By Adolf

Sitting in Europe, I have followed Sri Lankan social media closely and enthusiastically—without bias. The narrative is clear: AKD is losing his pants. The opposition, backed by self-interested businesses and a divided Ranil-Sajith vote, handed AKD 43% in the presidential election. Months later, he secured a 2/3 parliamentary majority. That is given. But let us not forget—when Gotabaya ran away, he too had a 2/3 majority. Popularity in a vacuum is not governance. If AKD truly wishes to test his popularity, let him face the Provincial Council elections. A united opposition would wipe him out.

AKD and RW in good times 

To his credit, AKD has driven fear into the hearts of the corrupt. But whilst he targets the opposition, critics rightly point out that he ignores his own corrupt ministers and business cronies. Retribution will come to him double and treble if he loses the next election. The better strategy is to deal with corruption with an even hand, bring down the cost of living, and build a credible administration.

Now, let us speak plainly about Ranil Wickremesinghe. He has his fair share of criticism—no one denies that. However, in the tumultuous aftermath of Sri Lanka’s 2022 economic implosion—when foreign reserves hit zero, inflation soared past 70%, and public rage toppled a presidency—the nation stood on the brink of a failed state. Into this maelstrom stepped Ranil Wickremesinghe. While his tenure was marked by severe public hardship and political unpopularity, a sober assessment reveals a stark reality: at that precise moment of existential threat, Wickremesinghe was not merely a viable option; he was the indispensable, singular figure capable of preventing total economic disintegration. And he did it whilst AKD watched in silence.

Achievements

The primary argument for Wickremesinghe’s unique value lies not in his popularity, but in his unparalleled crisis management pedigree. This was not his first rodeo. He had previously navigated the 2001 economic crisis, demonstrating a technical fluency in fiscal policy that his contemporaries lacked. When he assumed the presidency in July 2022, Sri Lanka was paralysed; international creditors were unresponsive, and domestic political factions offered only populist quick-fixes that would have accelerated default. Wickremesinghe, however, possessed the bureaucratic memory and international relationships necessary to immediately restart dialogue with multilateral institutions. His credibility with the IMF, built over decades, proved to be Sri Lanka’s most critical asset.

This credibility bore its most significant fruit: the securing of the $2.9 billion IMF bailout. This agreement was the lifeblood that stanched the country’s fiscal hemorrhage. Achieving this required the implementation of a deeply unpopular, yet medically necessary, austerity regimen. Wickremesinghe pushed through drastic tax hikes, slashed energy subsidies, and raised utility tariffs—measures that were politically suicidal but fiscally indispensable. Without these conditional reforms, the IMF program would have failed, and the country would have faced sovereign default with no recovery path. He provided the legislative backbone for stabilization, notably through the Central Bank Act, which curbed monetary financing of government debt—a reform that structurally prevents the very printing of money that caused the initial hyperinflation.

Recognized Results

The results, though hard-won, were objectively measurable and confirmed by international observers. Within two years, headline inflation plummeted from a crippling 70% to under 6%. The rupee stabilized against the dollar, and foreign investor confidence began to trickle back. Most critically, Sri Lanka exited the contractionary spiral; after four consecutive quarters of GDP decline, the economy recorded its first growth in 2024. This technical recovery was the direct consequence of a targeted, orthodox economic strategy that only Wickremesinghe had the nerve and will to execute. Even political adversaries, including figures from the Marxist JVP, conceded privately—and occasionally publicly—that no other active politician possessed his specific skill set to manage the collapse. His success lay in doing the “unpopular right thing” rather than the “popular wrong thing.”

The Way Forward for Sri Lanka 

Let us face the truth. AKD is good at speaking and frightening the opposition. But Ranil Wickremesinghe is the best choice—not because he is a great leader in the conventional sense, but because he is the ultimate crisis technician. He is the surgeon willing to perform a painful amputation to save the patient’s life. His electoral defeats underscore the profound disconnect between the technical requirements of stabilization and the public’s tolerance for pain. Yet historians of the 2022 economic crisis will remember Wickremesinghe’s role as the grim, necessary stopgap that pulled Sri Lanka back from the edge of the abyss—a task that, at that perilous hour, no one else was equipped to undertake.

