The Central Bank of Sri Lanka (CBSL), in collaboration with the Ministry of Finance and the International Monetary Fund (IMF), hosted a high-level conference titled “Sri Lanka’s Road to Recovery: Debt and Governance” on June 16, 2025, at Shangri-La Colombo.

The event brought together government officials, international stakeholders, private sector leaders, and civil society representatives to reflect on the country’s economic progress and governance reforms amid the IMF-supported recovery programme.

CBSL Governor Dr. Nandalal Weerasinghe welcomed participants, followed by opening remarks from President Anura Kumara Dissanayake and IMF First Deputy Managing Director Dr. Gita Gopinath. The conference reviewed Sri Lanka’s progress at the midpoint of the Extended Fund Facility (EFF) and assessed the nation’s economic turnaround following its 2022 crisis.

President Dissanayake emphasized the visible scars left by the crisis, noting that while macroeconomic stability had been achieved, structural reforms were essential for long-term resilience.

He reiterated the government’s aspiration to achieve economic self-reliance, aiming for the current IMF programme to be Sri Lanka’s last. Dr. Gopinath praised the difficult but necessary steps taken so far, urging the country to maintain reform momentum despite challenges.

Governor Weerasinghe highlighted the progress in stabilizing the economy and stressed the importance of domestic ownership of the reform agenda. He pointed to legislative advances such as the Central Bank of Sri Lanka Act, the Public Financial Management Act, and the Anti-Corruption Act as key to improving macroeconomic governance.

The conference featured four panel discussions. The opening session, moderated by CBSL Assistant Governor Dr. Chandranath Amarasekara, offered context on the 2022 crisis and Sri Lanka’s reform journey. Experts including Treasury Secretary Mahinda Siriwardana and IMF Asia-Pacific Director Dr. Krishna Srinivasan praised the pace of reforms, attributing it to strong political backing.

Session 1, “The Road to Debt Sustainability,” examined the complexities of Sri Lanka’s debt restructuring. Moderated by Dr. Peter Breuer (IMF), the panel called for greater transparency and equitable burden-sharing.

Session 2, “The Road to Credibility,” focused on governance. Discussions led by IMF Legal Department’s Joel Turkewitz highlighted the significance of Sri Lanka’s Governance Diagnostic—the first of its kind in Asia. Calls were made for stronger enforcement and public engagement to build trust.

 The final panel, “Challenges Ahead,” included Dr. Gopinath, former CBSL Governor Dr. Indrajit Coomaraswamy, and other key figures. Speakers emphasized private sector development, export-led growth, and deep institutional reform as pillars of long-term stability.

The conference marked a pivotal moment in Sri Lanka’s path to recovery, reaffirming the joint commitment of the government, CBSL, and IMF to restoring economic stability and public trust.

Sri Lanka is ramping up its efforts to transform into a regional air travel hub by fostering strategic airline alliances and investing in major infrastructure projects, as the country navigates complex political and economic challenges.

Positioned at the crossroads of major Indian Ocean flight routes, Sri Lanka offers unmatched geographical advantage to establish itself as a central player in regional aviation.

Recognizing this potential, authorities are now focused on strengthening air power strategies that integrate both domestic requirements and regional dynamics.

 At the core of this approach is a push for collaboration with other carriers through code-sharing agreements and strategic alliances, which could help SriLankan Airlines expand its global reach, enhance passenger options, and increase cargo volumes.

Such partnerships are particularly vital as the nation looks to rebuild its aviation sector following a prolonged economic crisis and pandemic-related disruptions. By tapping into regional carrier networks, Sri Lanka aims to stimulate tourism, facilitate trade, and attract investment.

As part of these wider efforts, the Chairman and senior management team of Airport and Aviation Services (Sri Lanka) Ltd. (AASL) recently held a high-level strategic meeting with the Board of Airline Representatives (BAR) in Colombo.

Country managers of major international airlines operating in Sri Lanka participated in the session, where they outlined their plans for expanding routes, increasing flight frequencies, and boosting both passenger and cargo capacity.

The meeting focused on aligning infrastructure development, operational efficiency, and service quality with global aviation trends and airline expectations. AASL showcased ongoing and upcoming developments, most notably the Bandaranaike International Airport (BIA) Terminal 2 Project—seen as a game changer in the country’s aviation infrastructure.

A Japanese Airport Consultants representative provided a detailed progress update on Terminal 2, emphasizing its enhanced capacity and improved passenger processing systems. Once completed, the new terminal is expected to significantly boost BIA’s ability to handle growing air traffic and offer a smoother, more modern travel experience.

BAR Chairman Dimuthu Tennakoon described the meeting as a milestone in stakeholder cooperation, expressing confidence that the discussions would help foster a more integrated and passenger-centric aviation ecosystem in Sri Lanka. He also noted that airline representatives would be updating their respective headquarters on the encouraging progress in infrastructure and partnership initiatives.

