In a significant step toward advancing Sri Lanka’s energy transition, the International Finance Corporation (IFC) is poised to extend a US $ 30 million loan to support the government-backed Secure, Bearable and Sustainable Energy Project (SBSE) under the umbrella of the World Bank Group. This move follows formal approval by the country’s Cabinet of Ministers of Sri Lanka, which endorsed the loan agreement earlier in May.

According to the Cabinet spokesman, Dr. Nalinda Jayatissa, negotiations with the IFC are ongoing to finalise the exact terms. The funds will be channelled via the Ceylon Electricity Board (CEB) or its designated affiliates, functioning as sub-loans to implement the project’s core components: enhancing system reliability, improving affordability of power, and accelerating the shift to sustainable energy generation. Importantly, the agreement will adhere to recommendations of the Public Debt Management Office to safeguard debt-management standards.

In broader context, this loan dovetails with the Bank Group’s new programme unveiled in June 2025, under which some US $150 million has been committed to strengthen Sri Lanka’s clean energy mix. That programme intends to add about 1 gigawatt of renewable (solar + wind) capacity and mobilise more than US $800 million of private-sector investment.

Beyond the headline loan, the IFC has been active in Sri Lanka’s financial and climate-finance reform space. For example, earlier in 2024-25 it supported the Central Bank of Sri Lanka in developing its green-finance strategy  a move aimed at boosting bank-lending to renewable projects and SME access to finance.

Although precise nine-month figures specific to the SBSE project are not publicly available yet, the IFC’s institutional data shows that for its FY 2025 (ending June 30) total commitments rose to US $71.7 billion globally up from US $56.1 billion a year earlier.

 While these numbers cover all IFC operations worldwide—not just Sri Lanka they reflect the scale at which the IFC is operating and the potential for significant deployment of funds into the country.

For Sri Lanka, the anticipated impact of the US $ 30 million loan is multiple. First, by improving power-system reliability and reducing dependence on costly fossil-fuel imports, it can help lower electricity cost burdens on households and businesses.

Second, aligning with the country’s goal of 70 % renewables by 2030, the loan is a catalyst for private-sector entry and innovation in the energy space. Third, by adhering to debt-management frameworks, the loan contributes to restoring fiscal stability and external-funding discipline.

It is, however, crucial to recognise risks: the success of the SBSE project will depend not only on funding but on execution the pace of generation-capacity roll-out, transmission upgrades, grid integration, and regulatory reform. The loan’s value lies not only in the US $ 30 million itself, but in the credible pathway it opens for larger private investment and institutional reform.

In summary, the IFC’s forthcoming loan marks a pivotal moment for Sri Lanka’s energy sector: through targeted funding, reform-linked technical support and private-sector mobilization it offers a tangible boost to cleaner, more sustainable and affordable power. 

The coming months will be critical as the project transitions from approval into implementation and as stakeholders monitor whether the promised gains translate into measurable improvements for the Sri Lankan economy and its people.

In the first half of 2025, Ceylon Petroleum Corporation (CPC) saw its net profit drop by 17.9 % to Rs. 17 billion, down from Rs. 20.7 billion in the same period in 2024. This decline comes as global fuel prices soften and the Sri Lankan rupee strengthens, helping to shrink both turnover and costs.

According to the Finance Ministry’s Mid-Year Fiscal Position Report 2025, CPC’s turnover slid 19.3 % to Rs. 439.5 billion from Rs. 544.3 billion a year earlier. Cost of sales likewise fell 19.2 % to Rs. 377.9 billion from Rs. 467.7 billion.

The report attributes the decline largely to lower international petroleum prices and the rupee’s appreciation, which dampened import costs. Notably, the value of CPC’s petroleum imports dropped to US$ 1.04 billion in the first half of 2025 from US$ 1.23 billion in the same period last year.

