December 24, Colombo (LNW): The Ministry of Finance, Planning and Economic Development has issued a new circular outlining the framework for the payment of bonuses to employees of State Corporations, Statutory Boards, and State-Owned Enterprises for the year 2024.
The circular, released on the 23rd of December by Treasury Secretary Mahinda Siriwardena, has been circulated to all Ministry Secretaries and the Chairpersons of the respective institutions, providing clear guidance on how the bonuses should be managed.
The document sets out the criteria for the bonus allocation, stating that employees working for institutions which contributed at least 30% of their profits after tax to the Consolidated Fund in 2023—either as dividends or levies—will be eligible for a bonus.
The bonus amounts are tiered, with eligible employees set to receive either Rs. 25,000 or Rs. 20,000, depending on the institution’s financial performance.
In addition to the bonus amounts, the circular also provides detailed instructions on how the bonuses should be processed.
However, it is important to note that the Treasury has clarified that it will not be providing direct funding for these bonus payments.
Instead, institutions will need to cover the cost from their own financial resources.
Furthermore, the circular specifies that in cases where there are complications or disagreements concerning the payment of bonuses, approval must be sought from the Cabinet before proceeding with any disbursements.
This step ensures that the process remains in line with governmental oversight and budgetary constraints.
This directive highlights the government’s continued efforts to incentivise performance in the public sector, linking bonus payments to financial contributions to the national fund while maintaining control over public expenditure.
The move is expected to provide clarity for both state employees and the institutions involved as they prepare to implement the bonus scheme for the coming year.
December 24, Colombo (LNW): Renowned Sri Lankan singer Priya Suriyasena has sadly passed away at the age of 80 while receiving treatment at the Colombo National Hospital.
His death marks the end of an era for Sri Lankan music, as Suriyasena’s distinctive voice and contributions to the music industry have left an indelible mark on the cultural landscape.
Suriyasena, who began his musical journey in 1968 with ballads, went on to captivate audiences across Sri Lanka with his versatile singing style. By 1972, he expanded his repertoire to include a variety of simple yet profoundly impactful songs, which resonated with the masses. Some of his most beloved tracks, such as “Aapasu Enawa,” “Sudu Paravi Raana Se,” “Ratakin Eha,” “Mage Lamanda,” “Hadawatha Illa,” “Adaraneeya Neranjana,” “Aatha Ran Viman“, “Asurin Mideela,” “Heta Dawase Api Denna,” and “Kandan Yannam Ranmal Mala Daala” became anthems for music lovers and continue to be cherished to this day.
A public viewing of Suriyasena’s body will take place tomorrow (25), at his residence on Pasal Mawatha, Gangodawila, Nugegoda, where fans and well-wishers can pay their respects to the legendary artist.
Throughout his long and celebrated career, Suriyasena won the hearts of generations, and his voice will remain a treasured part of Sri Lanka’s rich musical heritage, making him one of the greatest Sri Lankan musicians of all time.
His passing leaves a void in the world of music, but his legacy will undoubtedly live on through his timeless songs.
December 24, Colombo (LNW): The Central Bank of Sri Lanka’s Financial Intelligence Unit (FIU) has imposed a fine on Indian Bank, a state-owned entity, for failing to adhere to the regulations set forth by the Financial Transactions Reporting Act (FTRA) No.6 of 2006.
The penalty, amounting to 2 million Sri Lankan rupees (roughly Rs 5.8 lakh), was disclosed by the bank in a notice to the stock exchange on Monday, according to a report by The Times of India.
Indian Bank, which operates two branches in Sri Lanka—one in Colombo and another in Jaffna—has stated that it is taking immediate corrective measures to ensure compliance with local financial regulations and to prevent any future occurrences of similar violations.
The bank expressed its commitment to strengthening its internal processes to align with the legal requirements under Sri Lankan law.
Despite the fine, the bank refrained from providing further details on the specifics of the violation, as it did not respond to a request for clarification from The Times of India.
It remains unclear exactly which aspects of the FTRA the bank failed to meet, though such regulations typically concern the monitoring and reporting of financial transactions to prevent money laundering and other illicit financial activities.
