March 18, Colombo (LNW): The Fundamental Rights (FR) petitions filed in the Supreme Court challenging the Cabinet’s approval for the Adani Green Energy wind power project in Wedithalathivu, Mannar, were officially withdrawn today (18).
The withdrawal follows a motion presented by the Attorney General (AG) to the court, which informed that Adani Green Energy, the Indian energy giant behind the project, had formally notified the Chairman of Sri Lanka’s Board of Investment (BOI) of their decision to pull out from the venture.
This written communication marked the end of the legal challenge, with the petitioners, including the Centre for Environmental Justice (CEJ), confirming that they would no longer pursue their claims.
The proposed wind power project had sparked significant controversy and public debate due to environmental concerns raised by various stakeholders.
March 18, Colombo (LNW): Home to more than six million people, the Western Province has long struggled with a mounting waste disposal crisis. With 3,500 metric tonnes of solid waste generated daily, the region faces not only environmental degradation but also health risks.
A tragic reminder of the dangers of untreated waste came seven years ago when the collapse of a massive waste pile at the Meethotamulla landfill in Colombo tragically claimed the lives of 32 people.
The tragedy, caused by flooding and a fire that destabilised the heap, highlighted the urgent need for a sustainable solution.
Untreated solid waste, aside from posing physical hazards, also contributes significantly to pollution. As waste decomposes, it releases harmful gases such as methane, a potent greenhouse gas, whilst contaminating the soil and groundwater.
Despite ongoing challenges, Sri Lanka has taken significant strides to tackle this issue, with the launch of the country’s first waste-to-energy power plant in 2021, a major milestone in solid waste management.
Operated by the Western Power Company Ltd, a subsidiary of Aitken Spence PLC, the plant incinerates between 600 to 800 metric tonnes of waste daily, converting it into 10 megawatts of electricity for the national grid.
This innovative solution addresses both waste management and energy needs simultaneously. The residue from the incineration process is transformed into cinder blocks for the construction industry, whilst the flue gas is treated to remove harmful particles before being released into the atmosphere.
Aitken Spence, a long-standing signatory of the UN Global Compact, has credited its sustainability vision to the initiatives promoted by the organisation, which it joined in 2002.
Over the past two decades, the company has been an active participant in various UN programmes, including those focused on climate change, human rights, gender diversity, and sustainable supply chains.
Deshamanya Harry Jayawardena, Chairman of Aitken Spence PLC, emphasised the company’s commitment to responsible corporate stewardship and sustainability. “This venture is driven by our belief in progress through innovation and sustainable development, values that guide all of our investments,” he stated.
The creation of the waste-to-energy plant, however, was not without its challenges. Fluctuating interest rates, unfulfilled support promises, and a financial crisis that led to currency depreciation created significant obstacles during the project’s development.
Despite these setbacks, the plant has successfully processed over 815,000 metric tonnes of municipal solid waste, preventing it from being dumped in landfills and mitigating potential environmental damage.
Former Prime Minister Mahinda Rajapaksa hailed the plant’s construction as a pivotal moment for Sri Lanka’s waste management strategy, not only for Colombo but for the country as a whole.
The idea for the plant was first proposed in 2012, and following the 2017 Meethotamulla disaster, the project was fast-tracked by the government.
The waste-to-energy plant has played a crucial role in preserving the Muthurajawela wetlands, a sensitive ecosystem at risk from uncontrolled waste disposal.
“The plant provides a permanent solution to the waste management crisis whilst protecting the environment, wetlands, and waterways for future generations,” said R. Shanmugapriya, Assistant Director at the Waste Management Authority of the Western Province.
Shahina Mysan, Director of Engineering at the Colombo Municipal Council, highlighted the environmental benefits of the plant.
“For years, solid waste was piling up in landfills, polluting both the groundwater and the environment. Now, the waste-to-energy plant has safeguarded our wetlands, ensuring the protection of these invaluable ecosystems,” she explained.
Rathika de Silva, Executive Director of the UN Global Compact Network Sri Lanka, commended Aitken Spence for its innovative approach to sustainability. “Their commitment to scientific data and bold strategies, such as the waste-to-energy plant, positions them as leaders in corporate responsibility and environmental stewardship,” she remarked.