While the lower import cost helped, the firm also points out that a stronger rupee reduced its rupee-denominated revenue, which offset some of the gains. Meanwhile, CPC has taken steps to reduce external liabilities: dues to the National Iranian Oil Company declined to US$ 130.96 million by end-June 2025 from US$ 191 million a year earlier, thanks in part to ongoing tea-for-oil barter arrangements.

However, CPC continues to carry a heavy debt burden. In March 2025 it was reported that the corporation remains “debt-ridden”, with outstanding liabilities in excess of US$ 3 billion driven by fuel import loans and unpaid supplier bills. The corporation has also been approved to self-finance the development of 24 oil storage tanks at China Bay, despite its financial constraints.

The competitive landscape for fuel sales in Sri Lanka is also evolving. Historically CPC held a dominant share of around 80 % of the market, but its private-sector competitor Lanka IOC PLC has consistently posted profits in recent years despite operating in the same regulated pricing environment  in contrast to CPC’s heavy accumulated losses, which were estimated at LKR 529 billion by end 2020.

 Furthermore, regulatory moves have opened the sector to further competition, raising the urgency for CPC to sharpen its efficiency and financial discipline.

This combination of declining profitability, large outstanding debt and growing competition poses a critical test for CPC. The decline in turnover and profit underscores the sensitivity of its business to currency and global fuel price swings, while its debt legacy continues to constrain strategic flexibility. On the competitive front, private sector fuel retailers are proving that profitability is possible even in this environment  prompting questions about CPC’s operational model and cost structure.

For CPC to reverse its downturn and maintain market leadership, it will need to address three linked priorities: stabilising and reducing its debt burden, improving operational and treasury efficiency, and responding proactively to increased competition. The performance of CPC in the remainder of 2025 will thus be watched closely by stakeholders, especially given its key role in national energy security and the implications for public-sector finances.

The ambitious Port City Colombo project stands at a defining crossroads  marked by rising investor confidence and visible commercial traction, yet shadowed by structural delays, cost overruns, and lingering inefficiencies that continue to cloud its promise as Sri Lanka’s premier urban development.

While international interest has been steadily climbing, recent audit reports have laid bare significant gaps between the project’s aspirations and on-ground progress. Official data for the first nine months of 2025 reveal encouraging signs of market activity, but the city’s physical backbone remains incomplete, tempering optimism with caution.

By May 2025, nearly 80 percent of the leasable space at the Port City Business Centre had been taken up by “Authorised Persons,” underscoring robust commercial demand. In the same month, Sweden-based IGT 1 Lanka signed a landmark lease for two office towers expected to accommodate over 500 employees  a sign that genuine operational activity is beginning to take hold within the Special Economic Zone (SEZ). According to Finance Ministry sources, more than 100 companies were preparing to commence operations in the zone by October 2024, signalling a gradual shift from development to execution.

China Harbour Engineering Company (CHEC), a subsidiary of the state-owned China Communications Construction Company and the project’s principal foreign developer, continues to play a pivotal role. A government gazette issued in July 2025 announced that IFC Colombo 1 Pvt Ltd, a CHEC subsidiary, would inject approximately US$142.7 million into new real estate ventures within the Port City — a reaffirmation of China’s sustained confidence in the project’s long-term commercial potential despite administrative hurdles.

However, the Auditor-General’s report for the 2023 financial year, released in October 2024, paints a less flattering picture. By September 2023, only 85 of 118 land plots (72%) had obtained completion certificates, though the original target was 2019. Landscaping work due by March 2020 was just 77 percent finished by late 2023, and essential road, bridge, and tunnel infrastructure lagged at around half completion.

The report also highlighted worrying financial inefficiencies. A temporary sewage treatment facility initially budgeted at Rs. 1 billion ballooned to Rs. 3.7 billion — losses attributed to procurement lapses and poor oversight.

Acknowledging these setbacks, the government in February 2025 extended the Port City Project Management Unit’s mandate until June 2027, effectively confirming a longer timeline for completion. Meanwhile, mid-2025 regulatory revisions tightened eligibility for “strategic businesses” within the SEZ, emphasizing genuine high-value investment.

