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Central Bank directs private sector to build resilience amidst economy stability

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By: Staff Writer

March 04, Colombo (LNW): As Sri Lanka moves from economic stabilization to growth following its 2022 crisis, the private sector must enhance resilience through financial discipline and strategic investments, says CBSL Assistant Governor Dr. Chandranath Amarasekara.

While macroeconomic policies ensure stability, businesses must strengthen governance, competitiveness, and efficiency. Economist Talal Rafi emphasized that economic growth depends on government policies, not the IMF, highlighting the need for digitalization and innovation-driven industries.

The private sector bears a crucial responsibility in ensuring long-term economic stability. By fostering sustainable business practices, investing in emerging sectors, and collaborating with policymakers, corporations can drive sustained economic progress, making Sri Lanka’s recovery resilient and inclusive.

As Sri Lanka transitions from economic stabilization to accelerated growth following its 2022 financial crisis, the private sector must play a crucial role in ensuring long-term resilience and sustainable development. While the Central Bank of Sri Lanka (CBSL) has helped restore stability through monetary measures, the next phase of economic growth will depend on structural reforms and private sector-driven initiatives.

CBSL Assistant Governor Dr. Chandranath Amarasekara emphasized the importance of continuing macroeconomic policy reforms to prevent future crises.

He noted that while CBSL has contributed significantly to stabilizing inflation and lowering interest rates, sustainable economic expansion must be driven by productivity, competitiveness, efficiency, and governance.

He urged corporations to build financial buffers, strengthen resilience, and maintain discipline in managing balance sheets to navigate global economic uncertainties.

Following the economic downturn, CBSL has successfully reduced interest rates, with treasury bill rates for 91-day securities declining from 33% to 5%, and the prime lending rate dropping from over 30% to 8.4%.

 These improvements create a favorable business environment, but the private sector must leverage these conditions to drive growth.

Economist and Ernst & Young (EY) Sri Lanka Director Talal Rafi reinforced the necessity of a robust private sector, clarifying that institutions like the International Monetary Fund (IMF) serve primarily to stabilize economies in distress rather than directly fuel growth. He compared the IMF’s role to an Intensive Care Unit (ICU) in a hospital, which stabilizes critical patients but does not ensure long-term health.

Rafi emphasized that domestic growth must take precedence, alongside external trade expansion. He advocated for increased investments in digitalization and high-potential industries to secure long-term economic prospects.

With Sri Lanka targeting $19 billion in export revenue by 2025, he stressed the importance of shifting from traditional economic models toward innovation-driven industries. This transformation requires collaboration between the private sector and academia to foster research and development.

Additionally, Sri Lanka’s low GDP-to-revenue ratio, projected to struggle even at 15%, calls for progressive taxation policies rather than temporary revenue measures like vehicle taxes. Long-term fiscal stability will depend on sound economic policies that support private sector-led growth.

As the country moves forward, a strong, innovative, and resilient private sector will be the key driver of economic expansion, complementing government policies and ensuring sustainable development.

Govt’s New Approach to SOE Restructuring gets under in IMF Bailout

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By: Staff Writer

March 04, Colombo (LNW): Sri Lanka’s new administration, led by President Anura Kumara Dissanayake, has adopted a different strategy for restructuring state-owned enterprises (SOEs) under the International Monetary Fund’s (IMF) bailout program.

This approach deviates from the commitments made by the previous government, according to Labour Minister and Deputy Economic Development Minister Anil Jayantha.

While the ruling National People’s Power (NPP) party strongly opposed the previous government’s IMF agreements during its election campaign, it did not pledge to terminate the program upon assuming office.

The IMF recently released the fourth tranche of its $3 billion bailout package, which is contingent on implementing structural reforms, including SOE restructuring. The previous government had begun privatizing certain SOEs despite trade union protests.

Minister Jayantha, speaking to the media following the IMF’s latest disbursement, stated that a newly appointed committee is evaluating all SOEs to determine the best strategy for managing them efficiently while minimizing the financial strain on the treasury.