December 24, Colombo (LNW): The enforcement of a circular issued by the Provincial Ministry of Education in the Western Province, which prohibited schoolteachers from conducting private tuition classes, has been temporarily halted.
This move comes after the Governor of the Western Province intervened, responding to objections raised by various stakeholders regarding the new directive.
The circular, issued on December 20 by the Secretary of the Provincial Ministry of Education, had stirred controversy by forbidding teachers from offering paid tuition to students attending their own schools.
The ban was intended to address concerns over the ethical implications of teachers providing additional lessons to their own pupils outside of school hours, particularly when it came to matters of fairness and undue influence.
Following a wave of criticism, including concerns from educators, parents, and various unions, the Governor of the Western Province ordered a temporary suspension of the circular’s implementation.
The decision was made after careful consideration of the widespread objections, which highlighted the potential negative impact on both teachers’ livelihoods and the quality of education for students.
Deputy Minister of Labour, Mahinda Jayasinghe, confirmed the suspension, stating that the move was necessary to allow further consultation on the matter.
He acknowledged the concerns that had been raised, particularly regarding the practicalities and fairness of such a ban, and indicated that the government would be reviewing the issue before taking any further steps.
While the circular’s suspension has brought temporary relief to teachers, it remains uncertain whether a revised version of the directive will be issued or if the original ban will be reintroduced after further deliberation.
December 24, Colombo (LNW): A significant meeting was held yesterday (23) at the Presidential Secretariat, led by President Anura Kumara Disanayake, to review the crucial preparations for Sri Lanka’s upcoming Mutual Evaluation (ME) by the Asia/Pacific Group on Money Laundering (APG).
This evaluation is vital in assessing the country’s efforts to combat money laundering and terrorism financing, both key components of maintaining global financial integrity.
The meeting gathered a wide range of stakeholders, including cabinet ministers, senior officials from various ministries, the Central Bank of Sri Lanka, and the Financial Intelligence Unit (FIU).
In a detailed discussion, the focus centred on ensuring that Sri Lanka meets international standards for Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), an area that has gained increasing importance globally.
The FIU provided an update on the immediate need to implement action plans that have already been approved by the Cabinet. These plans involve a coordinated effort from 24 vital institutions, including key regulatory bodies and law enforcement agencies.
Amongst the priorities identified were crucial legal reforms, capacity-building initiatives, and the fostering of stronger inter-agency cooperation.
Additionally, the maintenance of thorough records is essential to ensure compliance with the recommendations set by the Financial Action Task Force (FATF), the global watchdog for financial crimes.
The President stressed the urgency of setting up dedicated teams to oversee the implementation of these action plans. He emphasised that strict monitoring and adherence to the outlined timelines are crucial for the country’s successful evaluation.
The President further highlighted that collaboration across all sectors, coupled with clear accountability, is fundamental to fortifying Sri Lanka’s AML and CFT framework.
Addressing the challenges ahead, the President underscored the need for a resilient and efficient system to ensure a favourable outcome in the evaluation.
He pointed out that this is not only about fulfilling international obligations but also about securing Sri Lanka’s financial stability and enhancing international confidence in the country’s economic resilience.
The meeting also saw the presence of Deputy Minister of Finance and Planning, Dr. Harshana Suriyapperuma, and the Secretary to the President, Dr. Nandika Sanath Kumanayake, who contributed to the discussions on the steps necessary to align Sri Lanka with global financial security standards.
December 24, Colombo (LNW): Showers or thundershowers may occur at a few places in Uva province and in Hambantota, Rathnapura and Ampara districts during the evening or night, with mainly fair weather being expected to prevail elsewhere, the Department of Meteorology said in its daily weather forecast today (24).
Misty conditions can be expected at some places in Western, Sabaragamuwa, Central, Southern, North-western and Uva provinces during the morning.
The general public is kindly requested to take adequate precautions to minimise damages caused by temporary localised strong winds and lightning during thundershowers.
Marine Weather:
Condition of Rain:
Showers or thundershowers may occur at a few places in the sea areas extending from Matara to Pottuvil via Hambantota during the afternoon or night.
