Sri Lanka is edging closer to securing its next tranche of International Monetary Fund (IMF) funding, with the global lender acknowledging the country’s commitment to tough economic reforms. However, several critical IMF benchmarks remain unfulfilled, particularly in 2025, raising questions about the durability of Sri Lanka’s recovery trajectory.

Julie Kozack, Director of the IMF’s Communications Department, announced that a Staff-Level Agreement was reached on April 25 for the fourth review of Sri Lanka’s Economic Reform Programme. The deal moves Sri Lanka a step closer to receiving around $344 million in financial assistance, pending approval from the IMF Executive Board.

“The program and Sri Lanka’s ambitious reform agenda continue to deliver commendable outcomes,” Kozack said. She pointed to gains in macroeconomic stability, including low inflation, a rebound in economic growth, rising foreign reserves, and progress in debt restructuring.

Among the most recent steps taken by Sri Lanka is a 15% increase in electricity tariffs and the publication of revised bulk supply transaction account guidelines by the Public Utilities Commission—actions that fulfill prior conditions required for the next IMF disbursement.

Yet, despite the progress, Sri Lanka has fallen short in several critical areas tied to IMF benchmarks in 2025. These include delays in fully implementing the new Public Procurement Law, gaps in asset recovery legislation, and slow progress in operationalizing recommendations outlined in the IMF’s Governance Diagnostic Report. Additionally, concerns remain over Sri Lanka’s ability to sustain tax revenue improvements and maintain fiscal discipline ahead of the 2025 presidential elections.

Governance reforms—especially related to transparency, anti-corruption, and institutional independence—are central to IMF expectations. While Sri Lanka has published an updated governance action plan, its execution remains partial and uneven.

Kozack stressed that maintaining momentum is vital. “It’s important to acknowledge this progress and ensure that reform momentum continues through the remainder of the current program,” she said. “Elevated global economic risks can impact countries like Sri Lanka, and if needed, the IMF stands ready to recalibrate policies within the existing framework.”

Sri Lanka’s road to economic recovery remains fragile. While near-term indicators show signs of improvement, meeting outstanding IMF conditions is crucial for long-term stability and regaining investor confidence. The exact date for the IMF Executive Board’s decision has not been announced, but it will hinge on the timely and full implementation of prior actions.

As the country approaches the halfway mark of its IMF program, the coming months will be decisive in determining whether Sri Lanka can maintain reform discipline—or risk setbacks in its path to economic recovery.

DFCC Bank PLC has made history by becoming the first foreign corporate entity to list a bond on the National Stock Exchange – International Exchange (NSE IX) at GIFT City, India. This milestone marks a major advancement for Sri Lanka’s capital markets and positions DFCC Bank as a regional leader in sustainable finance.

The listing of DFCC Bank’s Green Bond on NSE IX completes a strategic multi-listing journey that began with its initial issuance in Sri Lanka, followed by a dual listing on the Luxembourg Stock Exchange. This latest listing not only enhances the bank’s access to global capital markets but also highlights its commitment to cross-border, scalable sustainable finance.

A ceremonial bell-ringing event was held on 9 June 2025 at the Grand Mercure, GIFT City, to mark the occasion. The event was attended by several dignitaries, including K. Rajaraman, Chairperson of the International Financial Services Centres Authority (IFSCA), as the Chief Guest. DFCC Bank was represented by CEO Thimal Perera and Senior Vice President Prins Perera.

“This listing is a signal of Sri Lanka’s readiness to engage regionally through future-forward finance,” said Thimal Perera. “DFCC Bank is showing how institutions in emerging economies can structure sustainable capital in line with global standards. This achievement bridges South Asia’s financial systems with international markets in a meaningful, purpose-led way.”

V. Balasubramaniam, MD and CEO of NSE IX, welcomed the listing, stating, “We are pleased to have DFCC Bank PLC as the first foreign issuer on NSE IX at GIFT IFSC. The Rs. 2.5 billion Green Bond listing reflects the potential for greater regional collaboration through GIFT City and supports BIMSTEC’s vision for stronger trade and investment ties.”

