Given the extensive politicization of appointments, promotions and transfers across many government institutions, employees may become increasingly vulnerable if labour protections are diluted in the name of efficiency.

Private-sector stakeholders also face uncertainty. While businesses welcome efforts to reduce regulatory complexity and align labour laws with international standards, concerns remain about potential bureaucratic expansion. If implementation becomes heavily centralized, employers could face increased compliance requirements and greater political oversight rather than genuine deregulation.

The government argues that human capital is Sri Lanka’s most valuable economic resource and that labour efficiency will determine future competitiveness. However, productivity reforms cannot succeed solely through legislative changes. They require institutional independence, merit-based administration and confidence among workers that reforms are designed to enhance—not restrict their rights.

As Sri Lanka seeks deeper integration into global supply chains, the success of the new labour code will depend less on legal drafting and more on public trust. Without broad stakeholder participation and transparent implementation, what is being presented as a modernization initiative could instead be perceived as a mechanism for expanding state influence over the country’s workforce?

The coming months are likely to determine whether these reforms become a catalyst for economic renewal or another chapter in Sri Lanka’s long history of contested labour relations.

By: Staff Writer

June 18, Colombo (LNW): The government’s proposal to explore a unified tripartite governance framework for Sri Lanka’s Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) has ignited renewed debate over transparency, accountability and the future management of workers’ retirement savings.

At the heart of the discussion lies a simple but politically sensitive question: should private-sector employees and employers have a direct role in overseeing funds built primarily from workers’ compulsory contributions?

The issue is far from new. Labour unions have repeatedly campaigned for reforms to the EPF, arguing that contributors have historically remained excluded from decisions affecting trillions of rupees in retirement assets. Several previous efforts to introduce broader stakeholder participation encountered resistance from institutional authorities, who maintained that centralized management under the Central Bank ensured stability and professional investment oversight.

Today, the EPF remains Sri Lanka’s largest retirement savings fund, holding more than Rs. 4.9 trillion in assets. The ETF, administered through a tripartite structure under the Labour Department, manages over Rs. 637 billion. The government’s latest initiative seeks to study whether both funds can operate under a common governance framework that includes representatives from government, employers and employees.

Advocates see several potential benefits. A unified tripartite board could enhance transparency by giving contributors greater access to information and influence over policy decisions. Increased stakeholder participation may also strengthen public trust, particularly at a time when concerns over governance and accountability continue to dominate public discourse. Internationally, many social security systems embrace tripartite administration as a mechanism for balancing competing interests while protecting contributors.

Employer representatives have also highlighted the possibility of improved oversight and stronger governance standards. With direct participation, they argue, stakeholders would be better positioned to monitor investment decisions and ensure funds are managed in the best interests of members.

Nevertheless, the proposal is not without controversy. Financial experts caution that retirement funds require specialized investment expertise and swift decision-making. Expanding governance structures could potentially create bureaucratic delays, political bargaining and conflicts among stakeholder groups. There are also fears that board appointments could become politicized, undermining the professional management standards essential for safeguarding long-term returns.

Another concern is whether merging governance structures could blur the distinct mandates and operational strengths of the two funds. The EPF and ETF were established under different legal frameworks and have evolved under separate administrative models. Any restructuring effort would require careful legal, financial and institutional planning.

The government’s feasibility study therefore carries significant implications. If successful, it could usher in a more participatory model for managing workers’ savings. If poorly designed, critics warn, it could weaken the safeguards that have protected retirement assets for generations.

For millions of Sri Lankan workers, the debate is ultimately about more than governance. It is about who holds authority over their lifetime savings and how those funds can best be protected for future retirement security.

June 18, Colombo (LNW): Sri Lanka has recorded a notable decline in foreign currency spending on vehicle imports following the introduction of higher import duties, according to Deputy Minister of Finance and Planning Anil Jayantha Fernando.

Speaking about the impact of the government’s recent policy measures, Fernando said daily foreign exchange outflows linked to vehicle imports have fallen to below USD 4 million, signalling a slowdown in import demand and a reduction in pressure on the country’s external finances.

He noted that interest in importing vehicles remained strong even after the revised tax measures were announced. At one stage, letters of credit valued at approximately USD 88 million were reportedly opened within a single day, reflecting significant market demand. However, he said the effects of the surcharge are now becoming increasingly evident.

According to official figures, Sri Lanka spent an average of around USD 5.5 million per day on vehicle imports during the previous year. That figure climbed to nearly USD 7 million per day in 2026 as importers accelerated orders and increased the value of letters of credit opened for vehicle purchases.

Despite this initial surge, authorities say the trend has since reversed. Data for June indicates that daily expenditure on vehicle imports has dropped considerably, suggesting that the temporary duty increase is helping to moderate demand and conserve foreign exchange reserves.

Government officials have defended the measure as a necessary step to safeguard economic stability while managing import expenditure. They argue that controlling non-essential imports remains important as the country continues its broader efforts to strengthen external reserves and maintain a stable balance of payments position.

The temporary surcharge, introduced on May 15, 2026, increased applicable Customs Import Duties by 50 per cent on a range of selected imported goods, including vehicles. The measure was enacted through an Extraordinary Gazette issued under the provisions of the Customs Ordinance and is expected to remain under review as authorities monitor its economic impact.

Economic analysts believe the coming months will provide a clearer indication of whether the policy can sustainably reduce import-related foreign exchange outflows while balancing consumer demand and government revenue objectives.