Winds:
Winds will be Northerly to North-westerly in the sea areas around the island and speed will be (20-30) kmph. Wind speed can increase up to 40 kmph at times in the sea areas off the coast extending from Beruwala to Matara via Galle and fromKankasanthurai to Batticaloa via Trincomalee.
State of Sea:
The sea areas off the coast extending from Beruwala to Matara via Galle and from Kankasanthurai to Batticaloa via Trincomalee may be fairly rough at times. Temporarily strong gusty winds and very rough seas can be expected during thundershowers.
A high-level meeting on Sri Lanka’s preparations for the upcoming Mutual Evaluation (ME) by the Asia/Pacific Group on Money Laundering was held yesterday (23), led by President Anura Kumara Dissanayake: Discussions focused on anti-money laundering and countering terrorism financing (AML/CFT) efforts, with an emphasis on legal reforms, capacity building, and inter-agency cooperation: The President emphasised collaboration and accountability to ensure compliance and improve Sri Lanka’s financial system.
SJB MP Nalin Bandara says preliminary investigations have revealed that the erroneous identification of Justice Minister Harshana Nanayakkara as “Dr” on the Parliament website originated from a document provided by the office of Leader of the House, Bimal Rathnayake: Bandara criticised the government’s previous claims of a conspiracy and urged Nanayakkara to clarify the matter: He also criticised the JVP’s General Secretary for restricting media access.
The first National Conference for Families of Missing Persons in Sri Lanka, organised by the International Committee of the Red Cross (ICRC), was held in Colombo, bringing together 51 families from diverse communities: The conference allowed participants to share experiences, discuss challenges in finding missing loved ones, and engage with authorities, including the Minister of Justice and officials from the Office on Missing Persons: Key issues raised included the need for answers, support, and acknowledgment of their suffering: This event follows the success of the ICRC’s Global Family Conference held last year.
The tri-forces security provided to former Presidents will be removed starting December 23, as announced by Public Security Minister Ananda Wijepala: The Defence Ministry has instructed the tri-forces commanders to implement this change, with police security now being assigned to ensure the safety of former Presidents.
Deputy Minister of Labour Mahinda Jayasinghe has opposed a recent circular banning school teachers in the Western Province from conducting paid tuition classes for their own students during school hours, after school, or on weekends and public holidays: Jayasinghe stated that the Governor has instructed the suspension of the circular pending a review and policy decision: The circular, issued by the Western Province Secretary of Education, warns of disciplinary action for violations.
Sri Lanka’s export performance in November 2024 showed a marginal overall increase of 0.04% YoY, reaching US$ 1.269 billion: While merchandise exports fell 5.6% YoY, services exports grew by 20.89%: Notable export gains included tea, spices, and coconut products: Cumulatively, merchandise exports grew 6.44% to US$ 11.611 billion, and services exports rose 7.39% to US$ 3.174 billion, with strong performances from key markets like the USA, UK, and India.
Foreign reports indicate that a Sri Lankan organisation posing as an IT company is recruiting locals fluent in Japanese to target Japanese nationals with investment scams: A former employee revealed that victims had transferred up to 30 million yen ($192,000) to the organisation: The scam involved over 100 workers in Colombo, who made fraudulent investment calls to Japan while concealing their location using an app.
The Public Utilities Commission (PUCSL) will begin oral sessions for gathering public opinions on the electricity tariff revision from December 27: This follows a proposal by the Ceylon Electricity Board (CEB) to maintain current tariffs for the next six months, while the PUCSL suggests a 10%-20% reduction: Public submissions began on December 17, with the final report expected on January 17.
Veteran film director Sudath Mahaadivulwewa has been appointed as the Chairman of the National Film Corporation, with the appointment taking effect from December 23.
Moody’s upgraded Sri Lanka’s long-term foreign currency issuer rating to ‘Caa1’ from ‘Ca’ with a stable outlook, following the approval of a $12.55 billion debt overhaul by the country’s creditors: Moody’s noted improvements in Sri Lanka’s credit fundamentals, with reduced external vulnerability and government liquidity risk: Additionally, Fitch Ratings raised Sri Lanka’s rating to ‘CCC+’ from ‘Restricted Default’.
