By: Staff Writer

May 25, Colombo (LNW): Sri Lanka’s foreign exchange market experienced another wave of instability this week as the rupee sharply depreciated before partially recovering following intervention by the Central Bank of Sri Lanka. The episode has once again exposed the vulnerability of the country’s fragile post-crisis economy and highlighted the urgent need for stronger monetary management to prevent future currency shocks.

The rupee weakened dramatically during the week, with the interbank US dollar spot rate falling to Rs. 331/348 at its weakest point before recovering to Rs. 329/335 after the Central Bank stepped in to calm markets. Just a week earlier, the currency had traded around Rs. 321.90/326.00, indicating the speed at which market confidence deteriorated.

The depreciation was largely driven by panic-driven demand for dollars and speculative behavior within the market. Importers rushed to secure foreign currency amid fears that the rupee would weaken further, booking Letters of Credit and dollar requirements months in advance. This sudden spike in demand tightened liquidity and intensified pressure on the local currency.

At the same time, exporters delayed converting their export earnings into rupees, expecting higher exchange rates in the future. This withholding of dollar inflows created an artificial shortage in the market, worsening volatility and undermining confidence in the exchange rate system.

In response, the Central Bank reportedly held urgent discussions with bank CEOs and foreign exchange dealers while informally capping the dollar rate near Rs. 330. Market speculation also emerged that authorities may reduce the mandatory export conversion period from 90 days to 30 days to improve dollar liquidity.

The situation demonstrates how quickly market sentiment can destabilize Sri Lanka’s economy, which remains heavily dependent on imports and vulnerable to external shocks. Rising global oil prices and tensions in the Middle East have added further pressure, increasing fears over import costs and foreign reserve depletion.

Although the International Monetary Fund has expressed confidence in Sri Lanka’s economic recovery framework, the latest currency turbulence suggests that macroeconomic stability remains fragile. IMF Mission Chief Evan Papageorgiou acknowledged growing global pressures but stated that Sri Lanka’s policy framework and reserves are stronger than in previous crises.

However, confidence alone may not be sufficient to protect the rupee. The Central Bank must now adopt stricter measures to stabilize expectations and prevent speculative attacks on the currency. Faster export dollar conversions, tighter monitoring of import financing, and stronger communication from policymakers will be critical in calming markets.

Authorities must also rebuild investor confidence by maintaining consistent economic reforms and avoiding mixed policy signals. If market participants continue to expect depreciation, speculative behavior could rapidly return, threatening inflation, import costs, and economic recovery.

Sri Lanka’s recent currency fluctuations serve as a warning that despite signs of recovery, the economy remains highly sensitive to both domestic uncertainty and global instability. Without disciplined monetary policy and decisive intervention, renewed pressure on the rupee could once again undermine the country’s hard-won economic gains.

By: Staff Writer

May 25, Colombo (LNW): As Sri Lanka pushes forward with its ambitious digital economy agenda, the National People’s Power (NPP) Government has unveiled plans for a sweeping AI-powered national cybersecurity system aimed at tackling the country’s rapidly expanding cybercrime threat. Yet despite the bold rhetoric, questions remain over whether the administration can effectively implement such a large-scale initiative amid persistent institutional lethargy and fragmented policymaking.

Speaking at the “SL Scam Shield” Executive Breakfast Forum in Colombo, Deputy Minister of Digital Economy Eranga Weeraratne declared that cybersecurity should now be treated as a matter of national security rather than a routine technical responsibility. His comments come at a time when Sri Lanka is witnessing an alarming rise in online financial scams, identity theft, phishing attacks, and AI-driven cyber fraud targeting both citizens and businesses.

The Government’s proposed solution is the creation of a “Unified National Shield” — a centralised cybersecurity architecture capable of integrating banks, telecommunications providers, government institutions, and digital service platforms into a single coordinated defense network. Officials claim the system would use artificial intelligence to identify suspicious activity in real time and respond to threats before damage occurs.

