Category: Daily Financial Times

Ending months of speculation and delays over completing the country’s debt restructuring, national carrier SriLankan Airlines and the Government of Sri Lanka yesterday said that they have reached an agreement in principle with six members of the Ad Hoc Group of Bondholders on the financial parameters of restructuring the national carrier’s $ 175 million Guaranteed Bonds due June 2024.

Delivering the 2026 Budget in Parliament on 7 November, President and Finance Minister Anura Kumara Dissanayake had pledged that the restructuring of Sri Lanka’s outstanding Bonds and interest worth $ 210 million would be completed by the end of 2025.

SriLankan in a statement yesterday said that it held restricted discussions with the Group between 23 October and 19 November on the restructuring of the Notes.

The discussions were supported by the company’s financial and legal advisers, Lazard and Norton Rose Fulbright LLP, and by the Bondholder Group’s legal adviser, Akin Gump Strauss Hauer and Feld. The six restricted members of the Bondholder Group control approximately 55% of the aggregate outstanding amount of the Notes.

According to SriLankan, the agreement in principle remains subject to final Cabinet approval, as well as non-objection from the International Monetary Fund (IMF) and Sri Lanka’s Official Creditor Committee, in line with the Government’s wider public debt restructuring commitments.

Implementing the in-principle agreed terms will help the airline complete the full normalisation of its relations with external creditors and allow it to focus on the continuation of its operations.

SriLankan Airlines Chairman Sarath Ganegoda said: ‘We are very pleased to have finally reached an agreement with the Ad Hoc Group of Bondholders, allowing us to now look to the future of our company with greater optimism’.

SriLankan…

‘We thank them for their patience and for the pragmatic approach they adopted to avoid an unnecessary escalation of this situation, which would have been detrimental to everyone. Our island nation should rely on a well-functioning airline company for its economic prosperity,’ he added.

Under the agreed terms, and subject to successful implementation, the Government will be discharged from its liability under the Guarantee and will receive substantial debt and immediate liquidity relief to maintain the hard-fought long-term sustainability of its public finances.

The agreement in principle includes a 15% haircut on the total claim amount relating to the Notes, with the balance to be exchanged for a mix of cash and medium-term Government Bonds carrying an interest rate of 4%.

Treasury Secretary Dr. Harshana Suriyapperuma said: ‘We are taking a new step in the full normalisation of our relations with our external partners and in our efforts to restore our public finances. Thanks to this agreement, 99% of our external debt will now be settled.’

‘We count on the support of our official partners to assist us in this crucial new phase, which should also enable us to bolster our credit rating and prepare our eventual return to international capital markets,’ he added.

The terms have been communicated to Sri Lanka’s Official Creditor Committee for non-objection and to the IMF to ensure alignment with long-term debt sustainability. Upon confirmation, the parties expect to implement the transaction by the end of the year.

SriLankan Airlines and the Government thanked the Bondholder Group and its advisers for their patience and constructiveness throughout the discussions and said they look forward to prompt implementation of the transaction.

Terms of the agreement in principle

The agreement-in-principle consists of an offer to Note holders to participate in a mandatory and concurrent cash tender offer and exchange offer for Government Bonds issued under a tap of the Sri Lankan Government 2028 $ 1.20 billion 4% Bond.

Cash tender offer

Under the tender offer, the airline and the Government will allocate $ 60 million in cash to finance the voluntary tender of the Notes at a fixed price equivalent to 85% of the total claim amount (principal, accrued interest, and past due interest) as of the effective closing date.

If the offer is undersubscribed, any allocated and unutilised cash will be used first to cover the agreed Bondholder Group work fee, with the remaining balance reallocated to buy back additional Notes from consenting holders at the same fixed price on a pro-rata basis.

Non-consenting Note holders will not receive any cash.

Exchange offer

Under the exchange offer, Note holders will exchange remaining Notes for Sri Lankan Government Bonds (the 2028 $ 1.20 billion 4% Bond). These bonds will amortise in three instalments: April 2026 (~27.4%), April 2027 (~27.4%), and April 2028 (~45.2%). Government Bonds distributed under the exchange will be issued via a tap of the existing instrument.