Despite these challenges, officials insist investor enthusiasm remains strong, with global firms signing long-term leases and governance frameworks increasingly aligned with international norms. Whether Port City Colombo can overcome its infrastructure backlog while sustaining investor faith will ultimately decide if it fulfills its ambition of becoming a world-class regional financial hub — or remains a work in progress suspended between promise and delivery.

President Anura Kumara Dissanyake is to unveil its 2026 Budget today under the theme of “achieving a Productive Economy and fostering the engagement of everyone in economic development.”

Yet behind this aspirational message lies the reality of a tight fiscal program, rising debt obligations, and the demands of the IMF programme, all of which point to higher taxes and the possible introduction of new levies, and a reformed capital gains tax regime.

The Appropriation Bill, approved by the Cabinet in advance this week will be gazetted shortly in September 20, with second reading and Budget Speech following early in November.

Treasury Secretary Dr. Harshana Suriyapperuma has instructed ministries and provincial councils to bring forward their estimates within a stringently contained fiscal framework, prioritising settling arrears, restarting suspended infrastructure development projects, improving public transport, and furthering digitalisation.

While these priorities suggest a development agenda, they also require an accelerating surge in government income, and that can only be brought about through more tax reform.

IMF reviews of Sri Lanka’s fiscal framework have repeatedly stressed the need to broaden the tax base, remove exemptions, and shift the system toward direct taxation.

In this context, several new measures are being prepared for 2026. Chief among them is the introduction of reformed capital gains tax regime, designed to capture contributions from high net worth individuals and help rebalance a tax structure long skewed toward indirect levies.

Proposals to tax imputed rental income on owner occupied and vacant properties are also expected to resurface, while exemptions for some export oriented service industries may be curtailed.

At the same time, the government is moving to expand VAT coverage, particularly on digital services provided by non resident firms, a measure already announced for April 2026.

Sectors such as liquor, tobacco, and gaming may also face higher corporate tax rates in line with IMF guidance to increase progressive taxation.

To meet fiscal targets under the IMF programme, Sri Lanka must lift its tax to GDP ratio toward 14-15 percent by 2025-2026.

This implies a revenue requirement of between Rs. 5,500 and Rs. 6,000 billion in 2026, with total receipts, including non-tax income, projected at around Rs. 6,500 billion.

The r expenditure ceiling for next year is set at Rs 4,385.4 billion (4.38 trillion), according to the Treasury provisional data and mathematical models. .

Despite the policy emphasis on improving the balance between direct and indirect taxes, the latter will still account for the lion’s share of state income.

 The 2026 Budget may narrow this gap slightly through wealth and property taxes, but the system will remain dominated by indirect levies that disproportionately burden ordinary households.

The risks of taking this path are clear. Expanding indirect taxes can fuel consumer prices and stir inflationary pressures, and politically sensitive measures like a wealth tax will test the government’s ability to make it stick as well as blunt the opposition from vested groups.

 Budget 2026, therefore, is shaping up to be more than a spending budget. It will be an important litmus test of Sri Lanka’s capacity to overhaul its tax structure, harmonise equity with fiscal necessity, and give the revenue base it needs to stabilise the economy.

If it succeeds, it can begin to shift the burden onto those who are best able to bear it. But if it fails, the country may be embarking on another cycle of revenue deficiencies, borrowing, and austerity.

The European Union (EU) and Germany reaffirmed their commitment to promoting unity and reconciliation in Sri Lanka, as the Strengthening Social Cohesion and Peace in Sri Lanka (SCOPE) programme officially concluded following three-and-a-half years of impactful work across the country.

Speaking at the closing ceremony held recently at the Galle Face Hotel, EU Ambassador to Sri Lanka and the Maldives Carmen Moreno said that the SCOPE programme has “helped build bridges between institutions, communities, and individuals,” highlighting the importance of the initiative in fostering trust and dialogue.