ByDr. Dayanath Jayasuriya P. C. and Malik Cader, Attorney-at-Law
For Whom the Bell Tolls is a novel by Ernest Hemingway published in 1940. It is widely believed that the title was derived from a poem written by John Donne (1572-1631), an English poet and dean of St. Paul’s Cathedral in London. Donne argues that the tolling of church bells, which signified the death of another human life, is a toll for each of us, as we are all bound together. In an article that appeared many years ago on the forfeiture of the proceeds of crime legislation in another jurisdiction, the author had used the title because of the wide ranging scope of the law for culprits it means virtual death. Losing almost all the ill-gotten wealth is good enough to trigger a fatal heart attack,
Apart from a few statutes such as the Penal Code and Civil Procedure Code, the draft Proceeds of Crime Bill is one of the longest statutes in Sri Lanka. The bill that was published in the Gazette Supplement of 21 February 2025 runs into 227 A4 size pages with 151 clauses. It was drafted by an expert committee headed by Supreme Court Justice Yasantha Kodagoda P.C. The enactment of the Bill into an Act of Parliament is an IMF imposed condition.
In the evolution of anti-money laundering and terrorist financing and anti-corruption legal regimes, the enactment of a law on the seizure and forfeiture of the proceeds of crime is more or less a response to the ineffectiveness of other measures such laws to deter financial crimes as well as regulatory and compliance requirements such as Know Your Customer and Due Diligence.
Preamble to the Bill
The rationale underlining the Bill is set out in the Preamble to the Bill:
WHEREAS the committing of unlawful activities results in serious consequences and in certain circumstances causes pecuniary and other losses and the deprivation of the enjoyment of property rights by victims of such unlawful activities, the public at large and the state:
AND WHEREAS those who commit unlawful activities do not possess any legal right or other entitlement to enjoy and benefit from proceeds of such unlawful activities, and those who receive or derive proprietary rights to proceeds of such unlawful activities also do not possess any legal right to such property:
AND WHEREAS it is the responsibility of the state to take necessary measures to deprive perpetrators benefitting from proceeds of such unlawful activities and to have such proceeds returned to those who shall otherwise have received the entitlement to benefit from such proceeds:
AND WHEREAS the existing legislation including the Penal Code, Code of Criminal Procedure Act, Offences Against Public Property Act, Convention on the Suppression of Terrorist Financing Act, Prevention of Money Laundering Act, Financial Transactions Reporting Act and the Anti-Corruption Act need to be supplemented by new legislation for the purpose of providing an efficacious legislative framework for the effective identifying, tracing, detecting, investigating, restraining, seizure, preserving, protecting, managing, judicial freezing, forfeiting and returning proceeds of crime to those who are legitimately entitled to such property:
AND WHEREAS for the purpose of realizing the objectives of this Act, it is necessary to vest duties and responsibilities on certain law enforcement officers and to suitably empower them to perform such duties and responsibilities, and also to establish certain statutory bodies including the Proceeds of Crime Management Authority:
AND WHEREAS it is necessary to provide for a legislative mechanism to enable law enforcement authorities of Sri Lanka to cooperate with law enforcement, administrative and judicial authorities of other countries with regard to proceeds of crime located both within and outside Sri Lanka, and to cause the return to Sri Lanka or repatriate from Sri Lanka such proceeds of crime or value thereof to those who are legitimately entitled to such property:
AND WHEREAS it is necessary to provide restitution and repatriation to victims of crime and to the community or the general public who have been affected by unlawful activities, and for such purpose provide for the creation and establishment of the Victims of Crime Reparation Trust Fund:
AND WHEREAS it is also necessary to give full effect to Sri Lanka’s obligations under the United Nations Convention Against Corruption, the United Nations Convention Against Transnational Organized Crime, and the United Nations Convention Against the Illicit Traffic in Narcotic Drugs and Psychotropic Substance and to enact legislation relating to proceeds of crime, compatible with contemporary international norms and best practices…
Objectives of the Bill
In this background the Bill sets out the following objectives:
to —
(a) disincentivize the committing of unlawful activities for the purpose of benefitting from the proceeds of such unlawful activities;
(b) prevent and deprive any person from benefitting from the proceeds of unlawful activities committed by such person or by any other person;
(c) facilitate the investigation into the committing of unlawful activities including bribery and corruption, drug trafficking, terrorist financing and other organized and financial crimes;
(d) provide for the recognition, adoption and enforcement of advanced investigation techniques and cooperation between domestic law enforcement and administrative authorities pertaining to investigation of proceeds of crime;
(e) facilitate and provide for the tracing, identification and recovery of proceeds of crime;
(f) provide for restraining the use and seizure of proceeds of crime;
(g) provide for the issuance of judicial orders for the judicial freezing of proceeds of crime;
(h) provide for protection, preservation and management of proceeds of crime including the disposal of proceeds of crime under certain circumstances pending the conduct and completion of forfeiture proceedings;
(i) deter the committing of unlawful activities which yield proceeds of crime;
(j) provide for legislative mechanisms for the conduct of judicial proceedings and the issuance of judicial orders for the forfeiture of proceeds of crime –
(i) following the conviction of a person for having committed an unlawful activity which yielded such proceeds of crime (hereinafter referred to as the ‘post-conviction forfeiture proceedings’); and
(ii) independent of prosecuting a person for having committed the unlawful activity which yielded such proceeds of crime, (hereinafter referred to as the ‘non conviction based forfeiture proceedings’);
(k) recognize and provide a cause of action in civil law to enable victims of crime to recover loss or damage through civil litigation;
(l) establish a statutory authority for the protection, preservation, management and disposal of restrained, seized or frozen proceeds of crime;
(m) provide a mechanism for the management and the use of the realized value of the disposal of forfeited proceeds of crime;
(n) establish a Trust Fund to provide for restitution and reparation to victims of crime;
(o) provide a mechanism for cooperation, mutual assistance and reciprocity with judicial, law enforcement and administrative authorities of other countries pertaining to the recovery of proceeds of crime or value located overseas and for repatriation of the value of proceeds of crime located in Sri Lanka; and
(p) give effect to Sri Lanka’s obligations under the United Nations Convention Against Corruption, the United Nations Convention Against Transnational Organized Crime and international standards and best practices pertaining to anti-money laundering and countering the financing of terrorist activities.
Unlawful Activity
The term ‘unlawful activity’ appears in many clauses and in the definition clause it is defined to mean ‘any conduct which constitutes an offence under the laws of Sri Lanka, and includes-
(a) any activity which is wholly or partly committed in or outside Sri Lanka which constitute an offence under the laws of Sri Lanka if it was wholly committed in Sri Lanka; and
(b) any activity which had been committed prior to this Act coming into operation, provided, such activity constituted an offence under the law of Sri Lanka at the time it was committed.’
The terminology ‘unlawful activity’ finds specific expression in the Prevention of Money Laundering Act and in the Financial Transactions Act. However, the tem will apply to prohibited or unlawful activities in other legislation such as the Anti-Corruption Act.
Institutional Mechanisms
Proceeds of Crime Management Authority with a Board of Directors and a C.E.O. and other staff. Apart from four ex-officio members the Board will have 7 appointed members, namely
(i) a Chartered Accountant in consultation with the Institute of the Chartered Accountants of Sri Lanka;
(ii) an Engineer in consultation with the Institute of the Engineers of Sri Lanka;
(iii) an Attorney-at-Law in consultation with the Bar Association of Sri Lanka;
(iv) a Chartered Valuer in consultation with the Institute of Valuers of Sri Lanka;
(v) a person qualified and experienced in management in consultation with the Ceylon Chamber of Commerce; and
(vi) two persons from reputed non-politically aligned civil society organizations of which the mandate shall include the development of transparency, strengthening of anticorruption measures or advancement of objectives of criminal justice in consultation with the Minister assigned the subject of Social Services.