 He emphasized the administration’s goal of ensuring that state institutions contribute to market stability, prevent monopolies, and provide goods and services at affordable prices while improving quality.

SOEs and the IMF Bailout

SOEs have been central to Sri Lanka’s economic restructuring efforts under the IMF’s bailout program. In March 2023, the IMF approved a $3 billion, 48-month Extended Fund Facility (EFF) to help the country regain macroeconomic stability following its financial crisis.

 A major component of this program involves reforming SOEs to enhance efficiency and reduce their financial burden on the state.

Historically, SOEs have been a significant contributor to fiscal deficits, necessitating urgent reforms to align with the IMF’s conditions. The government has since taken steps to improve governance, enhance transparency, and introduce cost-recovery pricing mechanisms, particularly in sectors like energy.

IMF’s Role in Restructuring

Minister Jayantha clarified that the IMF has not imposed or forced specific actions on Sri Lanka but has emphasized the importance of reducing the financial strain caused by inefficient SOEs. He dismissed claims that the IMF demanded privatization, explaining that the organization seeks a disciplined restructuring approach rather than outright sales.

The restructuring process includes revising pricing structures to reflect market realities and cutting subsidies that have historically led to inefficiencies and financial losses. These measures are designed to alleviate the burden SOEs place on the national budget.

Economic Implications

Last week, the IMF completed the third review under the EFF arrangement, allowing Sri Lanka to access the fourth tranche of approximately $334 million, bringing the total disbursement to $1.34 billion. The IMF acknowledged strong progress in the reform program, with most targets and benchmarks being met, including those related to SOEs.

Additionally, the IMF urged Sri Lanka to restore cost-reflective electricity pricing to mitigate fiscal risks associated with SOEs. The government’s restructuring initiatives are expected to help reduce fiscal deficits, enhance public sector efficiency, and contribute to long-term economic recovery.

Gunman arrested in underworld kingpin’s murder linked to December shooting in Kandana

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March 04, Colombo (LNW): The individual apprehended in connection with the recent murder of notorious underworld figure “Ganemulla Sanjeewa” has now been identified as the shooter involved in a separate gun attack in Kandana last December.

The suspect, Samindu Dilshan Piyumanga Kandanaarachchi, is believed to have fired on a house in Kandana on 13 December 2024 before fleeing the scene, according to Police.

Investigations into the shooting have uncovered that it was part of a larger organised criminal operation, with links to individuals living abroad.

The information came to light after a detailed interrogation of the 27-year-old suspect, who has been held under a 90-day detention order by the Colombo Crimes Division (CCD).

During questioning, it emerged that Kandanaarachchi had assumed the role of a lawyer in February 2025 to gain access to a Colombo courthouse, where he shot and killed Sanjeewa in a highly targeted attack.

Air Vice Marshal Lasitha Sumanaweera appointed Chief of Staff of SLAF

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March 04, Colombo (LNW): Air Vice Marshal Lasitha Sumanaweera has been officially appointed as the new Chief of Staff of the Sri Lanka Air Force (SLAF), a decision approved by President Anura Kumara Dissanayake in his capacity as the Commander-in-Chief of the Armed Forces.

The formal announcement was made today, March 04, 2025, when Air Marshal Bandu Edirisinghe, the Commander of the Air Force, presented the letter of appointment to Air Vice Marshal Sumanaweera.

Sumanaweera, an experienced and distinguished officer, will now take on the critical responsibility of overseeing the strategic development and operational efficiency of the Air Force.

IMF EFF Programme: Mission Chief praises Sri Lanka’s economic recovery, foresees improved opportunities for citizens

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March 04, Colombo (LNW): Peter Breuer, the Senior Mission Chief for Sri Lanka at the International Monetary Fund (IMF), has praised the nation’s remarkable economic recovery in recent years, emphasising that as economic opportunities continue to expand, both income levels and living standards will rise, making it more appealing for people to stay in Sri Lanka rather than emigrate.