Note holders who voluntarily exchange will receive $ 0.85 in principal amount of Government Bonds for every $ 1 of total claim. The exchange ratio will be adjusted to reflect the first full interest coupon paid in April 2026 to avoid double-counting.

Any Notes not voluntarily tendered or exchanged will be mandatorily exchanged for Government Bonds at a rate of $ 0.75 per $ 1 of total claim, with the same coupon adjustment.

Other key features

The transaction will only proceed once an extraordinary resolution is passed at a meeting of Note holders to implement the agreed terms. Approval requires at least 75% of the principal amount of Notes present and voting.

Members of the Bondholder Group will also receive a work fee to compensate them for the time, cost, and expertise devoted during the negotiations.

The Tamil National Alliance (TNA) met President Anura Kumara Dissanayake today (19) at the Presidential Secretariat to discuss key political and regional concerns, including Provincial Council elections and the need for a new Constitution.

Sri Lanka Rugby appointed three Trustees to strengthen its governance and drive the sport toward a more sustainable future. Air Force Marshal W.D.M.J. Goonetileke, Group Captain Nalin De Silva (Retd.), and Cicero De Fonseka bring decades of leadership, discipline, and strategic expertise to the organisation.

These Trustees will play a vital role in ensuring effective oversight, maintaining transparency within the administrative structure, and helping shape long-term development strategies. They are entrusted with supporting initiatives that elevate performance standards, strengthen governance frameworks, and nurture emerging rugby talent across the country.

The Inland Revenue Department (IRD) said it has collected over Rs. 2 trillion as of 17 November, the highest annual revenue in its history. The tally exceeds the full-year figure for 2024 by over Rs. 60 billion, according to a statement issued yesterday.

The Department said crossing the Rs. 2 trillion mark within 11 months strengthens the State’s fiscal position. Commissioner General Rukdevi P.H. Fernando thanked taxpayers for meeting their obligations and acknowledged the role of public and private sector institutions in reaching the milestone.

Science fiction action film ‘Predator Badlands’ will be shown in seven cinemas in Sri Lanka from today.

They are Kandy City Centre, SCOPE Cinema – Colombo City Centre, SCOPE Cinema – Havelock City Mall, PVR Cinema, Ram Cinema, Lite Cinemas and Regal Cinemas.

‘Predator: Badlands’ is the seventh instalment in the Predator franchise. The film was directed by Dan Trachtenberg and written by Patrick Aison from a story by Trachtenberg and Aison.

Elle Fanning and Dimitrius Schuster-Koloamatangi star in leading roles.

In the film, Dek, a young Yautja exiled from his clan, crash-lands on a hostile planet and must prove himself worthy of the hunt. Struggling to survive, he forms an unlikely alliance with Thia, a damaged Weyland-Yutani Corporation android, as they face off against an apex predator.

Sri Lanka is experiencing its worst economic crisis since gaining independence in 1948. After defaulting on its external debt in 2022, the government was forced to impose severe austerity measures in exchange for a loan from the International Monetary Fund. As a result, the poverty rate remains alarmingly high, reaching 24.5% in 2024, up from 11.3% in 2019, while real per capita GDP is not expected to return to its 2018 level until 2026. The country is losing a generation to malnutrition, high youth unemployment, and educational losses as school-dropout rates climb.

The Sri Lankan economy is grappling with a paradoxical combination of punishing interest rates, sustained disinflationary forces, and continuing debt problems. The Central Bank of Sri Lanka’s August 2025 Monetary Policy Report recognized the extent of disinflation, with the headline inflation rate falling below policymakers’ 5% target for three consecutive quarters. The most recent data suggest that inflation moved from negative territory in the first two quarters of this year to slightly above zero in the third quarter, yet the benchmark interest rate remains at 7.75%.