Today, AKD attempts to put him in jail for 16 million Rupees whilst enjoying government privileges—a move that shows how low they have stooped. President Trump’s birthday bash on the White House lawns is a stark reminder that separating the private and public life of a president is exceedingly difficult. AKD and his team worked under Wickremesinghe’s guidance at Temple Trees in 2015–17, prosecuting the Rajapaksa family for bribery and corruption—yet continued with no apparent tangible results. A better attempt would be to stop the witch hunt and ensure Bribery of that scale never happens again. The country is losing valuable recovery time on an unproductive agenda . The laws were toughened during the crisis not by president AKD . Sri Lanka can no longer afford to look backward while the future burns.

Sri Lanka’s tax collection landscape has undergone a dramatic shift in 2026, with Sri Lanka Customs emerging as the country’s largest revenue-generating agency and overtaking the Inland Revenue Department for the first time in years. The development underscores the growing importance of import-based taxation in supporting the Government’s ambitious fiscal consolidation programme.

Official figures from the Finance Ministry show that Customs contributed Rs. 876 billion during the first four months of the year, representing 49% of total tax revenue. By comparison, the Inland Revenue Department collected Rs. 780 billion, accounting for 44%, while the Excise Department generated Rs. 97 billion.

The change has been driven primarily by the resumption of vehicle imports, which has triggered a sharp increase in tax collections at ports of entry. Revenue from excise duties on motor vehicles jumped to Rs. 187.1 billion between January and April, more than three times the amount collected during the same period in 2025. VAT on imports also recorded strong growth, increasing by 35% to Rs. 299.9 billion.

These gains helped total tax revenue rise by 31.7% to Rs. 1.78 trillion, accounting for more than 90% of overall Government income. Taxes on goods and services remained the largest contributor, generating Rs. 1.21 trillion. VAT alone delivered Rs. 677.4 billion, while excise duties contributed Rs. 391.8 billion and the Social Security Contribution Levy generated Rs. 113.3 billion.

However the fiscal story extends beyond import taxes. Domestic tax collection also showed resilience, reflecting broader economic recovery. Revenue from VAT on domestic activities expanded by 26%, while Social Security Contribution Levy collections increased by 15%.

Income tax receipts climbed to Rs. 310.2 billion, supported largely by corporate earnings. Corporate income taxes accounted for half of all income tax revenue, followed by individual income taxes and withholding taxes. The figures suggest that businesses have continued to recover from the economic crisis that severely disrupted activity only a few years ago.

The Ministry attributed the stronger tax performance to sustained economic growth. Sri Lanka’s economy expanded by 5% in both 2024 and 2025, with GDP at constant prices increasing to Rs. 13.13 trillion last year. The improving economic environment has broadened the tax base and strengthened compliance across several sectors.

Meanwhile, Government expenditure remained relatively contained. Recurrent spending increased modestly, while interest payments declined by 4.6%, providing additional relief to public finances. Although capital expenditure rose by nearly 50%, utilisation rates remained below planned levels, indicating that infrastructure and development spending has yet to accelerate significantly.

By the end of April, the Government had already achieved almost 37% of its annual revenue target and more than half of its projected non-tax revenue target. Total expenditure, however, stood at only a quarter of the annual allocation.

The figures point to a fiscal recovery that is gathering momentum. Whether it can be sustained will depend on continued economic growth, stable import activity and the Government’s ability to diversify revenue sources beyond the current dependence on vehicle-related taxes.

As Sri Lanka seeks to strengthen its economic recovery and restore investor confidence, authorities are turning their attention to the Gulf region, presenting Port City Colombo as a cornerstone project capable of attracting billions in investment and transforming the island into a regional services hub.

This vision took centre stage at a major investment forum hosted in Dubai, where government representatives and project officials showcased opportunities within Port City Colombo to an audience of UAE-based investors, business executives, financial institutions, and industry stakeholders.

Held at the Ritz-Carlton Dubai, the event formed part of a wider campaign to promote Sri Lanka’s premier Special Economic Zone and secure foreign direct investment for sectors expected to drive future economic growth.

