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Treasury’s Debt Management Failures Expose Continuing Fiscal Vulnerabilities

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Treasury’s Debt Management Failures Expose Continuing Fiscal Vulnerabilities

By: Staff Writer

June 16, Colombo (LNW): Nearly four years after Sri Lanka’s sovereign default, serious questions remain about the effectiveness of debt management within the Ministry of Finance and the newly established Public Debt Management Office (PDMO). While authorities frequently highlight restructuring successes and improving macroeconomic indicators, concerns are growing that institutional weaknesses continue to threaten long-term debt sustainability.

As of June 16, 2026, Sri Lanka remains heavily indebted despite securing restructuring agreements with bilateral and private creditors. External debt obligations have been rescheduled, but not eliminated. At the same time, domestic debt servicing costs continue to absorb a significant portion of annual government revenue, limiting fiscal space for public investment, social welfare and economic development.

Parliament’s Committee on Public Finance recently exposed a troubling gap in public debt disclosure practices. Members questioned why detailed debt statistics and government securities market information that were once readily available through the Central Bank are no longer easily accessible following the transfer of debt management responsibilities to the PDMO.

The magnitude of the challenge confronting policymakers is reflected in the latest debt figures. Treasury data show that Sri Lanka’s gross public debt remained close to US$100 billion by early 2026, equivalent to roughly 92 percent of GDP. Domestic debt accounted for over US$61 billion, while Government external debt stood at US$37.47 billion at the end of March 2026. Multilateral lenders, including the Asian Development Bank and World Bank, account for the largest share of external borrowings, while International Sovereign Bonds continue to dominate the commercial debt portfolio. Approximately 81 percent of Sri Lanka’s commercial external debt consists of sovereign bond obligations that were restructured following the 2022 default.

Despite the successful completion of debt restructuring agreements, Sri Lanka remains obligated to make significant annual debt service payments. Official data indicate that external debt servicing payments reached US$1.36 billion during the first six months of 2025, with principal repayments accounting for more than US$860 million and interest payments exceeding US$490 million. While debt restructuring has postponed major International Sovereign Bond repayments until 2028, annual obligations to bilateral, multilateral and commercial creditors continue to place pressure on foreign reserves and fiscal resources.

The issue goes beyond technical reporting deficiencies. It points to a broader lack of accountability within the Ministry of Finance regarding debt monitoring, debt servicing strategies and public communication. Effective debt management requires continuous surveillance of refinancing risks, currency exposures, maturity profiles and investor sentiment. Without transparent and comprehensive reporting, neither Parliament nor the public can properly assess whether these risks are being managed responsibly.

Critics argue that the Ministry of Finance has yet to demonstrate a coherent long-term debt strategy capable of preventing a recurrence of the crisis that culminated in the 2022 default. While restructuring negotiations addressed immediate financing pressures, questions remain about future borrowing plans, contingent liabilities from state-owned enterprises and the sustainability of rising domestic debt obligations.

The establishment of the PDMO was intended to introduce professionalism and specialization into public debt management. However, lawmakers have expressed concern that the institution has yet to match the transparency standards previously maintained by the Central Bank. The apparent reduction in publicly available debt data raises concerns about governance, institutional readiness and operational effectiveness.

Equally concerning is the limited accountability framework surrounding debt servicing decisions. Major borrowing commitments continue to have long-term implications for taxpayers, yet public scrutiny remains constrained by inadequate disclosure and fragmented reporting systems.

Sri Lanka’s debt crisis exposed fundamental weaknesses in economic governance. Preventing another debt emergency requires more than restructuring agreements and IMF reviews. It demands robust institutional capacity, transparent reporting systems, clear ministerial accountability and proactive risk management.