When output falls short of potential, or inflation is below target, the central bank should lower interest rates. Given below-target inflation and an employment-to-population ratio that has fallen by a full four percentage points since 2017 (a sure sign of an economy not fulfilling its potential), maintaining double-digit real (inflation-adjusted) rates is fiscal self-harm, not prudence.

In addition to the textbook argument, there is a more pragmatic case for lower interest rates in Sri Lanka: debt sustainability. The debt-to-GDP ratio depends not only on current expenditure and revenue, but also on economic growth and interest on debt accumulated in the past. The larger the ratio is, the stronger the effect of these latter factors. With a debt-to-GDP ratio close to 100%, Sri Lanka’s debt sustainability is highly sensitive to increases in interest rates: a few percentage points can be the difference between a stable ratio and one that is crushing.

Moreover, heavily indebted countries have long known that the GDP denominator matters just as much as the debt numerator. For example, after receiving multiple bailouts and adopting austerity measures between 2010 and 2015, Greece reduced its total debt by pound 15 billion ($17.4 billion) – nearly 5% of GDP – but its debt ratio rose by 30 percentage points because GDP fell at a much faster pace.

Sri Lanka risks suffering the same fate. High interest rates in a deflationary environment increase debt-service costs while suppressing economic activity – the worst of both worlds. Austerity in the name of fiscal sustainability is self-defeating if it destroys the conditions for growth.

Keeping rates high also does little to tame prices, because food accounts for around 35.1% of the average household consumption basket in Sri Lanka, and these prices depend more on global conditions and supply shocks than on domestic demand.

A more realistic goal for Sri Lanka would be to stabilize the balance of payments and avoid swings in capital flows. But if the central bank’s focus is indeed on the external balance, its public statements do a poor job of communicating this.

In August, the central bank projected a current-account surplus in 2025, meaning the country is accumulating rather than losing foreign exchange. Gross official reserves climbed to more than $6 billion in the first half of the year, despite debt-service outflows. After a large devaluation in early 2022, the rupee has been stable. In short, there is no evidence of a possible financing crisis that could justify sky-high domestic interest rates. The surplus liquidity in money markets suggests that conditions are ripe for monetary easing.

Policymakers cite ‘heightened worldwide economic uncertainty’ as a reason for caution. But this makes no sense: the interest-rate level, not the change in rates over time, is what matters. An interest rate of 7.75% is no less discouraging for investment just because rates were higher a year ago.

High interest rates and rising foreign reserves signal Sri Lanka’s willingness to place the interests of outside actors ahead of the country’s own people and businesses. But if ultra-tight monetary policy triggers a renewed crisis and another default, even foreign creditors will lose.

Instead of stabilizing inflation or the external balance, high interest rates are delaying the economy’s recovery and straining public finances. But it’s not too late for the central bank to change course. After several years of flat or falling output, the Sri Lankan economy grew by 4.9% in the second quarter of 2025, implying that renewed growth is possible with the right monetary-policy stance.

Economies escape debt traps through growth, not endless austerity. Sri Lanka is no exception. With below-target inflation, stable external accounts, and growth still tentative, maintaining a rate of 7.75% is indefensible. Policymakers should begin easing monetary conditions as soon as possible, while keeping an eye on capital flight.

The Zonta Club II of Colombo hosted an impactful program titled, ‘Raising Awareness, Understanding and Preventing Emotional Abuse’ at the Cinnamon Grand Colombo recently. Held under the theme, ‘Some Scars Are Invisible – Speak Up, Seek Support,’ the event attended by members of the Zonta Club, police personals, clergy, and other distinguished guests aimed to shed light on the hidden yet deeply damaging issue of emotional abuse.

The program began with an awareness and training session led by Independent Domestic Violence Adviser (UK) and Attorney-at-Law Shahran Mowlana focused on increasing understanding of emotional abuse-particularly against women-while equipping first responders such as teachers, HR professionals, community leaders and law enforcement officers with the skills to identify, respond to and support victims compassionately and effectively.

A panel discussion followed later in the day, moderated by International Member of the American Psychological Association Rasini Bandara.

She steered an open and insightful dialogue, encouraging participants to engage with the often-overlooked emotional and psychological dimensions of abuse.