The Authority will have or oversee the following funds:-
(a) Management and Administration fund of the Authority;
(b) Fund for the Protection, Preservation and Management of Proceeds of Crime
There will be a separate Trust Fund to provide for restitution and reparation to victims of crime (Victims of Crime Reparation Trust Fund)
Institution of Legal Proceedings
In a short article of this nature, justice cannot be done to the technical procedures set out in the Bill in greater detail.
Where the committing of an unlawful activity has been investigated into and the suspected perpetrator prosecuted for having committed the relevant unlawful activity and he has been convicted of having committed such unlawful activity, proceedings which shall be referred to as post-conviction forfeiture proceedings may thereafter be instituted for –
(a) the forfeiture of proceeds of such unlawful activity which has been frozen; or
(b) the corresponding value of the proceeds of crime to be recovered and forfeited.
(2) Such proceedings can be instituted –
(a) against the person who has been convicted for having committed the unlawful activity which yielded the relevant proceeds of crime or who had in his possession control or dominion the property of the corresponding value of such proceeds of crime; or
(b) against any other person from whom the relevant proceeds of crime was recovered.
However, if
(a) the trial does not result in the conviction of the accused; or
(b) the appeal against the conviction is successful and the conviction is set-aside, the Attorney-General may initiate non–conviction based forfeiture proceedings in respect of the property believed to be proceeds of crime or in respect of the property of the corresponding value of such proceeds of crime.
Following the conviction of any person for having
committed any unlawful activity, the court which convicted such person must, in addition to the punishment specified for such unlawful activity in the relevant law, be entitled to impose a penalty to the value of the proceeds of crime derived at the time committing of the unlawful activity and any value derived by the utilization of such proceeds of crime:
Provided however, an order for payment for a penalty as provided above cannot be made if the unlawful activity had been committed prior to the date of the coming into operation of this Bill/Act.
There are several clauses that deal with non-conviction based proceedings, namely where a property suspected to be proceeds of crime has been investigated into and material collected to establish prima-facie that such property is proceeds of crime, and such property has been either restrained or seized and thereafter frozen in terms of this Act, civil proceedings may be thereafter instituted in the High Court in terms of this Bill, against such property, for the forfeiture of such property suspected to be proceeds of crime as provided in this Act. Such civil judicial proceedings are referred to as non conviction based forfeiture proceedings.
For the forfeiture of a proceed of crime in terms of non-conviction based forfeiture proceedings, it is not necessary to prosecute and obtain a conviction against the person who had committed the unlawful activity which yielded the relevant proceeds of crime.
Other remedies
Civil Remedy for Victims Of Crime
Where any person has committed an unlawful activity and such activity has resulted directly or indirectly in pecuniary, sentimental or other loss or deprivation of any benefit, service or other entitlement, the party adversely affected by such unlawful activity, any other person being so affected including the state shall be entitled to recover the pecuniary, sentimental, or other loss or damage suffered by such party.
Observations
This Bill is highly technical in nature; however, given the scope of the subject-matter this was a necessity and the experts have done an admirable job in trying their best to demystify some of the concepts. There are several innovative measures in the Bill, compared with relevant laws in a few other jurisdictions. It will require a considerable amount of time and resources to make the legislation fully operational with trained Judges and officers. Integrity has to be in the genetic make up of those entrusted with the wide ranging statutory powers. The legal profession must extend their fullest cooperation to make this legislation to be successfully implemented rather than viewing it as a means of a new ‘gold mine’.
Corporate Vigilance Key to Avoiding Criminal Proceeds in Company Accounts
Corporations and financial sector organizations must exercise heightened vigilance to ensure they do not unknowingly become entangled in activities involving criminal proceeds, which could inadvertently appear in their financial records. Such involvement, even if unintentional, could lead to severe repercussions not only for the organizations but also for their directors and staff, as stipulated by the relevant legislation. The penalties under this act are stringent, emphasizing the necessity for rigorous adherence to compliance protocols. By maintaining robust preventive measures, organizations can effectively safeguard against the infiltration of illicit funds into their accounts. Directors and partners of partnerships need to be aware that they are equally liable (subject to some exceptions) if the corporate entity or one partner has committed an offence.
