By: Staff Writer

March 10, Colombo (LNW): Sri Lanka’s economic recovery could face serious setbacks if the country’s struggling small and medium enterprise sector continues to deteriorate under the weight of multiple crises.

Small businesses form the foundation of the country’s productive economy, yet many remain financially fragile after years of political instability, global disruptions and domestic economic turmoil.

Recognising the urgency of the situation, the Sri Lanka Chamber of Small and Medium Industries has announced a new initiative aimed at supporting entrepreneurs and reconnecting the sector with policymakers.

The chamber plans to host a national forum later this month to give SME owners a platform to voice concerns directly to industry leaders and government officials.

Such engagement has become increasingly important as the sector struggles to regain its footing.

SMEs contribute about 52% of national output and provide employment to more than 45% of Sri Lanka’s workforce, making them a critical engine of growth and job creation.

However, their vulnerability has been exposed by a chain of crises over the past several years.

The downturn began after the 2019 Easter Sunday Attacks triggered a sharp decline in tourism and investment.

Soon afterward, the global spread of COVID-19 disrupted production and trade, forcing businesses to navigate lockdowns, supply shortages and declining consumer spending.

The sector’s fragile recovery was further undermined by the political upheaval of the 2022 Sri Lankan protests and the country’s worst economic crisis in modern history, which brought fuel shortages, currency depreciation and soaring inflation.

Access to financing also became increasingly difficult as banks tightened lending conditions and interest rates surged.

Natural disasters such as Cyclone Ditwah have added yet another layer of strain, damaging infrastructure and disrupting regional economic activity.

At the same time, geopolitical tensions in the Middle East are creating additional uncertainty for trade and remittance flows that support many Sri Lankan households and businesses.

Analysts warn that if these pressures persist, Sri Lanka’s SME sector could face long-term structural damage.

Many businesses operate with limited capital buffers, meaning prolonged economic instability can quickly lead to closures and job losses.

The chamber’s planned SME forum aims to identify practical solutions to issues such as financing constraints, regulatory barriers and limited access to international markets.

Entrepreneurs will also be encouraged to collectively raise concerns in order to strengthen the sector’s negotiating position with policymakers.

Yet the broader challenge remains clear.

Reviving Sri Lanka’s SME sector will require more than dialogue it will demand comprehensive policy support, improved access to affordable credit and a stable economic environment.

Without those conditions, analysts warn that the country’s economic recovery may remain fragile, as the very sector expected to drive growth struggles simply to survive.

By: Staff Writer

March 10, Colombo (LNW): Sri Lanka’s push to redesign its export strategy comes at a moment of mounting global uncertainty, raising questions about whether the country’s ambitious targets can be achieved in a volatile international environment.

Government officials and leading corporate executives gathered last week at a strategy forum hosted by the Sri Lanka Export Development Board to shape a new national export roadmap aimed at expanding the country’s global trade presence.

The event brought together chairpersons and chief executives from across Sri Lanka’s private sector to evaluate export performance in 2025 and define priorities for the coming years.

Presiding over the forum, Industries and Entrepreneurship Development Minister Sunil Handunnetti said the Government intends to play a more active role in strengthening the country’s export ecosystem.

He indicated that the State is willing to act as a key investor in building industrial infrastructure needed by exporters, including improvements to industrial zones, electricity supply and technical facilities used by manufacturers.

The Government argues that such investments are essential if Sri Lankan businesses are to compete more effectively in global markets.

However, the broader global backdrop may complicate those ambitions.

The continuing instability in the Middle East linked to the Israel–Hamas War and rising tensions across the Gulf region have already triggered concerns about energy security and maritime trade disruptions.

For Sri Lanka, which relies heavily on imported fuel and international shipping lanes to move goods to overseas markets, any escalation of conflict could sharply increase logistics costs.

Higher freight charges and volatile energy prices would directly affect export competitiveness, particularly for industries such as apparel, rubber products and tea that operate on relatively narrow margins.

In addition, global demand itself could weaken if geopolitical tensions trigger broader economic slowdowns in major consumer markets.

Against this backdrop, the export roadmap risks becoming overly optimistic unless it factors in the geopolitical and economic shocks that increasingly shape global trade.

The CEO forum nevertheless sought to build consensus between policymakers and business leaders on the strategic direction of Sri Lanka’s export sector.

Officials say the discussions will contribute to a broader national export strategy designed to boost export earnings and strengthen the country’s position in international markets.

While the Government emphasised the importance of cooperation between the public and private sectors to drive export growth, industry observers say structural constraints remain significant.

Sri Lanka’s export sector still struggles with limited diversification, rising input costs and infrastructure bottlenecks.

If geopolitical instability persists and global trade slows, analysts warn that the country’s new export roadmap could quickly collide with economic realities turning ambitious targets into increasingly difficult goals to achieve.

By: Staff Writer

March 10, Colombo (LNW): Sri Lanka’s post-crisis economic recovery strategy is entering a critical phase, with new disclosures to international bondholders revealing a cautious growth outlook that could test the durability of the country’s debt restructuring deal.

According to Finance Ministry presentations shared with International Sovereign Bond (ISB) investors, Sri Lanka expects economic growth to stabilise at around 3.1% annually between 2027 and 2030, following a projected 2.9% expansion in 2026.

