Sri Lanka’s banking sector has shown a notable rebound in early 2025, with loan disbursements steadily increasing across key economic segments.

This growth reflects renewed confidence among borrowers and financial institutions amid improving macroeconomic conditions. While lending appetite strengthens, non-performing loans (NPLs) have also demonstrated a downward trend—except in the retail sector—thanks to better business performance, enhanced recoveries, and lower interest rates.

According to the Central Bank of Sri Lanka’s latest survey, lending activity remained strong in the first quarter of 2025 and is expected to continue through the second quarter.

 The demand for loans among Small and Medium Enterprises (SMEs) surged, with the SME Loan Demand Index rising sharply from 65.0 in the fourth quarter of 2024 to 82.2 in the first quarter of 2025. This signals renewed economic momentum within the SME sector.

Corporate loan demand, which stood at a relatively subdued index value of 57.9 in late 2024, is projected to climb significantly to 81.2 in the second quarter of 2025.

The Central Bank attributes this uptick in loan appetite to improving economic activity, declining interest rates, stable inflation, greater political stability, and growing business confidence.

The report further notes that loan demand is likely to continue increasing in the second quarter, supported by anticipated GDP growth and potential easing of vehicle import restrictions, which could further stimulate credit growth.

Sri Lanka’s monetary policy framework has broadly followed a deflationary approach since late 2022, mirroring successful East Asian models.

 However, an episode of monetary expansion during the fourth quarter of 2024, aimed at narrowly meeting credit targets, resulted in reserve losses and a reemergence of a current account deficit. Historically, Sri Lanka’s policy mix—including inflation-targeted rate cuts—has led to currency instability, requiring subsequent rate hikes and credit tightening to restore confidence.

In early 2025, the central bank’s policy rate has been kept slightly above market rates while accumulating foreign reserves. Yet analysts caution that excess unsterilized liquidity—resulting from foreign currency purchases—could pressure the rupee if it fuels unchecked credit growth.

On a positive note, the non-performing loan ratio has improved across most sectors, driven by stronger cash flows, more favorable economic conditions, flexible repayment structures, and sustained recovery efforts. The only exception is the retail sector, where NPLs have increased, likely due to the persistent high cost of living affecting household repayment capacity.

Overall, the findings underscore a cautiously optimistic outlook for Sri Lanka’s banking sector, with strong loan growth and improving credit quality pointing to a recovering economy in 2025.

Industry and Entrepreneurship Development Minister Sunil Handunnetti announced in Parliament that the recent salt shortage in the country has been effectively resolved. Addressing Parliament on May 22, the Minister dismissed claims made by several Opposition members, asserting that there is no cause for public concern.

Minister Handunnetti explained that, following a Cabinet decision, sufficient salt stocks have now arrived at the port through imports. He assured the public that these stocks will be distributed to the market in the coming days, eliminating any risk of continued shortages.

“The public should not fear a salt shortage to the extent the Opposition suggests. We have taken all necessary steps to address the situation,” he stated, adding that both he and Trade, Commerce, Food Security and Cooperative Development Minister Wasantha Samarasinghe accept full responsibility for resolving the issue.

However, Opposition MP Rauff Hakeem of the Samagi Jana Balawegaya (SJB) raised concerns about the existence of a so-called “salt mafia” in the country. Speaking in Parliament, Hakeem urged the Government to investigate individuals he alleges are manipulating the market.

“Certain individuals with stakes in the Puttalam Salt Company are also serving on its Board of Directors,” he said. “We are concerned whether salt from the Puttalam Saltern is being withheld deliberately to create an artificial shortage and drive up prices.”

Minister Handunnetti did not directly address the alleged monopoly but reiterated that there is no current shortage and warned against panic, suggesting the Opposition might benefit from public unrest.

Showers or thundershowers will occur at times in Western, Sabaragamuwa, North-western and Central provinces and in Galle and Matara districts.

Showers or thundershowers will occur at several places in Uva province and in Ampara, Batticaloa and Polonnaruwa districts during the evening or night. A few showers may occur elsewhere.

Fairly heavy falls above 75 mm are likely at some places in Western and Sabaragamuwa provinces and in Galle, Matara, Nuwara-Eliya and Kandy districts.

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, 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 and lightning during thundershowers

May 22, Colombo (LNW): At a ceremony held at the historic Temple Trees premises, Prime Minister Harini Amarasuriya reaffirmed the government’s dedication to preserving the country’s religious and cultural legacy, underscoring the importance of bridging tradition with modern innovation.

The event, which took place under the auspices of the Buddha Sravaka Caring Centre of Padukka, saw the distribution of digital tablets containing electronic versions of the Tripitaka, alongside printed editions of the sacred Buddhist texts. Sixty university-level Bhikkhus received these offerings, in an initiative led by Venerable Kurupita Dhammananda Thera.

In her address to the gathering, Prime Minister Amarasuriya highlighted the significance of embracing digital tools to uphold and disseminate spiritual teachings. “We are living in a time of rapid technological change, which can threaten the continuity of time-honoured traditions. Yet, initiatives such as this show how the very tools of modernity can serve to preserve the profound wisdom of the Dhamma,” she stated.

She noted that the Tripitaka is more than a repository of scripture—it serves as the moral and philosophical bedrock of Buddhist practice. Making these teachings more accessible to the younger generation of monastics, she argued, not only enriches their education but also nurtures continuity within the monastic tradition.