If no financial crimes are committed there will be no need for such a law to deal with the proceeds of crime. This should be one of the ultimate goals of the ‘Clean Sri Lanka’ endeavor.
A seminar under the above title will be held on 3rd April at the NH Collections Colombo, Colombo 3. For any details and registration inquiries, please contact Jane on 0763666246 or [email protected].The event is sponsored by Daily FT.
The writers are former Chairman and Director Generals of the Securities and Exchange Commission of Sri Lanka, with extensive experience in white-collar crime investigation. Dr. Jayasuriya was a Senior State Council attached to the Attorney General’s Department and has extensive local and international hands on experience on financial market regulations. Mr. Cader is an Attorney-at-Law, a Solicitor of the United Kingdom and Wales, a former Senior Advisor to the Ministry of Finance, and a past President of the Corporate Lawyers Association of Sri Lanka. He can be reached via [email protected].
March 18, Colombo (LNW): As Sri Lanka prepares for the upcoming Sinhala and Tamil New Year, the nation’s economy has seen continued growth, with both the manufacturing and services sectors showing positive performance throughout February.
The festive season has provided an added impetus, contributing to further expansion across various industries.
The Purchasing Managers’ Index (PMI), which measures the health of the manufacturing and services sectors, recorded values of 56.8 and 56.5 respectively for February, signalling consistent growth in both areas.
Whilst this marks a slight slowdown from January’s readings of 59.0 for manufacturing and 58.5 for services, the index values still indicate robust expansion, as anything above 50.0 reflects growth.
Manufacturing activities were notably driven by the food and beverage sector, as businesses within this field geared up for the festive demand. The sector saw positive movement in both new orders and production levels, a clear indicator that preparations for the festive period are well underway.
Additionally, employment within this sector has seen an uptick, with companies hiring workers to meet the increasing demand, possibly helping to replace jobs lost during the economic downturn.
The survey conducted by the Central Bank revealed that both employment and the volume of stock purchases grew, suggesting that firms are proactively preparing for the surge in demand.
In the services sector, growth has been driven by a diverse range of industries, from financial services to wholesale and retail trade, education, real estate, and more.
Notably, the financial services sector has seen a boost, largely due to increased lending activities facilitated by lower interest rates.
This has led to the emergence of new business opportunities, further stimulating economic activity. Additionally, other sectors, including accommodation, food and beverage, insurance, and personal services, have all shown signs of growth when compared to the previous month.
The services sector has also experienced a rise in employment, as companies across various industries ramp up hiring in preparation for the festive season.
The ongoing positive trend in employment reflects the broader economic recovery, with businesses expanding to meet the demands of the season.
Looking ahead, both the manufacturing and services sectors remain optimistic, with expectations for continued growth, largely driven by the upcoming festive season.
March 18, Colombo (LNW): The Ministry of Foreign Affairs, Foreign Employment, and Tourism, in collaboration with Sri Lanka’s diplomatic missions in Myanmar and Thailand, successfully orchestrated the rescue of 14 Sri Lankan nationals who had been trafficked and forced into labour at cybercrime centres in Myawaddy, Myanmar.
The repatriation of the individuals is scheduled for 18th March 2025, following a series of coordinated efforts involving the Governments of Myanmar and Thailand.
These efforts were pivotal in ensuring the safe return of the victims, who had been subjected to exploitation and illegal work in dangerous conditions.
This breakthrough comes after months of sustained diplomatic negotiations led by Sri Lankan officials. Notably, Foreign Affairs Minister Vijitha Herath engaged in high-level discussions with Myanmar’s Deputy Prime Minister and Union Minister of Foreign Affairs, U Than Swe, on February 03, 2024, followed by talks with Thailand’s Minister of Foreign Affairs, Maris Sangiampongsa, on February 13, 2025.
During these conversations, Minister Herath emphasised the urgency of securing the release and safe return of the trafficked Sri Lankans.
The Sri Lankan Ministry of Foreign Affairs has expressed deep gratitude to the governments of Myanmar and Thailand for their swift and effective support in the rescue operation.
Additionally, recognition has been given to the International Organisation for Migration (IOM) for assisting with international air travel and internal transportation, as well as to various non-governmental organisations in Myanmar who provided essential welfare services to the victims during the period of their ordeal.
March 18, Colombo (LNW): The Adani Group remains determined to push forward with its $1 billion renewable energy project in Sri Lanka, despite announcing its withdrawal from the venture in February, The Hindu reported.
Sources familiar with the ongoing discussions told The Hindu that the company is still actively engaging in talks with the Sri Lankan government, focusing on agreeing to a tariff rate that could pave the way for the project’s revival.
Negotiations over the tariffs, which are critical for the success of the project, are ongoing. A tentative rate of around 7 cents per kWh has been suggested, although the Sri Lankan government had initially sought a lower rate of 5-6 cents per kWh, down from the original proposed 8.26 cents for a 20-year power purchase agreement.
Sources have indicated that both parties are optimistic about reaching a mutually acceptable rate soon.
The timeline for the project’s launch remains fluid, but work could potentially commence as early as June, provided all necessary administrative procedures and approvals are finalised in time.
The Indian government is reportedly supportive of the project, viewing it as a key strategic investment for both nations. This backing from the Indian government could provide a crucial boost to the project’s prospects, sources added.
Despite the earlier announcement of its withdrawal, the Adani Group has not taken any legal steps to formally abandon the project. It has kept a door open for potential future collaborations, reiterating its interest in returning to Sri Lanka for new development opportunities.
Notably, the group had already invested $5 million in pre-development activities for the wind farm project, which includes the construction of two large-scale wind farms in Mannar and Pooneryn, along with necessary transmission lines and the expansion of the 220 kV and 400 kV networks.
Although the project has received most of the necessary regulatory clearances, the environmental approval for the Mannar site remains pending. The initial push for the project came during the previous administration in Sri Lanka, but it faced delays when the current government, led by President Anura Kumara Dissanayake, appointed a committee to reassess the project’s tariff structure.
The government’s push for a more competitive tariff has been a sticking point in negotiations.
The discussions continue and the future of the project hinges on finding a resolution that satisfies both the Adani Group and the Sri Lankan authorities.
With both sides showing a willingness to compromise, the project could yet move forward, potentially bringing significant renewable energy capacity to the island and fostering stronger economic ties between India and Sri Lanka.
March 18, Colombo (LNW): The Academy of Health Professionals has initiated a token strike today (March 18) in response to the government’s decision to reduce allowances for paramedical staff under its recently presented budget.
The strike, which began at 7:00 AM, is being observed across hospitals nationwide and has garnered the support of several trade unions.
Notably, seven unions from the Joint Federation of Paramedic Professionals and eleven unions from the Joint Front of Paramedic Services have thrown their weight behind the action.
Upul Rohana, Co-Convenor of the Academy of Health Professionals, explained that the strike was the result of failed discussions with Ministry of Finance officials on March 17.
Despite efforts to engage in dialogue, the government’s decision to slash allowances for paramedics has prompted widespread discontent within the sector, with many healthcare professionals feeling that their contributions are being undervalued.
However, not all within the paramedic community agree with the strike. Chalith Amaradiwakara, Co-Convenor of the Joint Federation of Paramedic Professionals, has expressed concerns about the action, labelling it unjustified.
This highlights a growing division within paramedic trade unions, with differing opinions on the effectiveness and necessity of the strike.
In a separate but related development, the ongoing postal workers’ strike, which began earlier this week, is set to continue today. The Joint Postal Trade Union Front has confirmed that negotiations with the government have yet to produce a resolution.
According to Chinthaka Bandara, Co-Convenor of the association, over one million pieces of mail and parcels are currently piling up in post offices across the island as a result of the industrial action.
Meanwhile, Jagath Mahinda, Chairman of the Sri Lanka Postal Services Association, has downplayed the impact of the strike, claiming that it has been largely ineffective and that services are still operating at a reduced capacity.
March 18, Colombo (LNW): Showers or thundershowers will occur at several places in Western, Sabaragamuwa, Southern, Central, North-western and Uva provinces after 2.00 p.m., the Department of Meteorology said in its daily weather forecast today (18).
Fairly heavy showers above 50 mm can be expected at some places in Western, Sabaragamuwa and Southern provinces.
A few showers may occur in Eastern province and in Polonnaruwa district.
Misty conditions can be expected at some places in Western, Sabaragamuwa, Central and Uva provinces and in Galle and Matara districts 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 off the coast extending from Trincomalee to Hambantota via Batticaloa. Showers or thundershowers may occur at several places in the sea areas off the coast extending from Hambantota to Mannar via Galle, Colombo and Puttalam during the evening or night.
Winds:
Winds will be North-easterly or variable and speed will be (20-30) kmph.
State of Sea:
Sea areas around the island will be slight to moderate. Temporarily strong gusty winds and very rough seas can be expected during thundershowers.
March 17, Colombo (LNW): Maldives, too, stands on the cusp of a massive debt crisis, similar to the economic meltdown of Sri Lanka in 2022. While it has moved to cut expenditure and is trying to rein in spending, the island nation is also piling on rising external debt and losing its foreign exchange buffers. With a large repayment of its debt falling due in 2025 and 2026, with a growing fear of default, economic experts said.
Increased Debt and Depreciating Reserves
Maldives’ foreign loans have risen to US$3.4 billion, of which most are from China and India. The first priority is to pay $600 million in 2025, then a staggering $1 billion in 2026, official sttistics showed.
The country’s foreign reserves are declining rapidly, and these payments are making everyday life tougher.
The government, under President Mohamed Muizzu, has raised tourism levies, reduced officials’ salaries, and floated plans to privatize state enterprises in an attempt to ease financial strain. But even after seeking help from the Gulf nations, these efforts have yet to yield results Maldivian. News agency reports revealed.
Sri Lanka’s Debt Crisis: A Cautionary Tale
Sri Lanka had faced one of the worst economic debacles in 2022 simlar to Maldivian present situtraion asa result of over-borrowing, mismanagement of funds, and external shocks.countrywids protests, which created political instability greatly affecting standard of living, a former treasury high official said. .
One of the main reasons for Sri Lanka economic crisis was its funding of major infrastructure projects like the Hambantota Port with high-interest Chinese loans that were not providing adequate returns in massive investments.
The tax cuts in 2019 also eroded government coffers, and the COVID-19 pandemic devastated the tourism industry, sucking out more foreign reserves, he added.
By April 2022, Sri Lanka was a history default on sovereign debt and created unprecedented disturbances in the economy. Inflation hit over 50% threshold and became expensive for such essentials. Later crisis erupted in the form of road riots and President Gotabaya Rajapaksa’s resignation.
In an attempt to mitigate the crisis, Sri Lanka requested an IMF bailout package of $2.9 billion in March 2023. Fiscal reforms like tax hikes, cutting subsidies, and debt restructuring helped curb inflation and foreign reserves.
Tourism and exports have also increased to a certain degree, but long-term debt sustainability remains a problem..Tourism and exports have also somewhat improved, but long-term debt sustainability is a concern.
Maldives Seeks Regional Support
Like Sri Lanka, Maldives has turned to regional and international financial institutions for assistance. It has requested $200 million in budget support from the China Development Bank and explored a currency swap arrangement with China.
However, Beijing has not responded to these appeals of the Maldivian authorities. Attempts s to get help from Sri Lanka and Bangladesh have also been ineffective.
Furthermore, Sharjah Islamic Bank has hesitated at arranging a $200 million Sukuk bond issue, rendering the nation’s $1 billion repayment in 2026 increasingly uncertain.
Tourism and India’s Support: An Interim Reprieve
Although Maldives boasts a thriving tourism sector and a $750 million currency swap with India, the measures are not likely to fully cure the debt issue.
The country’s economic model remains vulnerable due to its limited production base, high reliance on imports, and exposure to externalities such as COVID-19 and soaring oil prices.
Debt Projections and the Way Forward
Despite taking foreign loans and grants, Maldives’ total debt has more than doubled since 2018 and reached $8.2 billion as of March 2024. It is projected to exceed the $11 billion mark by 2029, sounding alarm bells for financial collapse unless remedial action is initiated at the earliest.
Maldives’ economic crisis today bears a striking resemblance to Sri Lanka’s recent one, underlining the risks of financial profligacy and fiscal excess. Maldives also could be destined for the same fate unless halted at this point.
Foreign assistance and regional cooperation could provide temporary respite, but long-term economic stability will require prudent financial policy, diversification of income, and sustainable debt strategies.
March 17, Colombo (LNW): A Sri Lankan delegation is scheduled to visit the United States next month to engage in discussions with the U.S. Trade Office regarding the upcoming reciprocal tariffs set to take effect on April 2, 2025. This visit aligns with the Sri Lankan government’s broader efforts to introduce a national tariff policy and a new Customs Act aimed at boosting exports and achieving a revenue target of $19 billion for the year, according to Foreign Minister Vijitha Herath.
Speaking in Parliament, Minister Herath underscored the urgency of these discussions, emphasizing the need to secure exemptions from the tariffs due to Sri Lanka’s fragile economic condition. He warned that the country could not afford additional financial burdens on its exports and stressed the importance of diplomatic negotiations to mitigate the impact.
This initiative follows U.S. President Donald Trump’s recent address to Congress, where he defended his strict tariff policies and announced reciprocal tariffs on several nations, including Canada, Mexico, China, and India. The policy aims to counteract what the U.S. administration perceives as unfair trade practices.
The United States remains a crucial trading partner for Sri Lanka, having imported $3 billion worth of goods from the island nation last year. Notably, over 70% of these exports were from the garment industry, making the U.S. market indispensable to Sri Lanka’s economy. Minister Herath expressed optimism that Sri Lanka’s ongoing engagement with the International Monetary Fund (IMF) could help secure a waiver from these tariffs.
In addition to official trade discussions, a high-level Sri Lankan business forum will be held in the U.S. next month, featuring representatives from the Finance Ministry, Foreign Ministry, and key business leaders. This forum aims to explore economic relief measures and negotiate possible waivers to lessen the impact of the tariff changes.
The national tariff policy is part of a broader initiative to better integrate Sri Lanka into global trade and enhance the competitiveness of its goods and services. A senior ministry official stated that tariff restructuring efforts would align Sri Lanka’s trade policies with evolving global economic trends. The government aims to create a fairer trading environment by adjusting tariff structures to accommodate technological advancements and market dynamics. Lowering tariffs on raw material imports while maintaining protective tariffs on finished goods is expected to stimulate local industries and promote economic self-sufficiency.
Furthermore, the government has launched the National Export Development Plan 2025–2029 to drive export sector growth. President Anura Kumara Dissanayake, who also serves as the Finance Minister, reaffirmed the commitment to streamlining the tariff regime to benefit exporters. The introduction of a new Customs Act is also underway to facilitate trade and enhance revenue collection.
Meanwhile, opposition lawmaker Dr. Harsha de Silva of the Samagi Jana Balawegaya (SJB) urged the government to act proactively in response to the U.S. tariff policy changes. He stressed the need to protect Sri Lanka’s trade relations with the U.S. and offered his expertise as the head of the parliamentary committee on public accounts.
Economists have warned that increased U.S. tariffs could lead to higher import costs and reduced competitiveness for Sri Lankan exports. This could result in decreased export volumes and revenue losses. To counter these risks, the government plans to introduce a clear, transparent, and predictable tariff framework that ensures exporters can access raw materials at competitive prices.
Deputy Minister of Industry and Entrepreneurship Development Chathuranga Abeysinghe outlined additional strategies, including setting minimum prices for key inputs, reducing production costs in the energy sector, and improving transportation infrastructure. These measures aim to enhance the business environment and attract investment.
A senior economist emphasized the importance of a data-driven, transparent mechanism to evaluate industry requests for tariff adjustments. Such an approach would ensure that businesses and labor groups receive appropriate government support to adapt to the changing global trade landscape.
