January 23, Colombo (LNW): The World Bank has emphasised the importance of attracting more private sector investment to ensure Sri Lanka maintains its hard-won macroeconomic stability and supports its ongoing recovery efforts.

During his recent two-day visit to the island, Martin Raiser, the World Bank’s Vice President for South Asia, highlighted that Sri Lanka’s future growth hinges on bolstering private sector participation, especially through foreign direct investment (FDI).

According to Raiser, strengthening the country’s economic resilience requires an enhanced focus on creating jobs, increasing incomes, and fostering an environment conducive to business expansion.

“The mobilisation of private investment is key to unlocking Sri Lanka’s growth potential,” Raiser stated, noting that the country must channel efforts into stimulating sectors that drive long-term prosperity.

Sri Lanka, he pointed out, is well-positioned to tap into the burgeoning opportunities across multiple industries, including the digital economy, tourism, logistics, agricultural value chains, and renewable energy.

However, realising the full potential of these sectors will necessitate significant improvements to the current business climate.

“To make these opportunities a reality, Sri Lanka must create a more attractive and efficient environment for businesses to thrive,” he said.

In a demonstration of its commitment to supporting Sri Lanka’s development, Raiser announced that the World Bank will be financing three critical projects, amounting to US $200 million, in the coming months.

These projects will focus on rural development, improving the education sector, and establishing a facility designed to attract private investments specifically in the renewable energy sector.

Additionally, the World Bank outlined several key priorities for Sri Lanka over the medium term.

These include boosting the tourism industry, enhancing public service delivery, providing development support to underserved regions, and equipping the labour force with the skills needed to meet the demands of a rapidly evolving global economy.

These priorities will be integrated into a new Country Partnership Framework, which will guide the World Bank’s support for Sri Lanka in the coming years.

Raiser reaffirmed the World Bank’s commitment to assisting the nation’s development agenda, particularly in areas such as poverty reduction, digital transformation, and sustainable growth.

“We are committed to financing projects that directly impact the livelihoods of the people of Sri Lanka,” Raiser concluded, underscoring the importance of collaboration between the World Bank, the Sri Lankan government, and the private sector in driving the nation’s economic progress.

January 23, Colombo (LNW): Fitch Ratings has recently revised the National Long-Term Ratings of ten major Sri Lankan banks, reflecting the positive shift in the nation’s financial outlook following the recent upgrade of Sri Lanka’s sovereign rating.

The move comes after the global credit rating agency recalibrated its national rating scale, which now reflects the enhanced creditworthiness of local issuers.

The adjustments, which took place following the upgrade of Sri Lanka’s Long-Term Local-Currency Issuer Default Rating (IDR) from ‘CCC-’ to ‘CCC+’ on December 20, 2024, have led to significant improvements in the ratings of several prominent banks.

However, Fitch has also affirmed the National Long-Term Ratings of five other banks, which remain unchanged.

Fitch’s recalibration process aims to provide a more accurate risk assessment for investors operating in the Sri Lankan market, helping to distinguish between the relative credit risks of local entities.

As part of this recalibration, the National Long-Term Ratings of the banks have been adjusted, with some enjoying an upgrade to reflect the positive shift in the country’s financial standing.

Among the banks that saw their ratings improve are several of Sri Lanka’s largest financial institutions, which have seen their National Long-Term Ratings raised to ‘AA-(lka)’ from ‘A(lka)’.

These include Bank of Ceylon (BOC), People’s Bank, Commercial Bank of Ceylon, Hatton National Bank (HNB), and Sampath Bank.

Meanwhile, Seylan Bank has received an upgrade to ‘A+(lka)’ from ‘A-(lka)’, and DFCC Bank, National Development Bank (NDB), Nations Trust Bank (NTB), and Pan Asia Banking Corporation (PABC) also experienced upward adjustments in their ratings.

The recalibration also saw some banks maintaining their existing ratings, with no change in outlook, as Fitch affirmed the National Long-Term Ratings of Amana Bank, Union Bank of Colombo, SANASA Development Bank, Housing Development Finance Corporation Bank, and Cargills Bank.

In line with the recalibration, the Outlooks for all the banks have been set as Stable, reflecting the general improvement in the financial environment post-sovereign upgrade.

However, Fitch has made it clear that it will not assign an Outlook to sovereign ratings below ‘CCC+’, as such ratings are typically too uncertain for meaningful projections.

By: Staff Writer

January 22, Colombo (LNW): In recent years, Sri Lanka’s central bank has made significant strides toward stabilizing the economy and rebuilding its foreign reserves after grappling with a severe financial crisis. Through prudent deflationary policies and strategic interventions, the central bank has managed to reverse negative trends in its net foreign assets, marking a promising step in the country’s economic recovery.

This data  examines the key developments in the central bank’s efforts and the broader implications for Sri Lanka’s financial stability.

Sri Lanka’s central bank reported net foreign assets rising to approximately 310 million US dollars in November 2024, according to official data. This increase stems from the bank’s direct foreign exchange purchases under deflationary policies and its efforts to settle reserve-related liabilities.

