By: Staff Writer

June 30, Colombo (LNW): The Government’s plan to transform Sri Lanka into an export-oriented economy reflects a clear recognition that sustained economic recovery depends on stronger foreign exchange earnings rather than debt-funded growth. President Anura Kumara Dissanayake’s target of generating up to $6 billion from the coconut, food and beverage, rubber and tea sectors is undoubtedly ambitious, but whether it can be achieved within the proposed timeframe remains an open question.

The strategy rightly prioritises value addition instead of relying on exports of raw commodities. Producing higher-value coconut products, processed foods, premium rubber goods and branded tea can significantly improve export earnings while increasing local employment. The Government has also acknowledged the importance of maximising net dollar inflows by reducing dependence on imported raw materials a policy shift that many exporters have long advocated.

However, global market conditions present challenges that extend well beyond domestic policy reforms.

Tea exports continue to face uncertainty due to geopolitical tensions affecting shipping routes and logistics costs, particularly in the Middle East. Rising freight charges and payment issues in traditional markets such as Iran have reduced competitiveness despite sustained international demand for Ceylon Tea. Meanwhile, rubber exporters operate in an increasingly competitive global market where countries with larger plantation bases and lower production costs continue to expand their market share.

The coconut and food processing sectors also face stiff competition from regional producers that benefit from larger-scale production, lower input costs and well-established international supply chains. Simply increasing production capacity may not be enough unless Sri Lankan exporters can differentiate their products through quality, branding, innovation and compliance with increasingly stringent international food safety and sustainability standards.

omestically, exporters continue to grapple with familiar constraints. Delays in VAT refunds affect cash flow, regulatory approvals often remain time-consuming, labour shortages persist across manufacturing industries, and research innovations are slow to reach commercial production. These operational inefficiencies increase production costs and weaken Sri Lanka’s competitiveness against regional rivals.

The Government’s proposal to provide incentives for investment, simplify regulations and encourage industrial development in the Northern Province represents a positive step. Nevertheless, investors typically seek long-term policy consistency, predictable taxation, reliable infrastructure and efficient public administration before committing significant capital. These institutional reforms often take years rather than months to produce measurable results.

Sri Lanka’s export ambitions are achievable only if policy implementation matches the scale of the targets being announced. Expanding exports requires more than incentives—it demands stronger supply chains, higher productivity, improved logistics, investment in technology, skilled labour and consistent economic policies that survive political cycles.

The President’s vision offers an important direction for the country’s economic future. Yet transforming four export sectors into multi-billion-dollar earners will require sustained reforms, private sector confidence and favourable global market conditions. Success will ultimately depend not on the ambition of the targets, but on the Government’s ability to deliver lasting structural change.

As speculation mounts over a possible change in leadership at Sri Lanka Telecom PLC (SLT-MOBITEL), a series of historical allegations concerning Independent Non-Executive Director Chandrasiri Kalupahana have resurfaced, prompting renewed debate among employees, shareholders and governance observers ahead of the company’s Annual General Meeting.

Several concerns relate to Kalupahana’s tenure as Group Chief Internal Auditor of SLT. One of the most frequently cited issues involves a foreign training programme scheduled to take place in Malaysia from April 22 to April 29, 2018.

The programme, organised by the Foundation Institute under the title “International Program on Management Auditing for Public Sector Internal Auditors,” reportedly received approval for three participants, including Kalupahana and two Internal Audit Accountants.

According to documents cited by critics, approval was granted for expenditure amounting to Rs. 540,000, and payment was reportedly made to the organisers. However, allegations suggest that the programme was later cancelled due to personal reasons attributed to Kalupahana, resulting in none of the approved officers attending. Critics claim the company incurred a financial loss of Rs. 540,000 as a consequence.

Separate allegations concern a private visit to Singapore between April 8 and April 13, 2018. Company procedures reportedly require employees travelling overseas on private leave to obtain prior approval from Human Resources and clearance from relevant investigation units before departure. Critics allege that the required approvals were not obtained before the trip took place.

By: Staff Writer

June 30, Colombo (LNW): Sri Lanka’s latest discussions with the International Monetary Fund extend far beyond financial targets, with governance reforms, anti-corruption measures, and state-sector restructuring emerging as decisive factors in determining the country’s continued access to international financial support.

An IMF delegation led by Mission Chief Evan Papageorgiou is conducting a week-long assessment in Colombo to evaluate progress under the country’s Extended Fund Facility programme. The review comes at a time when Sri Lanka is attempting to balance economic recovery with fresh challenges created by global geopolitical tensions and natural disasters.

Among the most closely monitored commitments is the full operationalisation of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC). IMF officials expect independent commissioners to be appointed without political interference while ensuring the institution receives adequate budgetary allocations to conduct sophisticated financial forensic investigations.