The panel featured Attorney-at-Law Jerusha Crosette-Thambiah, Open University of Sri Lanka Head of the Department of Psychology and Counselling Clinical Psychologist Dr. Ransirini De Silva, Miss Sri Lanka for Miss World 2024 Anudi Gunesekera and Corporate HR Professional and SME Trainer Chathurani Kulatunga.

Attorney-at-Law Jerusha Crosette-Thambiah highlighted the legal challenges many women face, especially in matters relating to property and financial independence.

She emphasised that Sri Lankan law offers very limited protection to women in situations where property is solely under the husband’s name-meaning that in the event of a divorce, the wife may not receive anything from assets. To safeguard themselves, she strongly advised couples to maintain joint bank accounts and shared ownership of property.

‘We are seeing more late marriages breaking down because couples are unable to cope with a narcissistic or overly demanding partner in the later years of marriage. Financial independence is essential-it gives individuals the strength and security to face these challenges and make the right decisions for their wellbeing.’ Thambiah added.

Corporate HR Professional and SME Trainer Chathurani Kulatunga spoke about the challenges faced by working women, who often have to balance workplace stress with the responsibilities of being homemakers. Issues such as favouritism among colleagues, internal rivalry, gender bias and even instances of sexual harassment by certain individuals.

Kulatunga also pointed out that many women feel pressured by societal expectations to manage every aspect of family life, a burden that frequently leads to emotional strain and abuse.

‘We are working on all these aspects, but firm steps must be taken to create healthier workplaces and happier homes,’ she noted.

Miss Sri Lanka for Miss World 2024 Anudi Gunesekera shared insights from her social and advocacy work, stressing the importance of awareness campaigns and empowering young women to recognise emotional manipulation early and seek help without shame.

She also spoke candidly about the online harassment she faced, recalling how certain users threatened her with gang rape after she did not win the Miss World title in India last year. While she received strong support from many on social media, she highlighted that the digital world carries both advantages and dangers.

Anudi further emphasised that in relationships, young women should maintain their identity and independence, reminding them not to make their partner their entire world but rather a part of it and never to lose themselves for someone acting out of selfish intent.

She summed up her message by saying, ‘Social media can lift you up or tear you down but your strength comes from knowing who you are. Never lose yourself for someone who doesn’t value you.’

Clinical Psychologist Dr. Ransirini De Silva examined the deep psychological impact of emotional abuse, explaining how it leads to trauma, long-term mental health consequences and the urgent need for early intervention and access to counselling.

She also pointed out that individuals, especially women-who experience ongoing emotional stress often unintentionally pass this distress on to their children. She explained that remaining in a troubled marriage can become a cycle of trauma, where emotional pain is repeated and carried forward within the family.

‘Emotional abuse is often overlooked because there are no visible injuries. Victims may appear calm or compliant and abusers can present themselves as caring, making the signs difficult to detect. It’s important to recognise warning indicators such as fearfulness, withdrawal, low self-confidence, avoiding eye contact, changes in mood, or minimising and excusing the abusive behaviour,’ De Silva noted.

The session further outlined how to respond safely to a survivor-by listening without judgment, validating their experience, reassuring them it is not their fault and empowering them with practical support. Emphasis was also placed on maintaining professional boundaries, encouraging helpers to debrief with colleagues, recognise emotional fatigue, practice self-care and remember that they are supporters, not saviours.

This event formed part of Zonta’s global ’16 Days of Activism’ campaign, inspired by the United Nations, aimed at ending violence against women in all its forms.

The program concluded with a powerful message: Although emotional abuse leaves no visible wounds, its scars run deep. Speaking up, seeking support and fostering awareness are the first steps toward healing and lasting change.

At the 2026 post-Budget Forum organised by the Daily FT in partnership with the University of Colombo MBA Alumni Association, Senior Adviser to the President on Economic Affairs Duminda Hulangamuwa remarked that Sri Lanka should make a strategic pivot towards high-value service exports, echoing the view which has been consistently advocated by this newspaper on a number of occasions.