Weeraratne warned that conventional security systems are no longer sufficient against modern cyber threats. The increasing use of AI-generated voice cloning, fake digital identities, and sophisticated scam networks has exposed major vulnerabilities in Sri Lanka’s digital infrastructure. According to the Deputy Minister, only an AI-powered “Autonomic Security” framework can effectively counter the scale and speed of emerging cybercrime operations.

However, cybersecurity experts remain cautious about the Government’s ability to convert vision into reality. Sri Lanka’s public sector has historically struggled with delays in digital reforms, weak inter-agency coordination, and inconsistent execution of technology policies. Critics argue that despite repeated promises of modernization, many state institutions still rely on outdated systems with limited cybersecurity preparedness.

A major concern is the fragmented nature of the country’s current cybersecurity environment. Financial institutions, telecom operators, and government agencies largely operate in isolation, often without proper information sharing or coordinated incident response mechanisms. The absence of a unified regulatory structure has created loopholes that cybercriminals increasingly exploit.

The Government has also heavily promoted public-private partnerships to accelerate implementation. Technology firm Google Cloud and Sri Lankan tech company NCINGA are collaborating on the “Scam Shield” initiative, which aims to engineer local AI-driven cybersecurity capabilities tailored to Sri Lanka’s needs. While officials describe the partnership as a milestone in technological cooperation, critics warn that announcements alone will not strengthen cyber resilience without clear timelines, legislation, and operational accountability.

The urgency of the issue continues to intensify as Sri Lanka expands digital banking, e-governance services, and online commerce. Without swift and coordinated action, analysts warn that cybercrime could undermine public trust in the country’s digital transformation drive. For now, the NPP Government’s cybersecurity ambitions remain significant on paper — but whether they evolve into an effective national defense system will depend entirely on execution rather than promises.

By: Staff Writer

May 25, Colombo (LNW): Sri Lanka’s tea smallholders, who produce the majority of the country’s world-famous Ceylon Tea, are being introduced to a new era of digital agriculture through the establishment of “Regenerative Agriculture Digital Resource Centres” aimed at improving sustainability, farmer education, and productivity across the tea sector.

The initiative, formally handed over to the Tea Smallholdings Development Authority on 20 May, marks one of the most significant recent attempts to modernise Sri Lanka’s tea smallholder industry through technology-driven agricultural extension services and regenerative farming education.

The programme was launched during the 6th Asian Tea Alliance conference at the Ratnasiri Wickramanayake National Training Centre with support from international organisations Solidaridad and the Nucleus Foundation.

The digital centres have been established at Hanthana, the authority’s headquarters, and the Walahanduwa regional office to facilitate knowledge-sharing, technical training, and digital communication between researchers, agricultural officers, and tea farmers.

Tea remains one of Sri Lanka’s largest export industries, generating approximately $1.5 billion annually while supporting nearly 2.4 million livelihoods directly and indirectly. Smallholders account for roughly 70% of national tea production and cultivate nearly 60% of the country’s tea-growing land area.

However, despite their importance to the national economy, many tea smallholders continue to operate under difficult economic conditions. Rising production costs, reduced fertiliser usage, unpredictable weather patterns, labour shortages, and declining yields have placed increasing pressure on growers in recent years.

Industry reports show that Sri Lanka’s tea sector recorded only marginal production growth in 2025, with adverse weather events and climate disruptions further threatening productivity. Analysts have warned that without improved technology adoption and climate-resilient cultivation methods, the long-term sustainability of the industry could face serious risks.

Authorities believe the new digital resource centres can help address these challenges by dramatically improving access to scientific knowledge generated by the Tea Research Institute of Sri Lanka.

Under the initiative, tea growers will gain faster access to information related to regenerative agriculture, soil management, pest control, climate adaptation, fertiliser optimisation, and sustainable cultivation practices through digital learning platforms and social media channels.

Officials say one of the key advantages of the programme will be the reduction of delays traditionally associated with printed extension material distribution. Instead, digital platforms will allow farmers to receive real-time technical advice while also enabling authorities to collect rapid feedback directly from cultivation communities.

The centres are also expected to play an important role in strengthening “Training of Trainers” programmes, enhancing the technical skills of agricultural instructors working closely with smallholder communities.