The gathering featured prominent figures including Presidential Special Envoy on Foreign Direct Investments Hanif Yusoof, Colombo Port City Economic Commission Chairman Harsha Amarasekera, and senior representatives from CHEC Port City Colombo Ltd. Their message was clear: Sri Lanka is positioning itself as an attractive destination for international capital, with Port City Colombo serving as the flagship platform for that ambition.

Speakers emphasised that the project offers investors a combination of strategic location, modern infrastructure, and a dedicated regulatory environment designed to facilitate global business operations. Located adjacent to Colombo’s commercial district and connected to major shipping routes, the development aims to become a centre for finance, technology, logistics, and professional services.

Sri Lanka’s Ambassador to the UAE, Professor Arusha Cooray, opened proceedings by highlighting the longstanding economic ties between the two countries and underscoring the growing importance of bilateral trade and investment cooperation.

One of the event’s key themes was the comparison between Dubai’s rise as a global commercial centre and the aspirations behind Port City Colombo. Ghanim Al Falasi, representing Dubai Silicon Oasis, noted that major infrastructure projects combined with business-friendly policies had played a crucial role in Dubai’s success. He suggested similar opportunities could emerge in Colombo if the project successfully attracts international businesses and investors.

During the forum, CPCEC officials detailed investment incentives, registration procedures, and future development plans. The presentations were designed to address investor concerns while demonstrating the project’s readiness for large-scale commercial activity.

Analysts note that Sri Lanka’s efforts to attract Gulf investment come at a critical time. The country is seeking to diversify sources of foreign capital, improve export earnings, and create high-value service industries capable of generating long-term economic benefits.

Closing the event, Consul General Alexi Gunasekera stressed that the initiative was intended not only to market Port City Colombo but also to deepen economic engagement between Sri Lanka and Gulf economies.

The strong turnout of business leaders and investors from sectors including banking, information technology, logistics, and real estate suggested significant regional interest. Whether that interest translates into substantial investment commitments will be closely watched, as Port City Colombo continues to be promoted as one of Sri Lanka’s most ambitious economic development projects.

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Sri Lanka Customs Overtakes Inland Revenue as Tax Collections Soar

Sri Lanka’s tax collection landscape has undergone a dramatic shift in 2026, with Sri Lanka Customs emerging as the country’s largest revenue-generating agency and overtaking the Inland Revenue Department for the first time in years. The development underscores the growing importance of import-based taxation in supporting the Government’s ambitious fiscal consolidation programme.

Official figures from the Finance Ministry show that Customs contributed Rs. 876 billion during the first four months of the year, representing 49% of total tax revenue. By comparison, the Inland Revenue Department collected Rs. 780 billion, accounting for 44%, while the Excise Department generated Rs. 97 billion.

The change has been driven primarily by the resumption of vehicle imports, which has triggered a sharp increase in tax collections at ports of entry. Revenue from excise duties on motor vehicles jumped to Rs. 187.1 billion between January and April, more than three times the amount collected during the same period in 2025. VAT on imports also recorded strong growth, increasing by 35% to Rs. 299.9 billion.

Four years after Sri Lanka’s worst economic crisis in modern history, policymakers are revisiting a critical lesson from the collapse: dependence on foreign currency can become a national vulnerability.

That lesson dominated discussions at a Colombo roundtable this week where financial regulators, bankers and business leaders examined a proposal that could significantly alter the country’s commercial relationship with India.

The initiative seeks to increase the use of Indian Rupees and Sri Lankan Rupees in bilateral trade, reducing reliance on the US dollar for transactions currently valued at more than $6 billion annually.

Supporters describe the proposal as a step toward economic resilience. Critics see practical challenges that could limit its effectiveness.

The debate comes at a time when Sri Lanka is still rebuilding foreign reserve buffers after the 2022 crisis exposed severe weaknesses in the country’s external financing model. When dollar shortages emerged, import payments became increasingly difficult, triggering widespread shortages of fuel, medicines and other essentials.

Against that backdrop, advocates argue that local-currency settlements offer a safeguard. By allowing traders to transact directly in rupees, Sri Lanka could reduce demand for scarce hard currency while lowering conversion costs and exchange-rate risks.

India, meanwhile, has been steadily laying the groundwork for wider international use of its currency. Regulatory changes introduced by the Reserve Bank of India now permit banks to open specialised rupee settlement accounts more easily and extend rupee-denominated financing for cross-border trade.