Without stronger leadership from the Ministry of Finance and a more transparent PDMO, Sri Lanka risks repeating the very mistakes that contributed to its economic collapse. Sustainable debt management is not simply a technical exercise it is the foundation upon which economic stability and investor confidence ultimately depend

The fundamental concern is that Sri Lanka’s debt crisis is no longer merely a question of how much the country owes. The greater challenge is whether institutions responsible for managing nearly US$100 billion in public liabilities possess the transparency, technical capacity and accountability required to prevent another debt catastrophe. When Parliament itself struggles to obtain comprehensive debt data, questions inevitably arise about whether investors, taxpayers and international partners are receiving the full picture of the country’s fiscal risks. The credibility of Sri Lanka’s economic recovery will ultimately depend not only on debt restructuring agreements but also on the quality of public debt governance.

Dubai Investors Eye Sri Lanka as South Asia Gateway

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Dubai Investors Eye Sri Lanka as South Asia Gateway

By: Staff Writer

June 16, Colombo (LNW): Nearly 200 senior corporate executives, investors, diplomats, and business leaders gathered behind closed doors at Dubai’s prestigious Ritz-Carlton DIFC to examine a question increasingly attracting attention across the Gulf: Can Sri Lanka become South Asia’s next major investment platform?

The exclusive forum, titled “Globalisation and the Sri Lankan Opportunity – From Recovery to Relevance”, was jointly organized by the Sri Lankan Embassy in the UAE, the Consulate General in Dubai and the Northern Emirates, the Colombo Port City Economic Commission, and CHEC Port City Colombo Pvt. Ltd.

The event brought together influential representatives from some of the UAE’s leading companies, including Sobha Realty, Binghatti, Oracle, Emirates Airlines, First Abu Dhabi Bank, JLL, Cushman & Wakefield, CBRE, IFS, Danube, and Samana Developers. Their presence underscored growing Gulf interest in Sri Lanka’s evolving economic landscape.

Opening the forum, Sri Lanka’s Ambassador to the UAE, Professor Arusha Cooray, highlighted the long-standing economic and people-to-people ties between the two nations. She emphasized that Sri Lanka is now seeking to deepen this partnership by positioning itself as a strategic hub for businesses aiming to expand across South Asia.

The discussion gained further momentum through a keynote address by Ghanim Al Falasi, CEO of Falak Tayyeb Platinum and a senior executive associated with Dubai Silicon Oasis. Drawing on years of experience in the UAE’s innovation ecosystem, Al Falasi argued that Dubai and Colombo can function as complementary gateways. While Dubai provides access to global capital, logistics, and international markets, Colombo offers proximity to one of the world’s fastest-growing regions.

A key message throughout the event was Sri Lanka’s effort to shift international perceptions from economic recovery to economic transformation.

Presidential Special Envoy for Foreign Investment Hanif Yusoof told participants that Sri Lanka now presents a unique proposition for investors seeking stable access to South Asian markets. He described Port City Colombo as the centrepiece of the country’s long-term development strategy, comparing its future role to Dubai’s function as a gateway to the Middle East and North Africa.

Meanwhile, Colombo Port City Economic Commission Chairman Harsha Amarasekera detailed the project’s recent progress and rising investor interest. He stressed that Port City Colombo is not intended to compete with Gulf financial centres but rather complement them by offering businesses a South Asian base of operations.

Director General Revan Wickramasuriya highlighted the project’s regulatory framework, tax incentives, and investor protection measures designed to meet international standards and attract globally mobile capital.

The gathering concluded with renewed optimism about UAE-Sri Lanka economic cooperation. Participants left with a clear message: Sri Lanka is seeking to redefine its place in the regional economy and position Port City Colombo as a launchpad for businesses targeting South Asia’s future growth opportunities.

TT Remittances Without Imports: CBSL, Finance Ministry and Customs Must take Responsibility

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TT Remittances Without Imports: CBSL, Finance Ministry and Customs Must take Responsibility

By Adolf

The recent revelations in Parliament regarding billions of rupees remitted overseas through telegraphic transfers (TTs) for imports that allegedly never entered Sri Lanka have once again exposed significant weaknesses in the country’s foreign exchange monitoring and trade oversight framework.

According to Public Security Minister Ananda Wijepala, investigations have uncovered tens of millions of dollars transferred abroad through hundreds of transactions linked to shell companies, with little or no evidence that corresponding goods were imported into the country. While the scale of the alleged fraud has attracted public attention, analysts point out that the underlying problem is not new.