The bold statement of the prominent economic advisor to the Government comes at a time when the Sri Lanka Export Development Board is in the process of formulating the National Export Development Plan 2025-2029 in collaboration with the Asian Development Bank.

The blueprint is expected to serve as a comprehensive and strategic framework to guide Sri Lanka’s export-led economic transformation over the next five years. The Government has set an ambitious objective to generate $ 45 billion exports in 2030, by earning $ 25 billion from merchandise exports, $ 11.5 billion from service exports, and $ 8.5 billion from tourism earnings.

Nevertheless, it is pertinent to raise the issue whether the emphasis on exports is aligned with the views of political leaders of the NPP Government regarding Sri Lanka’s economic direction. Prior to gaining power, the NPP pledged to herald a production economy – a political slogan, not a concept found in the principles of economics – which underscores enthusiasm for the manufacturing sector to be the driving force of the economy. Even from the JVP days, the current ruling party expressed a fondness towards factory production and agriculture while demonstrating reservations towards trade and services.

According to Hulangamuwa, deep-rooted structural constraints limit Sri Lanka’s ability to scale up manufacturing exports despite the enthusiasm of many to see Sri Lanka becoming another South Korea with prowess in high-tech manufacturing. For decades, the country’s manufacturing sector has been dominated by low-skill and light manufacturing segments such as apparel, rubber-based products, and food processing while experiencing difficulty to diversify into medium or high-tech manufacturing. High-tech manufacturing requires reliable supply of power at economical rates, an area in which Sri Lanka fares quite poorly. Moreover, with a rapidly ageing population, Sri Lanka has lost its appeal as a destination for mass-scale, manufacturing- oriented foreign direct investments due to its declining labour force.

The university system too does not provide graduates proficient in STEM disciplines in sufficient numbers to facilitate the growth of high-value manufacturing sectors.

Although the potential to excel in manufacturing is constrained, the nation has a huge opportunity to increase its export income by focusing on service exports. From ancient times, Sri Lanka has been one of the important maritime hubs for international traders. The geographical location gives a comparative advantage to the country as the gateway to the Indian Subcontinent to serve South and East Asia, the Middle East and Africa on the main East and West shipping route. Colombo Port has always been consistently ranked among the top 50 World Container Ports above other South Asia ports based on the volume of the containers handled. The Port has also emerged as a transhipment hub for a significant portion of Indian cargo due to its ability to handle deeper-draft vessels unlike main ports in India. With such inherent strengths, Sri Lanka can become a prominent logistics hub in Asia, aided by the growth of the Indian economy.

Tourism is undoubtedly a low-hanging fruit which has the potential to enhance Sri Lanka’s service export income substantially. However, Sri Lanka needs to be positioned cleverly as an up-market tourism destination to ensure the sustainable development of the industry.

A service-driven export strategy necessitates open and liberal economic policies backed by excellent relations with major foreign powers of the world. The view that industrialisation is the only pathway towards economic development for developing countries is no longer supported and endorsed by empirical evidence.

One quiet Sunday morning, a young man sent cheerful messages to his friends. He joked about cricket, promised to visit his parents that evening, and reminded his team at work about a deadline. By nightfall, he was gone. There were no notes, no visible signs of deep depression, only stunned silence and questions that will never be answered. Only disbelief, and the quiet question that lingers whenever tragedy arrives without warning, how could someone so alive choose to leave?

Every day, the media paints a worrying picture, young people overwhelmed by pressures no generation has ever faced. Headlines speak of anxiety, social isolation, and a growing mental health crisis. For many parents, these stories awaken a quiet fear, the fear that their own child might be silently suffering. Today’s world can be heavy. School pressures, social media comparisons, family difficulties, challenges in relationships and an uncertain future make even strong minds feel fragile. When a child withdraws or seems distant, parents often feel helpless, unsure how to reach out to them.

When someone dies by suicide, the first assumption is that they were depressed. It is how we try to make sense of what feels senseless. But not everyone who takes their life has a diagnosed mental illness.