This multi-pronged strategy—combining infrastructure modernisation, alliance building, and enhanced service focus—marks a crucial step in Sri Lanka’s journey to become a resilient and competitive aviation hub in the Indian Ocean region.

Sri Lanka’s listed companies reported a robust 57.4% year-on-year increase in earnings for the March 2025 quarter, marking the sixth consecutive quarter of profit growth, according to an analysis by First Capital Research.

The strong performance was mainly fueled by the banking and consumer sectors, benefiting from reduced finance costs and improving economic conditions.

The banking sector emerged as a key driver, with earnings rising 43.5% year-on-year. Industry giants such as Commercial Bank, HNB, Sampath Bank, Nations Trust, NDB, Seylan Bank, and Pan Asia Banking Corporation posted a collective 52.9% earnings growth.

The improvement stemmed from a surge in net interest income, supported by falling interest rates, which helped lower funding costs. Growth in fee-based income—especially from digital banking and card transactions—combined with reduced loan impairment charges due to better credit quality, added to the bottom-line gains.

However, the banking sector’s performance was tempered by rising operating expenses, and a few institutions—such as DFCC, Sanasa Development Bank, and HDFC—recorded profit declines.

Meanwhile, the Food, Beverage, and Tobacco sector delivered the strongest results across all segments, with profits soaring by 174.8%.

This spike was driven by higher revenues, improved margins, and lower finance costs. Major contributors including Ceylon Tobacco Company, Melstacorp, Cargills, Distilleries, Bukit Darah, Cold Storage, and Lion Brewery accounted for more than 60% of sector earnings.

The sector benefited from growing consumer demand, lower input costs, and a strengthening rupee, which further enhanced margins.

In contrast, the Consumer Durables and Apparel sector suffered a steep 206.6% drop in earnings. The plunge was largely due to HELA and Dipped Products, which posted a combined earnings contraction of 251.5%.

HELA swung from a Rs. 6 billion profit last year to an Rs. 8.8 billion loss this quarter, impacted by shrinking margins, rising operational costs, and impairment losses. DPL also faced pressure from a significant fall in revenue and a sharp rise in distribution costs.

The Real Estate sector also underperformed, with earnings dropping 26% year-on-year. This was primarily due to major declines at Overseas Realty and CT Land Development. Overseas Realty saw a 44.7% profit decline due to forex losses, while CT Land posted a 73.3% drop stemming from weaker investment property revaluations.

Despite isolated sectoral weaknesses, Sri Lanka’s corporate earnings momentum remains strong, signaling cautious optimism for sustained recovery in 2025.

The Board of Investment (BOI) of Sri Lanka has reported a significant increase of US$96 million in Foreign Direct Investment (FDI) during the first quarter of 2025, compared to the same period last year. This was announced on June 20 during a progress review meeting held at the Presidential Secretariat, chaired by President Anura Kumara Dissanayake.

In addition to the FDI boost, domestic investment rose by US$21 million, and export income grew by US$176 millionin the first quarter of 2025. So far this year, Sri Lanka has attracted a total of US$4.67 billion in foreign investment proposals.

The meeting also addressed the challenges and barriers to attracting investment, with discussions focused on strategic solutions to improve Sri Lanka’s investment climate.

President Dissanayake emphasized that the BOI plays a crucial role in economic development and in uplifting rural living standards. He noted that traditional sectors are reaching their limits in investment potential, and that it is now essential to explore emerging industries and innovation-led opportunities—an initiative that falls squarely within the BOI’s responsibilities.

Highlighting the urgency for progress, the President remarked that Sri Lanka has only attracted US$22 billion in total investment since 1978, while countries like Vietnam secured US$23 billion in a single year (2022). He urged the BOI to prioritize the services sector, such as IT, finance, and logistics, and to proactively seek out new investment frontiersrather than attempting to recover past opportunities.

Among those present at the meeting were Duminda Hulangamuwa, Senior Advisor to the President on Economic Affairs; Arjuna Herath, Chairman of the BOI; and Renuka Weerakone, Acting Director General of the BOI.

United Nations High Commissioner for Human Rights Volker Türk is scheduled to visit Sri Lanka from June 23 to 26, marking the first official visit by a UN Human Rights Chief to the country since February 2016.

During his visit, High Commissioner Türk will meet with President Anura Kumara Dissanayake and Prime MinisterDinesh Gunawardena. He will also hold discussions with the Ministers of Foreign Affairs, Foreign Employment, and Tourism, as well as other Cabinet Ministers, Members of Parliament, senior government officials, and religious and civil society leaders. Engagements with the diplomatic community and the Human Rights Commission of Sri Lankaare also scheduled.