Proceeds from the bond will be used to finance renewable energy initiatives in Sri Lanka, particularly solar power projects that meet the Sri Lanka Green Finance Taxonomy. These investments contribute toward the nation’s goal of sourcing 70% of its energy from renewable sources by 2030.

The Green Bonds are aligned with the International Capital Market Association’s Green Bond Principles and support the United Nations Sustainable Development Goals—specifically SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action).

In a promising move that blends international innovation with local expertise, a new partnership has been forged between  New Zealand’s Product Accelerator (NZPA) and EML Consultants (Pvt) Ltd. of Sri Lanka signaling  a strategic leap forward for small and medium-sized enterprises (SMEs) looking to harness cutting-edge technology and expand into global markets.

With the aim of bridging hemispheric innovation, Dr. Karnika De Silva—a respected Senior Materials Expert of New Zealand’s Product Accelerator (NZPA)—will partner with Sri Lanka-based consultancy firm EML Consultants (Pvt) Ltd.

This strategic partnership is striving to deliver cutting-edge, sustainable, and inclusive technologies in solving regional infrastructure and environmental challenges, with specific focus on Sri Lankan manufacturing and rubber products sectors.

Dr. De Silva, with his grassroot knowledge of polymer science, rubber technology, and sustainable materials engineering, is a pivotal individual at NZPA, a government-supported national platform housed at the University of Auckland.

Our role is to bridge the gap between the capabilities of research and the needs of industry. We do not dump deep science on the companies but rather provide them with targeted, timely, and low-risk R&D for rapid commercialization,” she explains. NZPA engages over 100 researchers across seven universities and two Crown Research Institutes (CRIs) in building an innovation hub.

Dr. De Silva’s professional and personal background is in Sri Lanka. As a former Deputy Director of Research in Technology at the Rubber Research Institute of Sri Lanka (RRISL), she has played an important role in opening up overseas markets for Sri Lankan rubber manufacturers.

“With my background and strong links in both countries, I’m in a unique position to connect Sri Lankan SMEs with NZ’s advanced technological solutions,” she notes.

Her most recent collaboration with EML Consultants aligns with their vision to create climate-resilient, low-carbon infrastructure in the Asia and Middle Eastern region. “EML’s regional development and sustainability initiatives are perfectly positioned to utilize NZPA’s cutting-edge capability—whether it is robotics, AI application for Agritech, air quality sensors, or green materials in infrastructure,” she says.

The NZPA engagement model—Engage, Define, Connect, Deliver—is designed for practical application. It allows EML to harness New Zealand’s cutting-edge manufacturing technologies, including seaweed-based cosmetics, geothermal nano-silica for green tires (already commercialized in Sri Lanka), and tropical climate sustainable coatings.

These collaborations not only de-risk R&D investment for Sri Lankan SMEs but also accelerate their entry into international markets.

Dr. De Silva mentions a recent success. “We re-engineered pylons that are installed on New Zealand’s horse racing tracks. The client had no idea that rubber could be a viable solution, but we supplied a durable, UV-resistant product within three months—available for mass production. This is the kind of fast, applied innovation that might also be available for Sri Lankan businesses.”

Beyond materials science, Dr. De Silva points to the possibilities of taking Sri Lankan innovation to a policy platform. She mentions New Zealand’s forward-thinking approach, for example, the assignment of a dedicated Minister of Manufacturing and national respect for researchers. “It would be wonderful if Sri Lanka too institutionalized to reward scientists and engineers in commercialization, not just in academia but also in the private sector.”

As a last candidate for the Excellence in Leadership in manufacturing award in New Zealand, Dr. De Silva is a strong testimony of what can be accomplished through cross-border collaboration. Her message to Sri Lankan stakeholders is clear-cut: “Tap into New Zealand’s proven innovation models. Collaborations like EML and NZPA are just the beginning—together, we can build a more sustainable, inclusive, and technologically advanced future.”

This joint effort between NZPA and EML Consultants offers a new page in Sri Lanka’s journey towards sustainable production and infrastructure development—informed by science, driven by collaboration, and focused on pragmatic outcomes.