The projections form part of the macroeconomic assumptions supporting the Government’s IMF-backed reform program, which is intended to restore debt sustainability after the country’s historic sovereign default.

But the relatively modest growth trajectory raises concerns about whether Sri Lanka can generate sufficient fiscal revenue and foreign exchange earnings to support long-term debt repayment while maintaining social and political stability.

Notably, the Government’s forecast is considerably lower than the Central Bank’s own medium-term projection of 4.5% to 5% annual growth, suggesting that the debt restructuring framework may have been built on more cautious assumptions about the country’s economic potential.

For bondholders, this gap may reflect a pragmatic attempt to avoid overly optimistic projections that could undermine the credibility of the restructuring plan.

Yet slower growth also means the margin for policy error becomes significantly narrower.

Officials told investors that the Government and the Central Bank intend to maintain a long-term real interest rate anchor of approximately 2.5% to 2.6%.

While such an anchor is designed to maintain macroeconomic stability, the combination of moderate growth and relatively high real interest rates could constrain credit expansion and private investment two factors necessary for accelerating economic recovery.

The progress of the IMF-supported reform program also remains under close scrutiny.

The program’s Fifth Review, originally scheduled for completion in December 2025, has been delayed after Cyclone Ditwah caused widespread economic disruption late last year.

Finance Ministry officials told investors that discussions with IMF staff are expected to move forward in March.

The visit by IMF Managing Director Kristalina Georgieva to Colombo in February signalled continued international support for Sri Lanka’s reform agenda, but also highlighted the importance of maintaining policy momentum.

Authorities also addressed questions about emergency financing obtained through the IMF’s Rapid Financing Instrument.

At the time of approval, the facility carried an interest rate of about 3.27% to 3.28%, calculated using the Special Drawing Rights rate plus a fixed IMF margin. Officials noted that the cost remains far below Sri Lanka’s previous market borrowing rates.

The RFI, however, is designed only as a short-term liquidity buffer, typically requiring repayment within three to five years.

Treasury Secretary Dr. Harshana Suriyapperuma reaffirmed that Sri Lanka will continue implementing IMF reforms through 2027, including politically sensitive structural changes.

Among the most significant is the proposed unbundling of the Ceylon Electricity Board, a move aimed at improving governance, reducing losses and attracting private sector participation in the energy sector.

Another feature of the debt restructuring agreement links future bond coupon payments to Government revenue performance beginning in 2028, effectively tying investor returns to the success of fiscal reforms.

Officials told investors the economic effects of Cyclone Ditwah are not expected to significantly affect sovereign bond yields.

But the broader picture suggests Sri Lanka’s recovery remains delicately balanced.

With growth expectations restrained and reforms politically challenging, the country’s economic future may ultimately hinge on whether it can sustain reform momentum long enough to rebuild credibility with both investors and its own citizens.

March 10, Colombo (LNW): Bernie Stefan, Chairman and Managing Director of Nestlé Lanka, has been honoured at the CEO of the Year Awards 2025 organised by the Global CEO Forum, in recognition of his leadership and contributions to the company’s growth in Sri Lanka.

The accolade acknowledges Stefan’s strategic direction and efforts to strengthen organisational resilience while maintaining the company’s long-standing commitment to improving quality of life through food and beverage innovation. Industry observers noted that the recognition also highlights his ability to guide teams through challenging economic conditions while sustaining business momentum.

Stefan brings more than two decades of international experience within the Nestlé Group. His career began with Nestlé Waters in France, after which he went on to hold senior roles in several key markets including the United Kingdom, Germany and Switzerland, gaining extensive exposure to global operations and leadership.

He assumed leadership of Nestlé Lanka in 2023 and has since focused on strengthening the company’s local operations and partnerships. Under his leadership, the organisation has continued to expand its engagement with consumers while also supporting community initiatives and sustainability programmes across the country.

Responding to the recognition, Stefan said the achievement reflects the dedication of the entire Nestlé Lanka workforce. He emphasised that the company’s progress is driven by a collective commitment from employees who work together to deliver high-quality products and services to Sri Lankan consumers.

The CEO of the Year Awards programme serves as a national platform that celebrates business leaders who demonstrate strong vision, responsible management and a commitment to economic and social progress. Organisers say the initiative also aims to encourage closer collaboration between public and private sector stakeholders.

Nestlé Lanka, which has operated in Sri Lanka for more than 120 years, continues to play a prominent role in the country’s food and beverage industry. The company produces the majority of its products locally at its manufacturing facility in Kurunegala and remains focused on promoting nutrition, supporting communities and advancing environmentally responsible practices.

March 10, Colombo (LNW): Sir Mark Tucker, the former Group Chairman of HSBC Holdings and the current Independent Non-Executive Chairman and Non-Executive Director of AIA Group, met with Sri Lanka’s Minister of Foreign Affairs, Tourism and Foreign Employment, Vijitha Herath, during his visit to the country.

The meeting took place yesterday (09) as part of Sir Mark Tucker’s short visit to Sri Lanka from March 9 to 10. Discussions focused on the operations and future prospects of AIA Group in the Sri Lankan market, as well as broader opportunities for international investment.

During the discussion, Tucker briefed the Minister on the company’s ongoing activities in the country and highlighted the progress made by the group’s local operations in recent years. He also shared insights into the company’s outlook for the insurance and financial services sector in Sri Lanka.