Global tea markets are increasingly demanding environmentally sustainable and traceable products, particularly in premium export destinations. As a result, regenerative agriculture practices are becoming central to the future competitiveness of tea-exporting countries like Sri Lanka.

Development experts argue that digitalisation and sustainability must now work together if Sri Lanka hopes to maintain its position in the international tea trade while protecting vulnerable rural livelihoods.

Several recent pilot programmes in Sri Lanka have already demonstrated the benefits of modern agricultural interventions. One initiative targeting tea smallholders in southern districts reportedly achieved productivity increases ranging between 15% and 45% within just over a year through improved cultivation support and technical guidance.

The launch event drew participation from senior Government representatives, diplomats, and international development officials including Acting Ambassador of the Netherlands to Sri Lanka Iwan Rutjens, Plantation and Community Infrastructure Ministry Secretary Gunadasa Samarasinghe, and Tea Smallholding Development Authority Chairman Nimal Udugampala.

Representatives from Solidaridad and the Nucleus Foundation, including Shatadru Chattopadhyay, Malory David, and Dave Morris, also attended the ceremony.

Agriculture sector observers say the initiative represents an important test of how digital transformation can help revive Sri Lanka’s tea industry at a time when global sustainability standards, climate concerns, and economic pressures are reshaping agricultural supply chains worldwide.

By: Staff Writer

May 24, Colombo (LNW): Sri Lanka’s already delicate economic recovery has come under renewed pressure as soaring global oil prices sharply increased the country’s fuel import expenditure during the first half of 2026. Government officials say the escalation of conflict in the Middle East has directly inflated petroleum costs, exposing the island nation’s continued vulnerability to external energy shocks.

Deputy Finance Minister Anil Jayantha revealed that the state-owned fuel supplier, Ceylon Petroleum Corporation (CPC), recorded an oil import bill of US$521 million in May, a dramatic rise compared to the US$152 million spent in December last year. The increase follows a sustained surge in global crude prices triggered by escalating military tensions involving the United States, Israel, and Iran.

According to finance officials, Sri Lanka lacks the large-scale strategic storage facilities required to stockpile crude oil or refined fuel during periods of lower prices. As a result, the country remains highly exposed to sudden fluctuations in international energy markets, particularly during geopolitical crises affecting major oil-producing regions.

The situation intensified after the closure of the Strait of Hormuz on March 2, 2026, one of the world’s most critical oil transit routes through which nearly one-fifth of global petroleum supplies pass daily. The disruption sent benchmark crude prices above US$100 per barrel for the first time in four years, immediately driving up Sri Lanka’s import costs.

A senior Central Bank official disclosed that CPC alone spent nearly US$1 billion on petroleum imports during the first four months of 2026. By comparison, the corporation’s total fuel import expenditure for the entirety of 2025 stood at approximately US$1.5 billion. When combined with purchases by the country’s other fuel retailers, Sri Lanka’s cumulative first-quarter fuel import costs reached an estimated US$1.28 billion.

The rapid escalation revived painful public memories of the country’s 2022 economic collapse, when severe fuel shortages caused kilometre-long queues, nationwide protests, and rolling power cuts. Fear of a repeat crisis prompted panic buying and hoarding in Colombo and surrounding districts, forcing authorities to temporarily reintroduce a QR-code-based fuel rationing system and impose restrictions on container fuel sales.

In response to mounting pressure, the Ministry of Energy moved to diversify Sri Lanka’s fuel procurement strategy. Officials initiated emergency bilateral agreements with Russia in mid-April to secure cheaper crude shipments outside traditional Middle Eastern supply routes. The government believes these arrangements could partially ease import costs over the coming months.

Despite the ongoing volatility, authorities insist that uninterrupted fuel and electricity supplies will be maintained. Officials project CPC’s monthly oil bill could decline to US$332 million in June and further to US$241 million by July if global prices stabilize. However, analysts warn that Sri Lanka’s recovery remains dangerously tied to unpredictable geopolitical developments beyond its control.