Breuer was speaking at a press conference following the completion of the third review of Sri Lanka’s Extended Fund Facility (EFF) programme.

He noted that the country’s reserves have significantly improved under the EFF, reaching nearly half of the set programme targets—a performance Breuer described as “impressive.”

Reflecting on Sri Lanka’s transformation, Breuer highlighted the striking contrast between the country’s current economic outlook and the dire situation he witnessed when he first arrived in Sri Lanka in June 2022.

At that time, the country was grappling with severe shortages of essential goods, with long queues for fuel, cooking gas, food, and medicine. Economic activity had all but come to a standstill, with the nation experiencing a substantial contraction in its economy, losing about 10 per cent of its activity due to the crisis.

However, in a remarkably short period since the implementation of the IMF-backed programme in 2023, Sri Lanka has recovered approximately 40 per cent of the economic activity it lost in the previous five years. Breuer noted that the most recent growth figure of 5.5 per cent further underscored the nation’s significant rebound.

It’s clear that Sri Lanka has made tremendous strides in a short period, and this recovery will positively impact crucial factors like poverty reduction,” he said.

Breuer also pointed out that as Sri Lanka continues to bounce back, it will not only boost incomes but also create more opportunities for its citizens.

As the economy stabilises and growth accelerates, people will be more likely to stay in Sri Lanka, finding new prospects within the country rather than seeking opportunities abroad. Those who have emigrated will also be drawn back by the renewed economic potential,” he concluded.

2025 Budget Appropriation Bill: Day 04 of Committee Stage

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March 04, Colombo (LNW): The ongoing debate on the third reading of the Appropriation Bill, commonly referred to as the Committee Stage debate, continues for the fourth consecutive day today (04).

As Parliament continues to scrutinise the bill, lawmakers will focus on the expenditure allocations for the Ministry of Public Administration, Provincial Councils and Local Government, as well as the Ministry of Labour.

The Committee Stage debate, which commenced on February 27, is scheduled to run for a total of 19 days, spanning across weekdays and four Saturdays, with the final session taking place on March 21.

During this period, MPs will deliberate on the various spending proposals outlined in the bill, discussing the financial allocations for each government ministry and state institution.

The debate will culminate in a vote on the third reading of the Appropriation Bill, which is set for 21 March at 6.00 PM.

The bill, once passed, will outline the government’s financial plan for the upcoming fiscal year, determining how funds will be allocated across various sectors, including public administration, local governance, and labour.

Government assures steady supply of essential foods during Sinhala and Tamil New Year festivities

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March 04, Colombo (LNW): The government has assured the public that there will be an uninterrupted supply of essential food items during the upcoming Sinhala and Tamil New Year season, with measures in place to ensure both availability and affordability.

This assurance was given following a key meeting convened by the President’s Media Division (PMD) on 3 March 2025, where relevant ministers and members of the Food Policy and Security Committee met to discuss strategies for maintaining food security throughout the festive period.

According to the PMD, the meeting was focused on ensuring that essential food items are available at reasonable prices during the peak festive season, a time when demand typically surges.

Participants discussed ways to provide these goods to the public without disruptions, and efforts were made to guarantee that stocks are maintained at sufficient levels to avoid any shortages.

Further deliberations during the meeting also centred on implementing additional measures to protect food security within the country. The government stressed the importance of ensuring that all steps taken during this period would not only secure supply but also protect the interests of consumers, local farmers, and food producers.

This holistic approach aims to balance demand with local production capacity and safeguard the entire supply chain.

In addition to the ongoing food security discussions, the meeting also addressed the issue of importing maize for animal feed production, with approval anticipated for shipments of this essential raw material after April 01, 2025.

This decision is expected to help support the agricultural sector and maintain stability in food prices for animal products during the festive season and beyond.