Net foreign assets grew from 18.6 billion rupees (about $63 million) in September 2024 to 91 billion rupees by November 2024, as central bank statistics reveal. However, this marks a stark contrast to the situation in August 2021, when net foreign assets turned negative due to the bank’s reliance on borrowed reserves to fund imports and counteract inflationary open market operations aimed at suppressing market interest rates.

By November 2024, Sri Lanka’s gross official reserves—including the central bank’s gross reserves (which include a Chinese currency swap) and Treasury balances—amounted to 6.4 billion US dollars. Previously, the central bank’s policy of using reserves while maintaining low policy rates had exacerbated currency volatility, resulting in a crisis comparable to those seen in parts of Latin America.

 During the height of the crisis, Sri Lanka turned to the International Monetary Fund, utilized a special drawing rights allocation, and delayed Asian Clearing Union payments to manage its import needs. Some reserves were also used to settle government debt obligations. By the last quarter of 2022, negative net foreign assets had reached a peak deficit of 4.5 billion US dollars. However, as deflationary policies took effect and private credit demand slowed, the situation gradually improved, reducing quasi-fiscal losses.

 The reversal was further supported by the appreciation of the exchange rate under tightened monetary policy. Over the past two years, the central bank has repaid loans from the IMF and the Reserve Bank of India while purchasing dollars through deflationary strategies, which involved selling down Treasury bills to the banking sector.

Despite these gains, concerns arose in October 2024 regarding excess liquidity caused by open market operations. Warnings have been issued that continued liquidity injections could lead to reserve losses and a potential second default as private credit begins to recover.

By: Staff Writer

January 22, Colombo (LNW): Sri Lanka’s rich legacy of producing world-class tea is receiving renewed global attention as a delegation of UK tea industry specialists visits the island to forge deeper connections.

 Renowned for its diverse and high-quality teas, Sri Lanka is showcasing its artisanal craftsmanship and sustainability-focused practices to buyers eager to explore the potential for mutually beneficial partnerships.

 This week, a delegation of experts and specialists from the UK tea industry arrived in Sri Lanka to strengthen ties with local specialty tea producers and explore new business opportunities. 

Organized under the UK Government-funded Trade Partnerships (UKTP) program and implemented by the International Trade Centre (ITC), the mission connects 12 UK tea companies with producers and processors from Sri Lanka’s low, mid, and upcountry regions. The delegation is exploring the unique flavors and variations influenced by the country’s diverse climatic conditions.

 During the visit, buyers will experience artisanal harvesting methods and distinctive processing techniques used to craft premium, curated teas. They will also gain insights into the environmental, ethical, and social practices that define each tea producer’s approach.

 Jarmila Sarda, UKTP Program Manager, highlighted the mission’s importance: “This trade mission provides a valuable opportunity for United Kingdom tea buyers to directly engage with high-quality Sri Lankan tea producers. 

By fostering these direct connections, we aim to strengthen trade relationships and contribute to the sustainable growth of both the United Kingdom and Sri Lankan tea sectors.”

 To further enhance networking and collaboration, a tea reception hosted by the British High Commission in Colombo brought together UK buyers and Sri Lankan stakeholders, including members of the Ceylon Artisanal Tea Association (CATA). British High Commissioner Andrew Patrick expressed optimism about the event’s outcomes: 

“It is great to welcome a delegation of UK tea buyers here in Sri Lanka – a demonstration of our shared love for high-quality, specialty tea. I hope that over the course of the week, new and fruitful partnerships will be created to further strengthen the UK-Sri Lanka trade relationship.”

 The initiative underscores the UKTP program’s dedication to expanding trade opportunities and promoting sustainable growth in Sri Lanka’s tea industry. 

As part of its broader mission, UKTP supports developing countries by unlocking trade potential in key sectors, bridging markets, and fostering lasting partnerships.

 Funded by the UK’s Foreign, Commonwealth & Development Office, UKTP also implements trade promotion and capacity-building initiatives worldwide. 

Partnering with government agencies, private sector organizations, and SMEs, the program advances sustainable development in line with the United Nations’ Sustainable Development Goals.

 By connecting the UK and Sri Lanka’s tea industries, this mission paves the way for enhanced collaboration, showcasing Sri Lanka’s rich tea heritage while contributing to global trade growth.

By: Staff Writer

January 22, Colombo (LNW): The Port of Colombo achieved remarkable growth in 2024, with transshipment volumes rising 9.7% year-on-year (YoY) to a record 6.31 million twenty-foot equivalent units (TEUs), constituting 81% of the port’s container throughput.

This surge was partly driven by disruptions from the Red Sea crisis, which elevated the port’s role as a key transshipment hub. 

Overall container throughput reached an unprecedented 7.78 million TEUs, marking a 12.1% YoY increase compared to the 6.91 million TEUs recorded in 2023. December alone saw transshipment volumes grow 5.4% YoY to 544,266 TEUs, continuing the upward trend.