December 23, Colombo (LNW): Sri Lanka has taken a significant step toward economic recovery by repaying defaulted local bondholders with floating-rate rupee bonds maturing between March 2023 and September 2043. This move is part of a broader restructuring initiative following the country’s default on International Sovereign Bonds (ISBs) on December 20.
The government issued eight tranches of rupee bonds worth LKR 19.46 billion to local bondholders, amounting to a total of LKR 155.7 billion. Local bondholders, primarily commercial banks, faced no reduction in principal, providing relief to financial institutions already strained by non-performing loans.
These bonds will yield a coupon rate 50 basis points above the Central Bank’s Standing Lending Facility Rate (SLFR), calculated as a six-month historical average 30 days before interest payments. Foreign bondholders were also given an option to convert holdings into local currency bonds, albeit within certain limits.
Internationally, Sri Lanka restructured $12.5 billion in sovereign bonds, much of which was borrowed during a series of currency crises between 2015 and 2019. These crises stemmed from expansionary monetary policies targeting inflation and potential economic output without a stable exchange rate framework.
Analysts argue that targeting mid-corridor interest rates while maintaining excess liquidity through inflationary open market operations and dollar-rupee swaps triggered persistent forex shortages and unsustainable debt accumulation.
The restructuring marks a critical milestone in Sri Lanka’s recovery, with the country’s debt-to-GDP ratio projected to decline to 90% by 2028. This represents a notable improvement from pre-default levels, where the debt servicing cost stood at 67% of government revenue.
Post-restructuring, this figure is expected to fall to 42%, although it remains significantly higher than the 16% average for other similarly rated economies. These improvements highlight the government’s efforts to stabilize its fiscal framework, though challenges persist.
Analysts caution that inconsistent monetary policies—such as Sri Lanka’s flexible exchange rate system coupled with weak operational frameworks—often result in cyclical currency crises and inflation. Similar patterns were observed in the United Kingdom during the 1970s, when its sterling crises and reliance on IMF programs drove long-term bond interest rates to nearly 20%.
On the domestic front, the Western Province remained the largest contributor to GDP in 2023, accounting for 43.7% of total output, though slightly lower than in 2022. The North Western and Central Provinces followed as the second and third largest contributors.
While progress has been made in debt restructuring and economic realignment, Sri Lanka still faces substantial structural challenges. Strengthening fiscal discipline, ensuring monetary stability, and implementing growth-oriented reforms are imperative to fostering long-term economic resilience.
A sustainable monetary policy framework will be key to avoiding future crises and enabling sustainable growth.
Sri Lanka’s restructuring efforts signal a step in the right direction, but the journey toward stability and prosperity will require continued commitment to sound economic policies and structural reforms.
December 23, Colombo (LNW): Sri Lanka’s rice industry is at a critical juncture, as high prices, shortages of nadu rice, and substantial rice imports dominate national discourse.
While rice importation offers benefits like stabilizing prices and preventing shortages, it also poses risks to small and medium-scale millers who may struggle to compete in a market flooded with imported rice.
The government’s strategy of importing and distributing rice through state-run retailers like Sathosa seeks to regulate prices but introduces challenges, including corruption risks, market distortions, and logistical inefficiencies.
Import Challenges and Economic Burden
Government-led importation efforts require significant financial resources and robust quality assurance mechanisms. Large-scale imports increase the risk of mismanagement and unethical practices.
Moreover, limiting sales to state outlets could lead to private retailers reselling imported rice at higher prices, negating the intended affordability for consumers. This, coupled with purchase limits at Sathosa, may cause long queues and inconvenience.
The economic implications of Sri Lanka’s rice policies are striking. The country taxes rice imports at 65 LKR per kilogram, keeping local prices roughly 50% higher than global averages.
While this generates tax revenue—4.3 billion LKR from 67,000 metric tonnes of imports in one instance—it places a heavy burden on consumers. Notably, the taxes collected often benefit domestic producers rather than the Treasury, perpetuating inefficiency in the rice sector.