The emphasis on anti-corruption reflects the IMF’s broader objective of strengthening governance and improving public confidence in state institutions following Sri Lanka’s economic crisis.

The delegation is also reviewing the government’s progress in reforming state-owned enterprises, many of which have accumulated significant losses over several years. Authorities are expected to demonstrate concrete action either through restructuring or divestment to ensure these enterprises no longer require continuous financial support from taxpayers.

Revenue generation remains another priority. Government officials are working on updated tax diagnostic measures and an enhanced Medium-Term Revenue Strategy designed to improve tax administration while increasing state income over the medium term.

Customs modernisation has also received significant attention during the IMF mission. Delegation members visited the Sri Lanka Customs Department to examine ongoing digitalisation initiatives intended to improve transparency, reduce leakages, and enhance revenue collection.

Despite temporary flexibility granted after Cyclone Ditwah and economic disruptions arising from Middle East tensions, the IMF continues to insist on strict financial discipline. The government received approval for a Rs.500 billion supplementary budget to finance disaster recovery and provide relief to affected communities, but officials must demonstrate that spending remains confined to the approved emergency allocation.

Similarly, the Central Bank is required to maintain zero net monetary financing, preventing the printing of money to finance government expenditure. Authorities must also continue strengthening foreign exchange reserves despite interventions to stabilise the rupee.

The IMF is carefully examining whether Sri Lanka has remained on schedule with debt restructuring commitments while avoiding any renewed external payment defaults. Maintaining credibility with international lenders remains central to the country’s recovery strategy.

If the seventh programme review concludes successfully, Sri Lanka is expected to qualify for the release of the eighth IMF EFF instalment valued at SDR 254 million, equivalent to approximately US$335–350 million. Analysts believe continued access to IMF funding will largely depend on the government’s ability to demonstrate sustained fiscal discipline, stronger governance, and meaningful implementation of long-promised structural reforms.

By: Staff Writer

June 30, Colombo (LNW): Sri Lanka’s unexpected fuel price reduction has reignited scrutiny over the Government’s earlier explanations for repeated fuel price hikes, particularly claims that the country remained locked into expensive fuel purchases through term tenders and high-priced inventories.

Throughout the recent Middle East crisis, Government ministers and senior officials repeatedly argued that Sri Lanka had little room to reduce fuel prices because cargoes had already been purchased at exceptionally high international prices.

Deputy Finance Minister statements suggested meaningful price reductions were unlikely before around September, while CPC officials similarly maintained that expensive imported stocks would continue influencing domestic retail prices until those inventories were exhausted.

Nevertheless effective June 30, CPC reduced Auto Diesel by Rs.25 and Octane 92 petrol by Rs.20.

The development naturally raises an important public-interest question: what happened to the fuel that officials previously said had been purchased at much higher prices?

If CPC imports fuel mainly through longer-term procurement contracts or term tenders, retail prices should ordinarily continue reflecting those higher acquisition costs until existing inventories are consumed.

That was the very explanation repeatedly offered to justify delayed price reductions despite softening international markets.

Several possibilities now emerge.

First, CPC may have received sufficient quantities of lower-priced cargoes, allowing average import costs to decline faster than expected.

Second, inventory turnover may have been quicker than officials originally projected.

Third, the Government may have adjusted the pricing methodology to provide consumers with immediate relief despite the existence of higher-cost stocks.

Each explanation carries different financial implications.

If expensive inventories remain unsold while retail prices fall, CPC’s profit margins may narrow unless compensated through future pricing adjustments or Government support.

Conversely, if the costly stocks have already been sold, questions arise about why earlier projections suggested consumers would need to wait until September for meaningful price relief.

The issue becomes more significant because Sri Lanka’s fuel pricing operates under an IMF-backed cost-reflective framework intended to minimise political discretion and prevent losses at state-owned enterprises.

That framework depends heavily on transparency.

Without publication of detailed monthly pricing calculations including import costs, inventory valuation methods, exchange-rate assumptions and tax components the public cannot independently assess whether the latest reduction reflects genuine cost movements or revised policy priorities.

Consumers, meanwhile, have already absorbed months of substantial increases that cascaded throughout the economy. Freight charges, bus fares, school transport costs and food prices all rose sharply. Experience shows many of those increases are unlikely to reverse immediately, even after fuel prices decline.

The June fuel reduction therefore provides welcome relief, but it also strengthens calls for greater disclosure. A transparent publication of CPC’s inventory costs, procurement timelines and the full cost-reflective pricing formula would help answer the central question facing consumers: if high-priced fuel stocks were expected to delay reductions until September, what changed to make lower prices possible today?