Looking ahead, the Sri Lanka Ports Authority (SLPA) aims to exceed nine million TEUs in 2025. Expansions at the East Container Terminal (ECT) and Colombo West International Terminal (CWIT) are expected to increase capacity to over 10 million TEUs within the year.

Import container volumes rose by 23.5% YoY to 541,155 TEUs, while export container volumes grew by 6.2% YoY to 301,094 TEUs. Notably, restowing volumes hit a record high, climbing 49.6% YoY to 307,619 TEUs.

Among the port’s terminals, Colombo International Container Terminals (CICT), the sole fully operational deep-water terminal, handled 3.22 million TEUs, reflecting a modest 4.1% YoY growth.

The SLPA-operated Jaya Container Terminal (JCT) and the partially operational ECT processed 2.41 million TEUs, a significant 22.8% increase from 2023. The South Asia Gateway Terminal (SAGT) also showed robust growth, handling 2.02 million TEUs, up 14.9% YoY.

However, the number of container ships calling at the port fell by 9.5% YoY to 3,522, as some shipping lines rerouted vessels due to congestion and operational inefficiencies. The total number of ships visiting the port dropped 6.3% YoY to 3,968.

Conversely, conventional cargo and bunkering operations recorded strong growth, with conventional cargo vessels rising 68.8% YoY to 54 and bunkering ships increasing 68.2% YoY to 74, reflecting heightened demand for refueling.

 The Red Sea crisis significantly boosted the port’s role as a transit point for rerouted shipping lines, particularly those avoiding disruptions and high insurance costs linked to Yemen’s Houthi conflict.

However, this boom period was followed by challenges, including severe congestion aggravated by trade union actions at Sri Lanka Customs.

These issues led to operational delays, reduced efficiency, and some shipping lines rerouting services. Despite these setbacks, congestion eased towards the end of the year, positioning the Port of Colombo for further growth in 2025.

By: Staff Writer

January 22, Colombo (LNW): Joint Apparel Association Forum (JAAF), has emphasized the need of Eravur Textile Manufacturing Zone  aims to reduce Sri Lanka’s reliance on imported raw materials, cutting foreign exchange outflows and improving supply chain transparency and traceability.

As Sri Lanka’s tourism industry celebrates a robust resurgence in early January, renewed discussions have emerged about prioritizing tourism investment. However, concerns have been raised about diverting resources from critical initiatives like the Eravur Textile Manufacturing Zone, a long-awaited project essential to the apparel sector’s sustainability and growth.

Spanning 300 acres in Eravur, Batticaloa the zone is designed to support various textile manufacturing verticals, including dyeing, washing, knitting, and weaving.

It features modern amenities like a centralized wastewater treatment plant with pre-cleared environmental approvals, ensuring environmental compliance.

This dedicated facility, conceptualized by the Joint Apparel Association Forum (JAAF), aims to reduce Sri Lanka’s reliance on imported raw materials, cutting foreign exchange outflows and improving supply chain transparency and traceability.

Sri Lanka’s apparel industry, which accounted for 5.8% of GDP in 2023 and generated $4.8 billion in revenue, is the nation’s largest industrial export sector.

With 52.6% of all industrial exports originating from the apparel sector, the industry remains a cornerstone of economic stability and employment, particularly for the blue-collar workforce.

The Eravur zone promises to enhance value addition, as demonstrated by initiatives like the Fabric Park in Thulhiriya, which has already increased domestic fabric availability and improved value addition to around 55%.

Global markets, particularly in the EU, UK, and USA, are increasingly demanding supply chain transparency and sustainable practices. By operationalizing the Eravur zone, Sri Lanka can align with these evolving regulations, positioning its apparel sector as a leader in sustainable and high-value manufacturing.

The zone’s strategic implementation could enable the country to meet ambitious export targets, provide higher-skilled job opportunities, and foster innovation within the industry.

Significant progress has already been made, with investments commencing in Eravur. Notably, Jay Jay Textiles Lanka Ltd. has committed to fabric manufacturing and processing for export.

However, for the initiative to reach its full potential, the government must maintain its momentum, engaging stakeholders to attract further investment and optimize the remaining space within the zone.

The JAAF has emphasized that the industry cannot sustain growth by relying on past strategies. Instead, Sri Lanka must position itself as a leading destination for sustainable ready-made garments and cutting-edge textile solutions. By doing so, the nation can diversify into higher-value products and categories, reinforcing its global competitiveness.

With regulatory changes in key markets expected to intensify by 2030, the operational success of the Eravur Textile Zone is crucial for Sri Lanka to meet these challenges and capitalize on emerging opportunities.

JAAF argues that this project is vital to the future of Sri Lanka’s apparel sector, which has been instrumental in navigating the economic crises of recent years, from the COVID-19 pandemic to the financial struggles of 2022.

The Eravur zone represents more than a manufacturing hub—it is a gateway to securing the apparel industry’s role as a driver of Sri Lanka’s economic growth in the decades ahead. By doubling down on this initiative, the government can ensure that Sri Lanka Apparel continues to thrive as a global leader in innovation, sustainability, and value addition.