Administration Failures

For years, weaknesses in the monitoring of trade-related remittances have been known to regulators and industry participants. The issue raises an important question: who is responsible for ensuring that foreign exchange leaving the country is genuinely linked to imports entering Sri Lanka?

The primary responsibility rests with the Central Bank of Sri Lanka (CBSL), which is the custodian of the country’s foreign exchange reserves and the regulator of the banking system. Commercial banks operate under rules established by the Central Bank, and therefore CBSL must ensure that adequate controls, reporting requirements and monitoring systems are in place to identify suspicious transactions and unusual patterns.

At the same time, Sri Lanka Customs and the Department of Imports and Exports Control have an equally important role. If foreign exchange is remitted for imports, there should be a mechanism to verify whether the goods subsequently arrive in the country. In an era where banking, customs and tax systems are increasingly digitised, reconciling TT payments with import declarations should not be an impossible task.

Analysts note that similar practices have existed for many years in different forms. For example, some parents fund children studying overseas through informal channels such as hawala systems. Others transfer money abroad and physically carry goods into the country through airports. In such cases, the remittance and the goods movement often cannot be properly reconciled through official records.

Failed Advisors

Perhaps the most significant concern, according to industry observers, relates to vehicle imports. It has long been alleged that invoices submitted for customs clearance do not always reflect the true value of vehicles. A portion of the actual payment may be settled separately through overseas transfers, creating discrepancies between declared import values and the real transaction value. Such practices not only result in foreign exchange leakages but may also lead to substantial losses in government revenue.

The focus therefore should not be on sensational headlines but on addressing the systemic weaknesses that have allowed such practices to continue. Authorities already possess extensive digital records. Every TT transaction leaves an electronic trail. Customs declarations, tax records, company registrations and banking information can all be analysed and cross-referenced.

Rather than broad accusations, investigators should identify the importers and companies involved and require them to demonstrate that imports corresponding to the remittances actually took place. Where discrepancies exist, businesses should be given an opportunity to show cause, regularise their positions and pay any taxes, duties or penalties that may be due.

The Financial Intelligence Unit (FIU) of the Central Bank must also play a more proactive role by strengthening monitoring systems, enhancing risk-based supervision and introducing clearer rules for trade-related foreign exchange transactions. Commercial banks should be required to conduct stronger due diligence when processing large volumes of import-related remittances.

Meanwhile, Sri Lanka Customs must improve post-clearance audits and strengthen digital tracking of imports against remittances. The Ministry of Finance should accelerate the integration of customs, tax and banking databases to ensure real-time monitoring and reconciliation.


Conclusion

The latest investigations should serve as a wake-up call. The solution lies not merely in punishing offenders but in building a modern, fully digitised system where every dollar remitted abroad for imports can be matched against goods entering the country. Only then can Sri Lanka effectively safeguard its foreign exchange resources and restore confidence in its regulatory and enforcement framework.

Increasingly, the public views attempts to blame banks, the private sector and industry for failures of state oversight with scepticism. When regulators, Customs, tax authorities and policymakers fail to detect or prevent such practices over many years, accountability must begin with the institutions entrusted with that responsibility.

President Anura Kumara Dissanayake faces a critical challenge. If he is serious about reform, he must surround himself with competent public servants, experienced technocrats and capable advisors who understand the realities of trade, finance and regulation. Relying on failed advisors and systems that have failed successive administrations risks producing more of the same outcomes. Sri Lanka does not need more investigations after the fact; it needs stronger institutions, smarter regulation and effective governance that prevents such abuses from occurring in the first place.

CID Submits Court Update on Multiple 2008 Killings Involving Ex-Eastern Province Leader

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CID Submits Court Update on Multiple 2008 Killings Involving Ex-Eastern Province Leader

June 16, Colombo (LNW): Sri Lanka’s Criminal Investigation Department (CID) has presented fresh details to the Batticaloa Magistrate’s Court concerning three individuals under investigation over a series of fatal shootings that occurred in the Eastern Province nearly two decades ago.