Q Collection Pte. Ltd., a Singapore-based apparel manufacturer recognised for its operational excellence and product diversification, has launched manufacturing operations in Sri Lanka with a strategic support from Hela Apparel Holdings PLC, a leading global apparel solutions provider.

As part of this process, Q Collection has acquired and assumed operational control of Hela Group’s subsidiary, Jinadasa Bennett (Private) Limited.  The transaction includes the transfer of operational assets and employees based at these manufacturing sites.

All employees at the manufacturing facilities have been offered continued employment under their existing terms, with no loss of accumulated benefits, ensuring workforce continuity and operational stability.

“This initiative reflects Q Collection’s commitment to delivering world-class manufacturing solutions in collaboration with globally renowned apparel brands” said Senthil Selvan, Group Chief Executive Officer of Q Collection.

“We are expanding our manufacturing footprint to enhance supply chain resilience and evolve into a multi-country apparel producer. Sri Lanka was selected for its strengths in high-end, ethical manufacturing—particularly in the underwear category. We are proud to collaborate with Hela Apparel Holdings in this strategic move to establish a strong foundation in the country and execute our long-term plans.”

The collaboration supports both companies’ strategic objectives: Hela’s transformation into a hybrid model of owned, managed, and partner-enabled manufacturing solutions, and Q Collection’s continued growth across South Asia as a sustainable manufacturing base for the global brands.

“This initiative provides opportunities for both companies to unlock greater potential. At the same time, this will also support our financial targets for this year, as the proceeds will be used to settle our short-term liabilities and strengthen the Company’s financial position,” said Sanath Amaratunga, Chief Executive Officer – Manufacturing Division.

“Hela remains committed to advancing our capabilities across our remaining six facilities in Sri Lanka, Kenya, and Egypt.”

The establishment of Q Collection’s operations aligns with Sri Lanka’s broader ambition to position itself as a regional hub for apparel manufacturing and innovation. This initiative highlights the potential of cross-border collaborations to enhance competitiveness, strengthen regional supply chains, generate employment, and attract long-term foreign investment.

It also reflects the growing interest of international stakeholders in the Sri Lankan apparel sector, particularly from those seeking agile, ethical, and scalable production solutions.

Q Collection is a Singapore-headquartered apparel manufacturing company specialising in high-efficiency, high-quality production solutions for global apparel brands. With a growing footprint in South Asia and a strong reputation for reliability and performance, Q Collection delivers manufacturing excellence through strategic partnerships and leading operational practices.

Hela Apparel Holdings PLC is a global fashion conglomerate offering end-to-end supply chain solutions to some of the world’s most recognised international brands. With manufacturing operations in Sri Lanka, Kenya, and Egypt, and a brand management arm in the United Kingdom, Hela is committed to sustainable growth and continuous innovation across the apparel value chain.

In pictures:

Picture 1: Senthil Selvan, Group Chief Executive Officer – Q Collection Pte. Ltd

Picture 2: Sanath Amaratunga, Chief Executive Officer – Manufacturing Division, Hela Apparel Holdings PLC

The Government has announced plans to establish four new district-level residential rehabilitation centres for drug addicts, including Sri Lanka’s first dedicated women’s rehabilitation centre, under the supervision of the Ministry of Justice and National Integration.

The decision was made during a high-level discussion on the Rehabilitation Bureau District Rehabilitation Center Plan, chaired by Justice and National Integration Minister Harshana Nanayakkara, held at the Ministry of Justice on Wednesday.

The initiative will focus on voluntary rehabilitation, with the goal of improving access and protecting the dignity of those undergoing treatment. The first center will be set up at the Senapura Vocational Training and Literacy Center in Welikanda, with additional centres to be established in other districts based on suitability and need.

Minister Nanayakkara emphasized that the programme must be designed to preserve the identity and confidentiality of individuals seeking rehabilitation. “The facilities should be accessible, humane, and spread across all 22 districts. Establishing the first centre in Senapura will pave the way for a national network of care,” he said.