Sometimes, the pain is quieter, a mix of exhaustion, shame, or a loss of connection to meaning and purpose. Many who struggle appear perfectly fine. They smile, work, and carry on, even as they crumble inside. They may not fit the image of someone in distress, and that is why awareness matters. Life moves in cycles. Joy and sorrow, gain and loss, all come and go like seasons.

When despair takes hold, it convinces us that darkness is permanent. But nothing lasts forever, not even the deepest pain. Beneath every moment of despair lies a self that is unbroken and capable of renewal. Even when the mind feels clouded, a part of us still holds the ability to heal and begin again. To remember that truth, and to help others remember it, is one of the most powerful acts of compassion.

Sometimes, people who are struggling do show signs, though subtle. They may withdraw from friends and family, talk about feeling hopeless or being a burden, give away possessions, or seem suddenly calm after a period of distress. Changes in sleep, appetite, or energy, or taking unusual risks, can also be signals that something is wrong. The key is to notice, to ask gently, and to listen without judgment.

A single, honest conversation can be the beginning of hope. In a world that often celebrates success and hides struggle, the greatest act of strength is to show care. Compassion and kindness are not small gestures, they are lifelines. When we reach out, when we listen and remind someone that they matter, we help them see that their story isn’t over. Awareness is not only about recognising symptoms, but about creating spaces where people can say, ‘I’m not okay,’ without shame or fear.

Not everyone who dies by suicide was depressed. But everyone who reaches that point has, for a moment, lost connection with their inner self, the quiet voice that says, this too shall pass. Our role, as friends, families, and communities, is to help one another find that voice again. To listen more, to judge less, and to remind each other that no night, no matter how dark, lasts forever.

If you or someone you know is struggling, please reach out for help. Useful organisations are National Institute of Mental Health (Sri Lanka): 1926 and Sri Lanka Sumithrayo: +94 112 682 535.

The Colombo stock market has reached a major valuation milestone in November 2025, trading at a price-earnings (PE) level significantly above its long-term norms, First Capital Research (FCR) said yesterday.

According to FCR, the ASPI is now valued at a premium to its 18-year historical PER average of 12.0x based on 2025 earnings, marking a rare period in which market valuations have exceeded their typical range.

As at yesterday, the ASPI has gained nearly 45% year-to-date (YTD), with the active S and P SL20 gaining 31.3%. Market capitalisation was up 45.3% to nearly Rs. 8.28 trillion.

FCR attributes the record levels to the strong performance of the broader economy throughout 2025.

Business activity strengthened across sectors as lower and stable lending rates supported construction, which recorded its fastest expansion since 2021.

Industrial output and confidence improved to multi-year highs, pointing to robust domestic demand and stronger corporate earnings. Export-focused industries and tourism benefitted from increased external demand and a weaker currency, with tourist arrivals rising above pre-2018 levels.

Macroeconomic conditions also played a central role in pushing valuations higher. Low inflation, consistent engagement with the International Monetary Fund (IMF), and improved political stability following decisive election results strengthened business sentiment and supported the sustained market rally.

These conditions provided a favourable backdrop for earnings growth, which FCR estimates rose by about 25% in 2025.

However, the research firm notes that several emerging pressures point to a moderation in the growth environment in 2026.

The depreciation of the rupee is expected to raise import costs and constrain household consumption.

Government capital expenditure continues to fall below allocated levels, reducing its potential stimulus to the economy.

Weaker Small and Medium Enterprise (SME) activity and slower private sector investment add to the softer outlook, with GDP growth projected to ease to 3-4% in 2026 compared with an estimated 5% in 2025.

Corporate earnings are also expected to normalise, with FCR forecasting growth of around 17% in 2026. Despite the slower pace, select sectors, particularly construction, tourism, and diversified export businesses, remain positioned to benefit from ongoing policy measures and currency dynamics.

With the ASPI now trading above its fair-value range for 2026 and at valuation levels rarely observed over nearly two decades, the market’s record PE multiple reflects both the strong economic rebound in 2025 and the evolving macroeconomic environment heading into 2026.