Among those named in the proceedings are former Deputy Minister and ex-Eastern Province Chief Minister Sivanesathurai Chandrakanthan, widely known as Pillayan, along with Rasik Mohamed Faiz and Hameed Lebbe Mohamed.

The information was placed before Batticaloa Magistrate Annathurai Darshini on 15 June as investigators continue to pursue several long-running homicide inquiries linked to incidents reported in 2008.

According to the CID, the cases under examination involve five separate killings carried out in different parts of the district during a period marked by heightened security concerns and political tensions.

Investigators informed the court that one of the incidents took place on 9 January 2008 near a playground situated beside the Murugan Kovil, where two men were reportedly gunned down with a T-56 assault rifle.

Another case relates to a shooting along the main road in Kattankudy on 22 May 2008, in which two individuals lost their lives after being attacked by armed assailants.

The CID also outlined findings connected to the death of Alagathurai Dharmalingam, a resident of Koththiyapola within the Vavunathivu Police Division. Authorities stated that he was allegedly killed in a shooting carried out by an unidentified armed group.

Health Minister Rejects Claims of Serious Illness Involving Ex-Intelligence Chief

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Health Minister Rejects Claims of Serious Illness Involving Ex-Intelligence Chief

June 16, Colombo (LNW): The government has sought to quell speculation surrounding the health of former State Intelligence Service Director Major General (Retired) Suresh Sallay, with Health and Mass Media Minister Dr. Nalinda Jayatissa stating that the former intelligence chief is receiving appropriate medical treatment and is not facing a life-threatening condition.

Speaking to reporters, the Minister dismissed recent allegations suggesting that Sallay’s health had significantly deteriorated while under detention, describing such claims as inconsistent with the information available from medical professionals overseeing his care.

According to Dr. Jayatissa, Sallay is currently undergoing treatment at the National Hospital under legal detention arrangements and remains under the supervision of specialist medical teams. He stressed that doctors have not reported any critical complications and that all necessary medical interventions, medication and nutritional requirements are being provided without restriction.

The Minister noted that healthcare authorities are closely monitoring Sallay’s condition and that any future decisions regarding his treatment or management would be guided by medical assessments and recommendations from the specialists involved.

Addressing concerns raised in some quarters that authorities could be held accountable if his health worsened, Dr. Jayatissa maintained that there is no indication at present of a serious or alarming medical situation. He reiterated that government institutions have acted in accordance with established procedures and medical advice throughout the process.

The Minister also responded to claims from family members that the former intelligence chief had developed swelling in his limbs, stating that he had not been informed of any such diagnosis by the medical team treating him. He added that official updates received by the Ministry have not indicated the presence of that condition.

Providing further details, Dr. Jayatissa said that attention had been given to Sallay’s health concerns even before his admission to hospital. He explained that while in custody, medical complaints raised by the detainee were attended to through coordination between law enforcement authorities and healthcare personnel.

Officials ensured that consultations and treatment were arranged whenever required, including for routine medical concerns, he said. Since being admitted to hospital, Sallay has continued to undergo examinations and receive specialist care as deemed necessary by doctors.

The Minister emphasised that medical evaluations, rather than public speculation or political commentary, would remain the basis for decisions concerning the former intelligence chief’s treatment. He added that healthcare professionals are continuing to monitor his progress and will provide recommendations based on clinical findings.

Climate Crisis Threatens Billions of Children Worldwide, UNICEF Warns

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Climate Crisis Threatens Billions of Children Worldwide, UNICEF Warns

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By: Isuru Parakrama

June 16, World (LNW): Children across the globe are increasingly bearing the brunt of climate change, with a new report from UNICEF warning that billions are now living under the shadow of severe environmental threats ranging from extreme heat and drought to flooding and disease outbreaks.

According to the organisation’s latest assessment, nearly every child worldwide is exposed to at least one major climate-related hazard. The report estimates that around 1.8 billion children are affected by drought conditions, while approximately 1.2 billion face prolonged exposure to dangerously high temperatures.