The meeting also highlighted the urgent need to create a specialised facility for women addicted to drugs, acknowledging the lack of gender-specific rehabilitation infrastructure in the country.

SriLankan Airlines has announced adjustments to several of its European flight routes, citing the closure of certain Middle Eastern airspaces due to escalating regional tensions.

In a statement issued yesterday, the airline confirmed that Flight UL504 from London to Colombo was diverted to Doha for refuelling as a result of in-flight rerouting, while Flight UL501 from Colombo to Paris was also rerouted to avoid conflict zones.

“Due to escalating tensions in the Middle East, airspace in certain regions has been closed, compelling SriLankan Airlines to alter its European routes—including those to and from London,” the statement said.

The airline noted that these route changes have increased flight durations, and assured passengers that all measures are being taken to ensure their safety and wellbeing.

“We kindly request our passengers’ understanding and patience as we implement these changes,” the airline added.

Passengers seeking further information are encouraged to contact the airline via:

• Hotline (Sri Lanka): 1979
• International: +94 11 777 1979
• WhatsApp (chat only): +94 74 444 1979
• Or their travel agent

The Government of Sri Lanka has called on Israel and Iran to exercise restraint and pursue diplomatic avenues to de-escalate rising tensions between the two nations.

In an official statement issued yesterday, the Ministry of Foreign Affairs urged both parties to engage in dialogue and avoid further escalation of hostilities. “Sri Lanka encourages both countries to resolve their differences through diplomatic initiatives and to uphold peace and stability in the region,” the statement read.

The Ministry also confirmed that Sri Lanka’s diplomatic missions in Israel and Iran are closely monitoring developments and are in regular contact with Sri Lankan nationals residing in both countries.

“All Sri Lankan citizens in the respective countries are advised to exercise utmost caution and remain vigilant,” the statement added.

Sri Lanka’s call for diplomacy comes amid heightened international concern over the deteriorating situation and the potential for broader regional implications.

President Anura Kumara Dissanayake, currently on an official visit to the Federal Republic of Germany, held bilateral talks with German Federal Minister for Economic Cooperation and Development, Reem Alabali-Radovan, yesterday at the Waldorf Astoria Hotel in Berlin.

The high-level discussion centred on the shared economic challenges faced by both nations amid shifting global economic trends. Both parties explored new avenues for enhancing economic cooperation between Sri Lanka and Germany.

President Dissanayake expressed appreciation for the longstanding partnership between the two countries, particularly Germany’s substantial contributions to vocational training and the healthcare sector. He highlighted the impact of institutions such as the Ceylon German Technical Training Institute (CGTTI) as a cornerstone of bilateral cooperation.

The President emphasised the need to transform traditional development assistance into strategic, mutually beneficial partnerships, aligning with Sri Lanka’s evolving national priorities and development goals.

Minister Alabali-Radovan welcomed the renewed engagement and assured Germany’s continued interest in supporting Sri Lanka’s economic recovery and sustainable development agenda, especially through skills development, technology transfer, and green economic initiatives.

Accompanying the President were Minister of Foreign Affairs, Foreign Employment and Tourism, Vijitha Herath, Sri Lanka’s Ambassador to Germany, Varuni Muthukumarana, and Director General for Europe and North America at the Ministry of Foreign Affairs, Sugeeshwara Gunaratna, along with other senior officials.

The visit marks a significant step in reinvigorating Sri Lanka–Germany relations, with both sides reaffirming their commitment to deepening economic cooperation and political dialogue.

Showers will occur at times in Western, Sabaragamuwa, Central, Southern and North-western provinces.

Heavy falls about 100 mm are likely at some places in the Western and Sabaragamuwa provinces and in Nuwara-Eliya, Kandy, Galle, Matara and Puttalam districts.

Several spells of showers will occur in the Northern province and in Anuradhapura district.
Strong winds of about (50-60) kmph can be expected at times over Western slopes of the central hills and in Northern, North-central, Sabaragamuwa, North-western and Southern provinces and in Trincomalee district.
The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds.