Category: Daily Financial Times

Rupees 704 billion is allocated for education in the 2026 Budget for Sri Lanka. This amount is the second highest allocation in the Budget and 2% of the projected GDP. This allocation is obviously nowhere near the much-cited goal of 6% GDP for education. What we have is an allocation which, like other allocations for education before, merely bolsters an education system that has been steadily losing its lead in access and quality decades ago. This Budget does not provide money to address burning issues like the unavailability of facilities for studying in the science stream for students in two thirds of the senior secondary schools in the country and the need to bring a fossilised examination system up to international standards, for example.

Sri Lanka’s financial circumstances are such that it is impossible for this (or any) Government to increase the education allocation to 6% or even to 3% of GDP because Sri Lanka must stay within the limit of 13% of GDP for primary expenditure at least until 2028, if the country is to stay solvent. Any further increases from 2% would mean taking money away from other functions of Governance, social development and economic growth that are also important. The prospect of having to stay within 13% of GDP limit in the next few years means that 2% of GDP for education will be our reality for the next few years.

How did we get here and where do we go from here?

Low tax revenue intakes over the years

The Human Rights Watch hit the nail on the head when they added the tag line ‘How Low Taxes Drove Sri Lanka’s Economic Crisis and Squandered its Education Lead’ to their recent report on Sri Lanka. They correctly identify underfunding of education as a Government tax revenue issue.

The story that Sri Lanka spends less than Haiti in education spending made the headlines sometime back. Sri Lanka is indeed in the league of Haiti and other countries in terms of our education spending, but the headlines missed the important fact that Sri Lanka was also in the league of 10 bottom countries in Government revenue.

According to World bank and IMF data sources, the list of ten countries with lowest Government revenues along with their revenues as a percent of GDP on an average for the 2013-2022 period are Sudan (8.1%), Nigeria (8.2%), Bangladesh (8.6%), Haiti (10.4%), Guatemala (11.4%), Madagascar (11.8%), Yemen, Rep. (11.9%), Uganda (12.2%), Sri Lanka (12.3%) and Benin (13.0%). Not surprisingly, all except Guatemala and Madagascar spent less than 2.2% of GDP on education.

13% of GDP limit to primary expenditure, imposed by debt repayment requirements

With Section 15(1) in the Public Financial Management Act No. 44 of 2024, the Government of Sri Lanka tied its own hands with a mandate that ‘the Government’s Primary Expenditure should not exceed thirteen percent of the estimated nominal gross domestic product for the relevant fiscal year’ so that debt obligations can be met and the country stays solvent. The result is that taxes you and I would be paying for 2026 and other grants the Government receives may garner Rs. 5,305 billion in revenue for 15.4% of the GDP, but the Government can spend only 13% of GDP or Rs. 4,850 trillion. The remaining Rs. 820 billion is to be set aside for interest payments on our past excesses.

According to Section 15(3), the 13% limit should hold at least from 2024-2028.

Competing demands from other sectors

How did the Government allocate this bare minimum Rs. 4,4485 billion for primary expenditure across the sectors. The Citizen Budget published by Treasury clusters Government expenditure by 12 sectors. For brevity, I use three larger clusters of – (1 Governance (Public Service; National Security; Justice and Environment); (2) Social Development (Education, Health, Decent Life and Social Protection) and (3) Economic Growth (Agriculture, Economic Services, Energy, and Transport). I separate the education sector from the Social Development cluster and National Security from the Governance Functions cluster for emphasis.

The education allocation has long been misunderstood because almost half of the allocation is hidden in the expenditure head for the Ministry of Provincial Councils. A familiar post-Budget headline until a few years ago was that Defense gets more money than education because journalists would look only at the allocation for the Ministry of Education. The Treasury’s citizen Budget initiative has helped resolve these misunderstandings.

Although the Primary Budget increased from 10,5% to 11.5%, 12.2% and 12.9 of GDP, respectively, from 2023-2026 (Table 2), the allocations for Economic Growth and National Security stayed steady at 2.5% of GDP and 1.2% of GDP, respectively (Figure 1).

The increase in the Primary Budget was taken up by increases in the rest of the Governance component (from 1.2% to 2.3%), Social Development (from 3.9% to 4.8%) and Education (from 1.6% to 2.0%).

High likelihood of the education allocation been frozen at 2% GDP at least until 2028

The bad news is that the education allocation is not likely to increase from around 2% of in the next foreseeable future because the according to the Public Financial Management Act, the primary expenditure is to be less than 13% of GDP from 2024-2028 (Table 2) and there seems to be little leeway in changing allocations across sectors, because money as a %GDP for education means less for money for other important sectors.

How can Sri Lanka manage with an education allocation which is likely to stay frozen at around 2% GDP in the next few years when inequities in school education are so pervasive?

Smarter spending is the only way out

Sri Lanka can move forward despite limitations in public funding, I believe, because so far policymakers have focused mostly on inputs to education. We have not explored low-input-high-impact policy options. I would begin with the following more policy-intensive options in funding and governance. Only the early childhood sector will require significant inputs. For example:

Funding

Designate selected professional programs in higher education as money earners and divert saved/earned funds to school education and national priorities in post-school education

Governance

Give more power with accountability to individual schools, school clusters, colleges and universities to achieve more efficiency and effectiveness in education spending; Restructure and downsize central authorities, including Isurupaya.

Teaching and Learning

Strengthen the pre-school sector, which is 80% private, with a national curriculum, NVQ for teachers and increases in Government top-up for teachers and/or award vouchers for needy families

Simplify curricula, school-based assessments, and national exams, and use the money and time saved to improve quality.

Set suitable KPIs for the sector and mandate that the minister for education reports to the Parliament and the people annually.

A.P. Moller – Maersk (Maersk) has celebrated the opening of its flagship logistics centre in Shanghai’s Lin-gang area, marking one of the company’s largest global warehousing investments.

The $140 million warehouse spans 113,000 square metres, offering 147,000 square metres of storage.

The centre provides a full suite of fulfilment services, supporting customers across China, the Asia-Pacific region, and beyond, and aims to enhance efficiency, flexibility, and resilience in trade operations.

Maersk CEO Vincent Clerc said: ‘China is not only the world’s largest exporter but also a key consumer market; this centre strengthens our omnichannel fulfilment capabilities and further connects China with international markets.’

The opening ceremony was attended by local government officials, Maersk executives, and customers, highlighting the strategic importance of the facility.

Leveraging Shanghai’s position as a global shipping hub and its proximity to Yangshan Port, the logistics centre integrates seamlessly with Maersk’s ocean, air, and land services; this scale-driven network enables faster, more cost-effective solutions.

The facility offers four core capabilities: export and import distribution, regional/global hub services, and cross-border e-commerce, along with value-added services such as temperature-controlled storage and customised solutions.

With in-house customs expertise and Authorised Economic Operator (AEO) certification, the centre provides efficient clearance for international shipments; it can handle bonded and non-bonded goods under one roof, allowing storage and conversion without additional customs processing.

Maersk Greater China Managing Director Silvia Ding said: ‘Brands increasingly require unified inventory management across export, import, and transhipment; our omnichannel fulfilment capabilities now allow customers to efficiently meet both B2B and B2C demands.’

The National Savings Bank Group (NSB) has reported a solid performance for the nine months ended 30 September 2025, delivering sharp improvements in profitability, margins, and asset quality despite a moderating interest-rate environment.

The State-owned savings giant recorded a Profit Before Tax (PBT) of Rs. 34.8 billion, up 30%, while Profit After Tax (PAT) surged 32% to Rs. 21.2 billion.

Chairman Dr. Harsha Cabral, PC said the results highlight the bank’s ability to uphold its dual mandate of safeguarding national savings and supporting State financing, while maintaining strong profitability.

General Manager/CEO Shashi Kandambi noted that disciplined balance sheet management, improved margins, and sustained investments in technology and staff contributed to the strong performance.

Despite a slight moderation in total income due to lower market rates, core profitability strengthened significantly. A 15.8% reduction in interest expenses, driven by active liability management, led to a 16.8% increase in Net Interest Income (NII) to Rs. 64.4 billion. The Net Interest Margin (NIM) improved to 4.71%. Furthermore, net fee and commission income grew by 26.3%, and other non-interest income rose by nearly 62.5%, contributing to an 18.4% expansion in total operating income compared to the same period last year.

Operating expenses increased due to wage adjustments and digital investments, but the cost-to-income ratio remained steady at 38.28%, demonstrating solid cost control. After absorbing financial service levies of Rs. 10.6 billion (VAT and SSCL) and an income tax expense of Rs. 13.6 billion that rose in line with higher earnings, NSB delivered a PAT of Rs. 21.2 billion, a strong year-on-year (YoY) increase of over 32%.

This robust bottom-line performance was supported by a dramatic improvement in asset quality and an exceptionally fortified capital base. The Stage 3 impaired loan (NPL) ratio more than halved, falling sharply to 2.63% from 5.18% at the end of 2024. At the same time, the Stage 3 impairment coverage ratio increased to 59.36% (2024: 44.50%), underscoring the bank’s conservative provisioning stance and resilience against potential credit shocks.

Concurrently, the bank’s capital buffers remained strong, with a Tier 1 Capital Ratio of 21.92% and a Total Capital Ratio of 23.89%, both well above regulatory requirements. This reinforced financial foundation directly translated into enhanced profitability, with key metrics showing significant improvement: the Return on Assets (before tax) rose to 2.54% from 1.63%, and the Return on Equity increased substantially to 24.67% from 18.15%, evidencing greater earnings generation.

NSB’s total assets rose to Rs. 1.87 trillion, up 5.3% from end-2024, supported primarily by increased investments in Government securities. Loans and advances stood at Rs. 519 billion, marginally lower due to selective lending efforts.

Customer deposits increased to Rs. 1.59 trillion, reaffirming strong depositor confidence. Liquidity remained a standout strength, with the Liquidity Coverage Ratio (LCR) exceeding 349% and the Net Stable Funding Ratio (NSFR) at 195%, all far above regulatory requirements.

During the period, NSB contributed over Rs. 24.1 billion in taxes on financial services and income tax, reinforcing its role as a key supporter of public finance, in addition to the bank’s ongoing role as a major investor in Government securities and a conduit for funding to key State-owned enterprises.

Dr. Cabral noted that NSB will continue expanding access to financial services through its islandwide branch network and over 4,000 postal banking outlets. Kandambi added that the strong third quarter performance provides a firm foundation for the bank’s continued focus on digital banking, sustainable growth, and enhanced governance.

With stronger earnings, high liquidity, solid capital buffers, and improving asset quality, NSB enters the final quarter of 2025 in a robust position. The bank said it remains committed to its national mandate protecting public savings, supporting Government funding needs, and driving inclusive, sustainable financial progress across Sri Lanka.

The unit trust industry of Sri Lanka has reported a 16% year-on-year (YoY) growth of its assets under management (AUM) to Rs. 603 billion by the end of October 2025, up from Rs. 592 billion in September.

These assets are currently managed across 85 funds by 16 management companies.

The industry saw 3,628 new unit holders invest in the market during the month, bringing the total number of investors to 137,224 as of end-October. Year-to-date (YTD), the industry has added nearly 25,000 new investors. October also saw an influx of approximately Rs. 4 billion into equity-related funds. This reflects investors’ continued confidence in the growth potential of Sri Lanka’s capital markets and a growing appetite for long-term wealth creation through diversified investment portfolios, indicating a gradual shift away from traditional savings-focused methods.

Unit Trust Association of Sri Lanka (UTASL) President and JB Financial CEO Christine Dias Bandaranaike said: ‘The industry has performed remarkably in 2025, with AUM surpassing the Rs. 600 billion mark earlier this year. We continue to see strong potential for market growth, driven by increasing investor awareness and a broader range of fund offerings.’

‘Our recently concluded ‘Investor Awareness Initiative’ held from the 27 to 31 October, which aimed to educate the public to build wealth through unit trusts, was a great success. 16 management companies participated in the event, each bringing their unique expertise and commitment to wealth building. As a part of the UTASL’s ongoing efforts to promote unit trusts, the initiative reinforced the importance of informed investing, bringing in both new and existing investors to make confident, long-term investment decisions,’ she added.

Together with the Securities and Exchange Commission of Sri Lanka (SEC) and the Colombo Stock Exchange (CSE), the UTASL said it remains focused on strengthening financial literacy and investor participation across the country – particularly in unit trusts. While pooled funds are one of the most widely used and trusted investment tools globally, awareness and participation among Sri Lankan investors remain relatively low.

The UTASL is the representative body for the country’s licenced fund management companies, dedicated to upholding the highest standards of professionalism, integrity and transparency across the industry. Consisting of 16 member companies regulated by the SEC, the UTASL aims to popularise unit trusts and encourage Sri Lankans to prioritise long-term and professionally guided investing, in addition to short-term savings, whilst contributing to national economic growth.

The Japanese Ambassador Akio Isomata, officials from the Japan International Cooperation Agency (JICA), and Ports and Civil Aviation Minister Anura Karunathilake held discussions on resuming the second phase of the Bandaranaike International Airport (BIA) development project.

Browns’ Battery and Tyres raced ahead of the competition at the SLIM National Sales Awards 2025 by securing several wins at Sri Lanka’s renowned sales excellence platform, the only national-level awards dedicated to recognising the country’s key performing professionals.

This year, Browns’ Battery and Tyres charged the Automotive/Frontliners category with two victories: Chandima Ruwan claimed Gold, while Prabodha Pathum bagged a Bronze, reaffirming the team’s unwavering drive and passion. The winning streak powered on with Nuwan Sameera earning a Merit in the Automotive/Territory category and Dulan Tennakoon securing another Merit accolade in the Corporate Sales/Frontliners segment, further highlighting Browns’ Battery and Tyres’ legacy of excellence.

Brown and Company PLC Chief Operating Officer – Automotive and Hardware Cluster Ajith De Silva said: ‘We continue to empower our sales staff by using a holistic approach, training and enhancing their knowledge of the latest trends and technical innovations, while creating a conducive environment that ignites their passion, motivates them beyond their comfort zones, and helps them push the boundaries of their personal best. It is with this assurance that I can confidently say that the Browns’ Battery and Tyre Sales Team is a force to be reckoned with in the automotive sector. Despite many challenges, they have consistently achieved top-line sales in our business unit during the year under review.’

With a heritage that spans over one-and-a-half centuries, Browns has long been a pioneer in Sri Lanka’s automotive battery market. The Company’s 150-year anniversary which was celebrated earlier this year, stands as a testament to its journey which began in the 1920s with the import of Silver Exide batteries from the United Kingdom. This later paved the way for the partnership between Exide Industries India and British Batteries in establishing Sri Lanka’s first lead-acid battery manufacturing plant in 1960, Associated Battery Manufacturers Ceylon Ltd.

Bahrain Airport Company (BAC), the operating and managing body of Bahrain International Airport (BIA), has announced the preparation to renew its long-term partnership with Thales, a global leader in high technologies in defence, aerospace, cyber and digital.

The announcement was attended by BAC Acting Chief Executive Officer, Chief of Airport Operations Ahmed Mohamed Janahi and Gulf Air Group Chief Technology Officer Ahmed Naeemi, at Dubai Airshow, at Dubai World Central.

As per the agreement, Thales will continue providing maintenance and support for BIA’s security systems, ensuring the uninterrupted delivery of a world-class airport experience, in line with Bahrain’s digital transformation vision. The partnership ensures seamless performance across key platforms, including airport security cameras, airport access control, airport public announcements, and all related system integrations.

Naeemi said: ‘This partnership reflects our commitment to maintaining robust and advanced digital infrastructure at the heart of the airport’s operations. Thales’s technology helps us ensure that our systems operate reliably every day and continue to evolve in line with global aviation standards. It plays an important role in supporting the reliability and performance of our core systems, supporting us to meet the expectations of both passengers and stakeholders. We look forward to further strengthening this collaboration as BIA continues its growth.’

Ravoire said: ‘Our partnership with BAC has always been rooted in a shared ambition to elevate airport operations through reliability and innovation. Renewing this agreement reflects our commitment to supporting BIA with secure, future-ready systems that keep pace with the evolving needs of passengers, stakeholders and the wider aviation ecosystem.’

Thales’s integrated security system uses advanced tools and video analytics to help identify and track persons of interest, while coordinating digital and physical security measures to reduce the impact of potential cyber incidents on airport operations.

Pakistani Prime Minister Shehbaz Sharif hosted the Sri Lanka, Zimbabwe, and Pakistan cricket teams for a State luncheon at his house on 19 November.

The event was attended by Interior and Narcotics Control Federal Minister Mohsin Naqvi, Pakistan Cricket Board Chairman and Information Federal Minister Attaullah Tarar, the Ambassador of Zimbabwe, and the High Commissioner of Sri Lanka.

In his remarks, the Prime Minister highly commended the Sri Lankan team’s decision to continue the tour.

The Manager and Captain of the Sri Lankan team expressed their gratitude for the warm hospitality, luncheon, facilities, and security arrangements provided during the tour for the Pakistan side.

Sri Lanka is stepping into a transformative phase in global logistics with the launch of ProDG Logistics, the country’s first ever company dedicated exclusively to the handling, transportation, and management of dangerous cargo goods that require the highest levels of safety, compliance, and specialised expertise.

ProDG Logistics said dangerous cargo, often referred to as hazardous materials, includes flammable liquids, corrosive chemicals, explosives, toxic substances, compressed gases, radioactive materials, and other substances classified under global safety frameworks. Managing such cargo demands strict handling procedures, specialised storage conditions, and advanced operational protocols to protect people, the environment, and critical infrastructure.

ProDG Logistics is established as a subsidiary of InterGlobe Freight Solutions Ltd, a veteran and highly respected leader in Sri Lanka’s logistics sector. With years of experience, industry credibility, and operational excellence, Inter Globe Freight Solutions provides a strong foundation for this ground-breaking new venture,

Its vision is ‘To position Sri Lanka as a trusted regional hub for safe, compliant, and technologically advanced dangerous cargo logistics.’ The mission is ‘To deliver world class dangerous cargo handling solutions through uncompromising safety standards, innovative systems, and a highly trained team strengthening Sri Lanka’s position within global supply chains.’

Guiding this vision is a dynamic leadership drawn from the defence and maritime sector, Retired Rear Admiral Manjula Dissanayake, together with InterGlobe Freight Solutions Ltd., brings strategic insight, proven industry experience, and operational excellence to the forefront of the company.

As the first Sri Lankan entity dedicated solely to dangerous cargo logistics, ProDG Logistics offers comprehensive end-to-end services including specialised packaging, international sourcing, documentation, maritime and air transport coordination, warehousing, and distribution. All processes will be aligned with globally recognised industry regulations and best practices, ensuring the highest levels of compliance.

A significant strength of ProDG Logistics lies in its highly skilled and professionally trained team of experts in hazardous material management, chemical handling, maritime operations, aviation regulations, and international logistics. Their knowledge ensures accuracy, reliability, and full compliance at every stage of operation.

While serving Sri Lanka’s key industries from defence-related sectors involving ammunition and other specialised dangerous cargo, to pharmaceuticals and manufacturing, and extending to mining, energy, and research ProDG Logistics has also outlined an ambitious global growth strategy. The company aims to build strong international partnerships, establish overseas operational hubs, and integrate advanced digital systems to ensure the seamless and compliant global movement of dangerous cargo.

As global trade continues to evolve and the demand for specialised logistics grows, the establishment of ProDG Logistics marks a significant milestone for the country. It signifies Sri Lanka’s readiness to elevate its logistics capabilities while adhering to the highest standards of safety and professionalism.

With a powerful vision, strong leadership, the backing of industry pioneer InterGlobe Freight Solutions, and a team of experts at its core, ProDG Logistics said it is poised to redefine dangerous cargo logistics in Sri Lanka and the region.

LOLC Finance PLC has been ranked 14th overall, in the prestigious ‘Top 100 Most Valuable Brands of Sri Lanka’ and number one in the Non-Banking Financial Services (NBFI) sector list by Brand Finance.

The brand valuation assessment revealed LOLC Finance achieved a brand rating of AA+, with a strong brand value of Rs. 11,528 Million. This honour not only reaffirms LOLC Finance’s position among the nation’s most elite brands but also establishes its undisputed dominance in the Non-Banking Financial Institution sector, securing the top spot with a commanding lead over competitors in the overall rankings.

Brand Finance’s annual Sri Lanka Top 100 Most Valuable Brands study is among the country’s most stringent and comprehensive brand valuation assessments, evaluating brands on their financial performance, stability, market recognition, credibility, and consumer trust, while benchmarking them against industry peers and global standards. For LOLC Finance, this recognition is more than a ranking: it is a testament to sustained market leadership, unmatched brand equity, and a proven record of delivering transformative value to customers and communities alike.

LOLC Finance CEO Krishan Thilakaratne said: ‘This recognition is a powerful endorsement of our position as Sri Lanka’s undisputed NBFI leader. LOLC Finance accounts for 20% of total industry assets, 25% of industry liabilities, and 36% of total profitability. Among the 35 players in the NBFI industry, LOLC Finance is the market leader in SME Finance, Personal Finance, Islamic Finance, Factoring, Agricultural Product Financing, and several other market segments in Sri Lanka. Furthermore, our digital footprint is recognised as the largest in the Sri Lankan digital banking space, with our iPay platform handling over 60% of e-wallet transactions in the country. Our vision is to enhance financial inclusion in Sri Lanka by extending formal financial services to all segments of society. The Brand Finance ranking affirms what our customers, stakeholders, and partners already know: LOLC Finance is not just a financial services provider, and it is a force shaping the future of the NBFI sector in Sri Lanka.’

LOLC Finance PLC Assistant General Manager, Marketing Communications Prasad Perera said: ‘More than just transactions, we are focused on building strong relationships, shaping financial journeys, and cherishing shared ambitions. Our customers increasingly see us as their dedicated partner, advisor, and guide, helping them make life’s most important financial decisions with confidence. As a comprehensive one-stop solution for all financial needs across all walks of life, LOLC Finance leverages its strong brand equity for sustainable growth. Our short-term marketing strategies are powerfully leveraged by having such a solid brand, we fundamentally believe in and continuously invest in long-term brand building to ensure we achieve the optimal marketing mix. Our integrated communication campaigns consistently generate a positive Return on Investment (ROI) for the company, both in the short and long term. As we continue to grow, we will uphold these connections, solidifying our position as Sri Lanka’s most valuable financial services provider.’