UNICEF cautioned that young people are among the most vulnerable groups when it comes to climate-related disasters, as they often suffer the greatest consequences from disruptions to health services, education, nutrition and access to clean water. The agency has called on governments to accelerate investments in climate-resilient infrastructure, disaster preparedness and community adaptation programmes to better protect future generations.

The study examined a wide range of environmental and public health risks, including floods, storms, air pollution and mosquito-borne diseases such as malaria. Researchers also analysed factors such as healthcare availability, sanitation, water access and social support systems to assess the overall vulnerability of children.

One of the report’s most alarming findings is that an estimated 1.1 billion children are exposed to three or more overlapping climate hazards. Experts warn that the combination of multiple risks can create compounding crises that place immense pressure on public services and emergency response systems.

UNICEF researchers noted that the challenge extends far beyond individual disasters. In many regions, children are simultaneously confronting heatwaves, water shortages, disease outbreaks and extreme weather events, creating a cycle of vulnerability that becomes increasingly difficult to address.

The report estimates that hundreds of millions of children are exposed to tropical storms and river flooding, while vast numbers remain at risk from malaria, particularly in parts of Africa where climate conditions continue to favour the spread of disease-carrying mosquitoes.

Climate-related disruptions are also taking a significant toll on education. During 2024 alone, approximately 242 million children in dozens of countries experienced interruptions to their schooling as a result of extreme weather events and environmental emergencies.

Among the countries identified as facing the highest levels of child climate vulnerability were Somalia, Madagascar, Myanmar, Cambodia and Pakistan, where climate pressures intersect with economic and social challenges.

The report further highlighted the growing strain on agriculture-dependent nations such as Bangladesh, Indonesia, Nigeria, Pakistan and Tanzania, where prolonged droughts threaten food security and livelihoods.

Meanwhile, landlocked countries are expected to face mounting challenges from water scarcity, desertification, flash flooding and heat stress. Nations such as Botswana and Burkina Faso could see worsening water shortages in the years ahead, underscoring the urgent need for coordinated international action to safeguard children from the accelerating impacts of climate change.

Sri Lanka and China Explore Expanded Defence Cooperation During High-Level Meeting

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Sri Lanka and China Explore Expanded Defence Cooperation During High-Level Meeting

June 16, Colombo (LNW): The newly appointed Defence Attaché of the Chinese Embassy in Sri Lanka, Senior Colonel Fu Xiao, held discussions with Deputy Minister of Defence Major General Aruna Jayasekara (Retd) during a courtesy meeting at the Ministry of Defence in Colombo.

The meeting provided an opportunity for both sides to reaffirm the longstanding defence ties between Sri Lanka and China while exploring avenues for deeper cooperation in areas of shared strategic importance. Officials described the discussions as constructive and forward-looking, reflecting the strong diplomatic and military relationship maintained by the two countries over the years.

During the talks, Deputy Minister Jayasekara expressed appreciation for China’s continued support towards the development of Sri Lanka’s defence sector, particularly through military training opportunities, professional capacity-building initiatives and knowledge-sharing programmes that have benefited members of the armed forces.

He also highlighted the evolving security priorities facing Sri Lanka, noting the growing emphasis on maritime security and surveillance as the country seeks to strengthen its ability to monitor and safeguard its surrounding waters. The Deputy Minister reiterated Sri Lanka’s commitment to maintaining an independent and non-aligned foreign policy while fostering positive relations with international partners.

The discussions focused on several potential areas for future collaboration, including efforts to combat transnational maritime crimes such as narcotics trafficking, illegal arms movements and human smuggling. Both parties also exchanged views on the use of modern technology in defence operations, advanced training systems, simulation-based learning and disaster response capabilities.

Officials noted that enhanced cooperation in these sectors could contribute to regional stability and improve preparedness for emerging security challenges in the Indian Ocean region.

The meeting was also attended by senior representatives from the Chinese Embassy, including the Deputy Defence Attaché and the Naval Attaché, underscoring the importance both countries place on strengthening defence engagement and strategic dialogue.