“The transmission of the Dhamma across generations is crucial. When young monks gain convenient access to these texts, they are empowered to deeply engage with the teachings, which ultimately reinforces the spiritual fabric of our society,” the Prime Minister added.

Emphasising her government’s ongoing commitment, Amarasuriya affirmed that projects which strengthen spiritual and ethical well-being remain a key focus of national policy. She praised the Buddha Sravaka Caring Centre for its compassionate work, particularly in caring for elderly and ailing members of the monastic community.

“The spirit of service embodied by this organisation is exemplary,” she said. “It reflects the values we hold dear as a nation—compassion, respect, and collective responsibility.”

The ceremony drew participation from members of the Maha Sangha and devotees not only from Sri Lanka but also from Malaysia and Thailand. Notable among the attendees were Venerable Kutawatte Saranankara from Malaysia and Venerable Kadahingala Dhammarakkhita Thera, who joined other respected clergy in blessing the proceedings.

The event concluded with a renewed sense of unity and purpose among attendees, marking a significant step forward in harmonising heritage with the digital age.

May 22, Colombo (LNW): The Bar Association of Sri Lanka (BASL) has raised serious concerns regarding an attempt by law enforcement authorities to obtain a lawyer’s mobile phone without legal authorisation, following a violent incident in Colombo involving a former high-level government official.

In a strongly worded communication to Acting Inspector General of Police Priyantha Weerasuriya, the BASL criticised the conduct of officers from the Colombo Crimes Division (CCD), who had reportedly made a verbal request for the phone of Attorney-at-Law Dinesh Dodangoda.

The demand came in the aftermath of a targeted assault on Mr Dodangoda and his client, Thusitha Hallouwa — a former Director to ex-President Ranil Wickremesinghe.

The attack occurred on the evening of 18 May along Dabare Mawatha in Colombo 5, where two unidentified assailants allegedly ambushed their vehicle. According to reports, the attackers discharged firearms, physically assaulted both individuals, and fled with a document file belonging to Hallouwa. The file is believed to have contained sensitive material.

Subsequent to the incident, Mr Dodangoda was approached by CCD personnel, who, without producing a warrant or court order, verbally requested access to his mobile phone as part of their investigation.

The BASL has taken exception to this approach, arguing that such a move directly undermines the legal protections afforded to members of the legal profession.

In their letter, signed by BASL President Rajeev Amarasuriya and Secretary Chathura A. Galhena, the Association stressed that a lawyer’s mobile phone often holds confidential communications, both personal and related to ongoing legal cases.

Any attempt to access such information must be conducted strictly through judicial oversight, they said, warning that circumvention of due process not only infringes upon privacy rights but also jeopardises the integrity of legal proceedings.

The BASL reiterated its commitment to safeguarding the independence of the legal profession and called upon the Police Department to exercise greater restraint and adherence to legal standards in its operations.

The Association urged the Acting IGP to review the incident thoroughly and ensure that such intrusions do not recur, asserting that legal practitioners must be allowed to operate without intimidation or unlawful interference.

May 22, Colombo (LNW): The Election Commission has reiterated its call for all political parties and independent groups to swiftly submit the names of their elected representatives to local government bodies, following the recent completion of local council elections.

Commission Chief R.M.A.L. Rathnayake revealed that the timely submission of these details is critical for the official publication of elected members’ names in the Government Gazette.

The Commission has stressed that this procedural requirement must be fulfilled without delay to finalise the post-election administrative process at the local level.

In addition to the request for elected member details, the Commission has also reminded all candidates, political organisations, and independent collectives to submit their official income and expenditure statements relating to their election campaigns. The final deadline for this submission has been set for May 27.

Failure to provide these financial disclosures, as required under election law, could result in penalties or disqualifications.

The Commission emphasised the importance of transparency and accountability in electoral finance, especially in light of growing public scrutiny over campaign spending.

May 22, Colombo (LNW): A consignment of humanitarian aid from Sri Lanka has arrived in Myanmar, marking a gesture of cross-border solidarity in response to the devastating earthquake that struck the country recently.

The relief shipment, coordinated under the guidance of the Sri Lankan President, was formally handed over to Myanmar authorities at the Asia World Port Terminal in Yangon.

The Sri Lankan Ambassador and embassy staff were present at the port to deliver the aid to officials representing several Myanmar government departments, including the Ministries of Foreign Affairs and Social Welfare, Relief and Resettlement. Port authorities also took part in the official transfer.

The consignment, which includes essential supplies such as dry rations, clothing, and basic medical items, was assembled through a broad-based national effort. Notably, the Amarapura and Ramanna monastic traditions played a central role in mobilising the relief initiative.

These Buddhist monastic communities, with deep ties to both Sri Lankan society and Myanmar’s religious landscape, led the appeal for aid in collaboration with various state institutions and members of the public who responded with generosity.

In addition to the tangible relief, the initiative symbolises a renewal of religious and cultural ties between the two nations. Sri Lanka and Myanmar have long maintained strong historical and spiritual connections, particularly through Theravāda Buddhism, and this act of assistance has been widely seen as an extension of that enduring relationship.

In the aftermath of the earthquake, which caused widespread destruction and displacement in several parts of Myanmar, the arrival of international aid has been crucial. The Sri Lankan contribution, although modest in scale compared to larger donors, was welcomed warmly by Myanmar authorities as a meaningful expression of friendship and empathy during a time of national hardship.