As part of his itinerary, Türk will travel to Kandy to pay respects at the Temple of the Sacred Tooth Relic and meet with the Chief Prelates of the Malwatte and Asgiriya Chapters.

He will also visit Jaffna and Trincomalee, where he is expected to meet with the Governors of the Northern and Eastern Provinces.

The visit aims to further strengthen efforts related to the promotion and protection of human rights and national reconciliation, aligning with Sri Lanka’s ongoing constructive engagement with the Office of the High Commissioner for Human Rights (OHCHR).

Deputy Minister of Education and Higher Education Dr. Madura Seneviratne informed Parliament that the Grade Five Scholarship Examination will continue without changes until 2029, and will not be discontinued immediately.

He stated that the Government has decided to retain the exam in its current form until a final decision is made in 2029. To that end, a review committee will be appointed in 2028 to assess the future of the scholarship exam. This committee will examine the feasibility of continuing the exam and propose measures to reduce the pressure placed on young students. The final decision will be based on both the committee’s findings and the Education Department’s recommendations.

Dr. Seneviratne also revealed that the Department of Examinations is currently preparing a plan to ease the stress of the examination for students during the transitional period leading up to 2028.

He further stated that the Government is committed to gradually addressing disparities between schools and ensuring a more equitable education system, thereby reducing the intense competition and psychological burden associated with the Grade Five Scholarship Exam.

Leader of the House and Minister of Transport, Highways, Ports, and Civil Aviation Bimal Ratnayake told Parliament yesterday that the Southern Expressway, Sri Lanka’s first expressway, was marred by political interference and irregularities during its early development.

Responding to a query from SLPP MP Rohitha Abeygunawardena regarding the placement of interchanges along the expressway, Minister Ratnayake alleged that the original design and feasibility studies were altered under political pressure, compromising the integrity of the project.

He further revealed that the expressway currently has only one designated rest area, which had been leased out for 99 years at a nominal rate of Rs.10,000. He claimed that during the Rajapaksa administration, proposed rest stops were deliberately omitted and interchanges were instead constructed to provide direct access to private residences of politically connected individuals.

During the debate, SJB MP Ajith P. Perera raised additional concerns regarding the lack of an interchange at Pelpola, located between the Gelanigama and Dodangoda interchanges. Perera pointed out that Pelpola had been earmarked as the location for an investment zone, and with ongoing development in nearby Galpatha, an interchange is crucial for improving regional access and economic benefits for Kalutara residents.

In response, Minister Ratnayake stated that the Pelpola-Millaniya interchange is not part of the current expressway expansion plan due to an estimated construction cost of nearly Rs.1,000 million. However, he confirmed that the proposal remains under active discussion, with Health Minister Dr. Nalinda Jayatissa and Industries Minister Sunil Handunnetti also supporting the need for its inclusion in future development phases.

Sri Lanka’s Foreign Direct Investment (FDI) rose by US$ 96 million in the first quarter of 2025, compared to the same period in 2024, the Board of Investment (BOI) revealed during a progress review meeting held on June 20 at the Presidential Secretariat. The session was chaired by President Anura Kumara Dissanayake.

In addition to the FDI growth, the BOI reported that domestic investment increased by US$ 21 million, and export income rose by US$ 176 million in the same period. So far in 2025, the country has received foreign investment proposals worth US$ 4.67 billion.

The meeting also addressed the challenges hindering investment and explored strategies to boost investor confidence. President Dissanayake emphasized that the BOI plays a critical role in strengthening the national economy and uplifting rural living standards. He urged the agency to move beyond traditional sectors, as such avenues are becoming increasingly limited.

The President stressed the need for Sri Lanka to identify emerging sectors and innovation-driven opportunities to remain competitive in the global market. He noted that Sri Lanka has attracted only about US$ 22 billion in FDI since 1978, a figure that falls significantly behind regional counterparts like Vietnam, which drew US$ 23 billion in 2022 alone.

He called on the BOI to focus on expanding investments in the services sector, and to proactively seek new investment avenues instead of merely trying to recapture missed opportunities.

The meeting was attended by key BOI officials, including Chairman Arjuna Herath, Acting Director General Renuka Weerakone, and Senior Economic Affairs Advisor to the President, Duminda Hulangamuwa.

Showers will occur at times in the Western and Sabaragamuwa provinces and in Nuwara-Eliya, Kandy, Galle and Matara districts.

Several spells of showers will occur in the North-western province and in Matale district.

Showers or thundershowers may occur at a few places in the Uva province and in Ampara and Batticaloa districts during the afternoon or night.

Fairly strong winds of about (30-40) kmph can be expected at times over Western slopes of the central hills and in Northern, North-central, Southern and North-western provinces and in Trincomalee district.

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