New Deputy Director General Appointed to National Hospital Colombo

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New Deputy Director General Appointed to National Hospital Colombo

June 16, Colombo (LNW): Specialist Dr. M.K. Sampath Indika Kumar has officially assumed duties as the new Deputy Director General of the National Hospital Colombo yesterday (15), marking a significant addition to the institution’s senior management team.

His appointment forms part of a wider effort by health authorities to strengthen leadership across the public healthcare sector. Dr. Kumar was among a group of newly appointed Deputy Directors General who received official letters of appointment from Health and Mass Media Minister Dr. Nalinda Jayatissa earlier this month.

The Ministry of Health noted that the latest appointments fill several long-standing vacancies in key administrative positions, a move expected to improve decision-making, operational efficiency and service delivery within major state-run healthcare institutions.

A specialist in medical administration with decades of experience in the public health sector, Dr. Kumar is widely recognised for his contributions to hospital management and healthcare planning. Throughout his career, he has overseen the administration of several leading medical institutions across the country, gaining extensive experience in both clinical support services and healthcare governance.

His previous assignments include senior leadership positions at Teaching Hospitals in Badulla and Ratnapura, the District General Hospital in Polonnaruwa, and the National Nephrology Hospital. He has also served as Provincial Director of Health Services for the North Western Province and held a key administrative role at Apeksha Hospital in Maharagama, one of Sri Lanka’s foremost cancer treatment centres.

Authorities to Begin Full Enforcement of Expressway Seat Belt Rules from June 20

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Authorities to Begin Full Enforcement of Expressway Seat Belt Rules from June 20

June 16, Colombo (LNW): Motorists and passengers using Sri Lanka’s expressway network have been reminded that stricter enforcement of mandatory seat belt regulations will come into effect from June 20, following the conclusion of a public awareness and adjustment period.

The National Council for Road Safety announced that from that date, all individuals travelling in vehicles on expressways, regardless of where they are seated, will be required to wear seat belts. The regulation applies equally to front-seat occupants and passengers seated in the rear of the vehicle.

According to Council Chairman Manjula Kularatne, authorities have spent the past several weeks educating motorists about the revised requirements and providing sufficient time for vehicle owners and passengers to adapt to the new safety measures. That grace period is scheduled to expire on June 19.

Officials say the move forms part of a broader effort to strengthen road safety standards and reduce the severity of injuries resulting from traffic accidents on high-speed roads. Studies worldwide have consistently shown that seat belts significantly improve survival rates and minimise the risk of serious injury during collisions.

From June 20 onwards, law enforcement officers will be instructed to implement the regulation without leniency, and those found violating the rule may face legal action under existing traffic laws. Authorities have urged all road users to make seat belt use a routine habit, stressing that the measure is intended to protect lives rather than merely enforce compliance.

Extended Water Interruption Scheduled Across Parts of Gampaha

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Extended Water Interruption Scheduled Across Parts of Gampaha

June 16, Colombo (LNW): Residents in several parts of the Gampaha District have been advised to prepare for a prolonged disruption to their water supply as emergency repair work gets underway at the Karasnagala Water Treatment Plant in Attanagalla.

The National Water Supply and Drainage Board (NWSDB) announced that the interruption will last for 19 hours, commencing at 8.00 a.m. today and continuing until 3.00 a.m. tomorrow (17). Officials stated that the temporary suspension is necessary to facilitate critical maintenance aimed at ensuring the reliability and efficiency of the water distribution network.

Areas falling under the Gampaha Municipal Council, Gampaha Pradeshiya Sabha and Mahara Pradeshiya Sabha jurisdictions will be affected by the outage. Water services will also be unavailable in Weliweriya, Balummahara, Rathupaswala, Minuwangoda, Asgiriya, Udugampola, Opatha and several neighbouring localities.

The NWSDB further noted that residents of the Ranpokunugama Housing Scheme, Urapola, Attanagalla, Bataleeya, Watupitiwala, Nittambuwa, Veyangoda, Kalagedihena, Thihariya and Naiwala are among those expected to experience supply interruptions during the maintenance period.

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