“The European Union is proud to have supported this effort to strengthen social cohesion. As Sri Lanka continues this journey, the lessons and partnerships forged through SCOPE will remain a lasting contribution,” Ambassador Moreno stated.

German Ambassador to Sri Lanka and the Maldives Dr. Felix Neumann echoed these sentiments, emphasizing Germany’s commitment to reconciliation and open dialogue.

“SCOPE has shown how honest reflection and cooperation can build the foundations for lasting social cohesion. We are proud to have supported a programme that strengthened institutions and empowered communities to move forward together,” he said.

Launched in March 2022, SCOPE was co-funded by the European Union and the German Federal Foreign Office, and implemented by GIZ in partnership with the Ministry of Justice and National Integration. Over its three-and-a-half-year implementation period, the programme worked with over 50 government and civil society partners, engaging more than 175,000 people across all 25 districts of Sri Lanka.

The initiative aimed to enhance institutional and community capacities, promote inclusive public discourse, and support economic inclusion to strengthen peace and social cohesion nationwide.

The closing event brought together government officials, diplomats, civil society leaders, academics, media professionals, and private sector representatives to celebrate SCOPE’s achievements and discuss ways to sustain its outcomes in the years ahead.

Distinguished attendees included Deputy Minister of Religious and Cultural Affairs Muneer Mulaffer, EU Ambassador Carmen Moreno, and German Ambassador Dr. Felix Neumann.

The programme featured a presentation on SCOPE’s impact and outcomes, a panel discussion with civil society representatives exploring key learnings, and the launch of a photo stories book capturing personal narratives and community experiences from across the island.

The event concluded with an art performance by the Temple of Fine Arts, symbolizing unity through creative expression, and an appreciation ceremony recognizing SCOPE’s many partners and collaborators. Exhibition spaces showcased installations by the Centre for Policy Alternatives, the Archive of Memory, and the Sri Lanka Barometer, all supported under the SCOPE initiative.

The ceremony served as both a celebration and reflection, underscoring the collective effort that shaped SCOPE’s success and reaffirming the shared commitment of Sri Lanka, the EU, and Germany to promote dialogue, inclusion, and unity across the nation.

Colombo, November 7 – The Ministry of Education, Higher Education, and Vocational Education announced that Sri Lanka’s school system will transition to a learning-centered education model focusing on practical knowledge and skills under the upcoming 2026 education reforms.

Addressing a press briefing held yesterday (6), Ministry Secretary Nalaka Kaluwewa stated that the reforms will be implemented for students entering Grade 1 and Grade 6 in 2026, marking the beginning of a long-term transformation in the education sector.

“A Grade 1 student who starts under this new reform will leave school after 13 years, around 2036 or 2037. So, this is a long-term process,” Kaluwewa explained.

Currently, Sri Lanka has 10,076 schools, with 12,626 Grade 1 classrooms serving 282,293 students, and 11,291 Grade 6 classes accommodating 323,896 students. Kaluwewa noted that these students will form the foundation of the reform rollout.

Teacher Training and Preparation

Kaluwewa emphasized that teacher training is a key component of the reform. The training program consists of two stages:

• The Training of Trainers (ToT) phase, conducted by the National Institute of Education (NIE), is 99% complete, with nearly 10,000 master trainers already trained.
• The second phase aims to train 136,065 teachers islandwide, using the master trainers, and is currently in progress.

He confirmed that all teacher training will be completed by December 31, 2025.

New Learning Materials and Parental Awareness

The Ministry has prepared 106 new learning modules for Grades 1 and 6 for the first term of 2026, with printing in its final stages and expected to finish by November 15. The materials will be distributed to schools before the new academic year begins.

An awareness program for parents will also be held in December 2025 to familiarize them with the upcoming changes in the education system.

Revised School Timetable

Kaluwewa announced that the duration of a school period will be extended to 50 minutes, as recommended by the NIE, to support practical and activity-based learning. Consequently, the number of periods per day will be reduced from eight to seven, while interval durations will be increased.

He clarified that the reform is not merely about extending school hours but about enhancing the quality of learning. The new timetable will apply to all grades:

• Grades 1 to 4 will follow a common schedule.
• Grades 5 to 13 will have an additional 30 minutes added to their school day.

Transport Coordination

Addressing potential transportation concerns, Kaluwewa said the Ministry has held discussions with the Transport Ministry, National Transport Commission, Road Passenger Transport Authority, and the Railway Department. All relevant agencies have agreed to adjust transport schedules to align with the new school hours.

Implementation and Access

Kaluwewa confirmed that all circulars related to the reforms have already been issued and are available on the official Ministry of Education website for public access.

He concluded by reiterating that the 2026 education reforms represent a major step toward a modern, skill-oriented, and student-centered education system designed to prepare Sri Lankan students for future global challenges.

Sri Lanka’s Minister of Foreign Affairs, Foreign Employment, and Tourism, Vijitha Herath, will undertake an official visit to Riyadh, Kingdom of Saudi Arabia, from November 8 to 11, 2025, to participate in the 26th Session of the General Assembly of the World Tourism Organization (UNWTO).

According to a statement issued by the Ministry of Foreign Affairs, Foreign Employment, and Tourism, Minister Herath will take part in high-level sessions of the UNWTO Assembly and hold bilateral discussions with counterparts from several member states.

The Ministry noted that Sri Lanka, a founding member of the UNWTO since its establishment in 1975, continues to play an active role in global tourism policy and development.

“The visit of Minister Herath is aimed at advancing Sri Lanka’s tourism agenda through enhanced collaboration with the UNWTO and its member countries,” the statement added.

The four-day session in Riyadh is expected to focus on sustainable tourism recovery, innovation, and investment, providing Sri Lanka an opportunity to strengthen international partnerships and showcase its ongoing efforts to promote tourism as a key driver of economic growth.

Bangladesh and Sri Lanka have agreed to enhance investment ties and explore port connectivity projects as part of a broader effort to strengthen bilateral cooperation, following the fourth round of Foreign Office Consultations (FOC) held in Colombo on Thursday.

The meeting — convened after an eight-year gap — was co-chaired by the Foreign Secretaries of both nations and served as a platform to review the full spectrum of bilateral relations while identifying new areas of collaboration.

Discussions covered a wide range of topics including trade, investment, connectivity, defence, tourism, education, agriculture, fisheries, youth development, culture, health, digital innovation, and people-to-people exchanges.

Sri Lanka highlighted its existing investments and vibrant diaspora presence in Bangladesh, inviting Bangladeshi investors to explore opportunities in infrastructure, logistics, agriculture, and tourism-related ventures. Bangladesh, in turn, encouraged Sri Lankan investment in its export processing zones, special economic zones, and API industrial parks, with a focus on high-potential sectors such as pharmaceuticals, hospitality, ICT, renewable energy, agro-processing, automobiles, and leather industries.

Both sides underscored the need to facilitate trade by streamlining regulatory processes, particularly for pharmaceutical product registration, and by advancing the work of the Trade Negotiating Committee and the Joint Working Group on Trade and Shipping. They also stressed the importance of private-sector engagement in driving economic cooperation.

Connectivity and shipping emerged as key priorities, with discussions centered on establishing direct port links between Chattogram and Colombo. Tourism cooperation was another focal point — Sri Lanka proposed initiatives to promote green tourism, while Bangladesh suggested developing joint tourism circuits highlighting tea and Buddhist heritage sites.

Showers or thundershowers will occur at times in Western, Sabaragamuwa, Central, North-western and Northern provinces and in Galle and Matara districts. Fairly heavy falls above 75 mm are likely at some places in these areas.
Showers or thundershowers will occur elsewhere of the island after 1.00 p.m. Fairly heavy falls above 50 mm are likely at some places in these areas.

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