Despite significant rice consumption—twice the global average—Sri Lanka’s market remains underdeveloped, and farmers remain impoverished. Local rice production reached 2.89 million metric tonnes in the last Maha and Yala seasons.
Yet, the additional 187.8 billion LKR paid by consumers due to inflated prices highlights systemic inefficiencies. This “arbitrage” benefits paddy producers and millers without incentivizing productivity or market improvements.
Structural Challenges in the Rice Market
Sri Lanka’s rice sector suffers from low productivity and misaligned market incentives. Farmers hesitate to boost yields because increased supply often leads to price drops, negating potential income gains. Conversely, low yields may drive prices up but result in reduced total income, perpetuating poverty and discouraging efficiency.
Another significant issue is the mismatch between the types of rice grown and market demand. While Sri Lanka predominantly produces short-grain varieties, global markets favor long-grain rice like basmati and jasmine. Transitioning to globally competitive varieties faces challenges such as unsuitable soil conditions and high production costs. Additionally, the true cost of rice production is underestimated. Producing one kilogram of rice requires 2,400 liters of water, yet farmers are not charged for water usage, masking the actual economic and environmental costs.
The rice market is further constrained by an oligopoly of large-scale millers. These entities dominate the market due to their financial capacity and storage infrastructure, while small and medium-scale millers, despite offering better prices, lack the resources to compete effectively. Limited competition exacerbates high consumer prices and stagnation within the industry.
Pathways to Sustainable Solutions
Addressing Sri Lanka’s rice crisis requires long-term, multifaceted strategies. Key solutions include improving productivity through better farmer incentives, diversifying the buyer base, and allowing private sector imports without restrictive licensing. Encouraging the establishment of farmer associations with adequate storage facilities could also reduce reliance on large millers and enhance market competition.
Government price controls and heavy intervention are unlikely to resolve underlying issues. Instead, policies should focus on transparency, fair competition, and balancing productivity improvements with equitable outcomes. By addressing these systemic challenges, Sri Lanka can create a more resilient and efficient rice market that benefits both consumers and farmers.
December 23, Colombo (LNW): The International Monetary Fund (IMF) will review the new tax measures announced by Sri Lanka recently, Julie Kozack, Director of the Communications Department of the IMF said.
She noted that the IMF staff and the Sri Lankan authorities reached a Staff-Level Agreement on the Third Review under the EFF arrangement last month.
The International Monetary Fund (IMF) has proposed a series of tax reforms for Sri Lanka, effective from January 1, 2025, aimed at achieving fiscal sustainability and a tax-to-GDP ratio of at least 14% by 2026. These reforms include the introduction of new taxes, adjustments to existing ones, and the removal of certain exemptions
Kozack said that once the review is completed or approved by the IMF Executive Board, Sri Lanka will have access to $333 million.
“With respect to what comes next, the Executive Board meeting is expected to take place in the coming months following the implementation by the authorities of the prior actions,” she said.
Kozack revealed that the IMF staff will include a full assessment of the new tax measures in the staff report that will be published following approval by the Executive Board of the program.
President Anura Kumara Dissanayake recently announced proposed reforms to Sri Lanka’s Personal Income Tax (PIT) system.
These changes include raising the tax-free monthly income threshold from LKR 100,000 to LKR 150,000, as well as adjusting the tax brackets to offer substantial savings for taxpayers.
At the same time, these proposals reinforce Sri Lanka’s position as one of the region’s least taxed countries for lower-income earners.
Although the President did not outline the precise tax rates for each bracket, PublicFinance.lk has estimated the new rates and brackets based on the proposed reductions upto Rs 300,000 per month.
Sri Lanka already provides the highest tax-free threshold and a comparatively lower tax burden for low-income earners than most other South Asian countries, with the exception of the Maldives.
In a previous blog, PublicFinance.lk noted that Sri Lanka’s current tax-free income threshold of Rs 100,000 per month is higher than those in Bangladesh (Rs 75,682), Pakistan (Rs 54,710), and India and Bhutan (approximately Rs 91,000).
However, while income earners below Rs 250,000 per month enjoy relatively low tax obligations, the burden beyond this amount rises sharply to the highest in the region.