Sri Lanka to introduce new Electricity Amendment Bill, CEB division to be scrapped

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March 04, Colombo (LNW): The government is set to introduce a new Electricity Amendment Bill which will eliminate the planned division of the Ceylon Electricity Board (CEB), Minister of Trade Wasantha Samarasinghe announced in Parliament yesterday (03).

Speaking on the matter, Minister Samarasinghe emphasised that the current administration has no intention of privatising any power stations or the transmission of electricity.

He pointed out that the previous government had proposed dividing the CEB into eight separate entities, a move that the present government will not pursue.

“We are committed to maintaining the integrity of the Ceylon Electricity Board as a single entity. Unlike the previous administration’s plans, we will not fragment the CEB into multiple companies,” Samarasinghe clarified.

The Minister also highlighted the government’s success in reducing electricity prices, revealing that the cost of power has decreased significantly, now ranging between Rs. 18 to 19 per unit, down from Rs. 30 per unit previously.

This reduction, he noted, demonstrates the government’s commitment to ensuring affordable power for the public.

The Ministry of Trade reiterated that the current government remains focused on purchasing electricity at the lowest possible rates, further assuring the public of continued efforts to make energy consumption more affordable and accessible for all citizens.

Indian Naval Ship Kuthar visits Colombo Port to strengthen bilateral ties

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March 04, Colombo (LNW): The Indian Naval Ship Kuthar, an indigenously built Khukri-class corvette, docked at the Port of Colombo yesterday (03) for a three-day goodwill visit.

The vessel was greeted with a warm and traditional reception, including a performance by the Sri Lankan Navy band and an official welcome from senior naval officers.

Upon its arrival, the commanding officer of INS Kuthar, Commander Nitin Sharma, paid a courtesy call to Rear Admiral MHCJ Silva, the Commander of the Western Naval Area of the Sri Lanka Navy.

The occasion marked an important step in furthering the strong maritime cooperation between India and Sri Lanka.

One of the key events during the visit was a ceremony held on board INS Kuthar, where the ship’s crew handed over a refilled fire-fighting system cylinder to the Sri Lanka Coast Guard Ship Suraksha.

This system is a vital component of the vessel’s safety infrastructure. SLCGS Suraksha, an Offshore Patrol Vessel, was transferred to Sri Lanka by the Indian government in October 2017, and India has previously provided spare parts and technical support to the ship, including similar assistance in June 2021, April 2022, and June 2024. The refilling of fire-fighting cylinders was also carried out by India in January 2024.

During its stay in Colombo, INS Kuthar will engage in a series of professional interactions aimed at enhancing the skills and knowledge of Sri Lankan Navy personnel.

These exchanges will focus on sharing best practices and enhancing operational efficiency between the two navies. A special demonstration on Visit, Board, Search, and Seizure (VBSS) operations, as well as Force Protection tactics, will be conducted by the Sri Lanka Navy for the Indian crew.

Additionally, the ship’s crew will take part in sports activities and yoga sessions with their Sri Lankan counterparts, further strengthening the camaraderie between the two forces.

INS Kuthar is scheduled to depart from Colombo on March 06, 2025, marking the conclusion of this important visit that highlights the continued close ties between the Indian and Sri Lankan navies.

Police constable arrested in connection with triple murder in Middeniya

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March 04, Colombo (LNW): A police constable from the Weeraketiya Police Station has been apprehended in connection with the horrific triple murder that occurred in Middeniya.

The arrest took place yesterday (03) evening, when officers from the Middeniya Police Station made the breakthrough following an ongoing investigation.

The 36-year-old suspect, a resident of Julampitiya, stands accused of supplying a crucial component to the individuals responsible for the shooting.

It is alleged that he provided 12 rounds of live T-56 ammunition to the assailants, who are believed to have carried out the attack.

The tragic shooting occurred on February 18, claiming the lives of Aruna Vidanagamage and his two young children.

Authorities have made significant progress in the investigation, with a total of seven individuals now in custody in relation to the crime.