The reforms effectively create a financial ecosystem where trade can be conducted without touching the dollar.

However despite these changes, actual utilisation remains modest.

Why?

Interviews with trade finance experts suggest the answer lies in commercial realities rather than policy shortcomings. Businesses typically favour familiar systems. Most exporters and importers continue to invoice in dollars because pricing benchmarks, financing structures and global supply chains are built around the currency.

Switching to rupee settlements requires confidence that exchange rates will remain predictable, liquidity will be available, and counterparties will accept the arrangement without additional costs.

There is also a psychological factor. For decades, the dollar has been viewed as the safest and most convenient medium for international transactions. Changing that mindset may prove more difficult than changing regulations.

Nevertheless, momentum appears to be building. Policymakers from both countries are increasingly framing local-currency trade not simply as a financial innovation but as part of a broader vision of regional economic integration.

The objective extends beyond trade settlements. Officials speak of deeper banking links, digital connectivity, investment flows and more efficient cross-border payment systems connecting the two economies.

Whether those ambitions materialise will depend largely on private-sector participation.

The success of rupee-based trade cannot be mandated through policy alone. It requires exporters, importers and banks to see tangible commercial benefits.

For Sri Lanka, the stakes are significant. If local-currency trade gains traction, it could provide an additional layer of protection against future foreign exchange shocks. If it fails to attract users, it risks becoming another well-intentioned reform that never fulfils its promise.

The coming months may reveal which path the initiative ultimately takes.

Sri Lanka has taken a significant step toward embracing the global digital economy, with the Ministry of Digital Economy and the Securities and Exchange Commission (SEC) launching discussions on the future of virtual assets. The initiative marks a notable departure from the country’s traditionally cautious approach to cryptocurrencies and digital finance.

The two institutions recently convened a high-level awareness session involving senior representatives from the Central Bank of Sri Lanka, the Colombo Stock Exchange, and the Ministry of Digital Economy. The gathering aimed to assess how rapidly evolving digital asset markets can be aligned with Sri Lanka’s existing financial and regulatory systems.

Officials explored the realities of Sri Lanka’s digital asset landscape while examining international regulatory models adopted by leading financial centres. Discussions also focused on compliance requirements, risk management practices, and the broader implications of integrating virtual assets into the country’s financial ecosystem.

Participants were introduced to the mechanics of virtual assets, including how they are created, traded, stored, and utilized across various industries. The session also highlighted emerging applications ranging from investment products such as exchange-traded funds (ETFs) and self-custody solutions to cross-border payment systems and remittance services.

Particular attention was paid to asset tokenization, a process that converts ownership rights of physical assets into digital tokens. Officials also examined how startups could potentially leverage token issuance mechanisms to access new sources of capital, a financing avenue that has gained popularity in several technology-driven economies.

The move represents a striking shift in policy. For years, Sri Lanka’s financial authorities maintained a firm stance against cryptocurrencies. The Central Bank repeatedly warned the public about the risks associated with virtual currencies, stressing that they were not recognized as legal tender within the country. Regulatory concerns centred on market volatility, fraud, investor protection, and vulnerabilities linked to money laundering and terrorist financing.

However, the global landscape has changed considerably. Financial hubs such as Singapore and Hong Kong have introduced comprehensive frameworks governing digital assets, attracting investment and innovation while maintaining regulatory oversight. Meanwhile, many Sri Lankans have increasingly turned to peer-to-peer trading networks and offshore cryptocurrency platforms despite the absence of local regulations.

Analysts view the latest initiative as an acknowledgement that digital assets are becoming increasingly difficult to ignore. Rather than attempting to restrict activity entirely, policymakers appear to be considering a regulated environment that balances innovation with investor protection.

The discussions also come as Sri Lanka seeks new avenues for economic growth following its recent debt crisis. Policymakers believe digital transformation could play a central role in modernizing financial services, attracting foreign investment, and supporting entrepreneurship.

While no formal regulatory framework has yet been announced, the collaboration between the Ministry of Digital Economy and the SEC signals the beginning of what could become a comprehensive roadmap for virtual asset regulation. The outcome may determine how Sri Lanka positions itself within the rapidly evolving global digital economy.