Category: Daily Financial Times

The anti-Tamil pogrom of Black July was not the first episode of communal violence directed against the Tamil community, but it was undoubtedly the deadliest and most devastating. The violence claimed hundreds, if not thousands, of lives, displaced countless families, destroyed homes and livelihoods, and irreversibly altered the course of our country.

More than four decades later, however, Sri Lanka has yet to fully confront the legacy of those events. Black July remains largely absent from school curricula and is seldom discussed in a meaningful national conversation. This silence risks allowing history to be rewritten while denying future generations the opportunity to learn from one of the country’s gravest failures.

Treating July 1983 as an isolated eruption of violence is perhaps the greatest mistake we continues to make.

The pogrom did not emerge spontaneously in response to the killing of 13 soldiers by the LTTE. Rather, it was the culmination of decades of political rhetoric, discriminatory policies, and systematic “othering” of the Tamil community. Tamils were increasingly portrayed as outsiders, scapegoats, and even enemies within their own homeland. This climate of suspicion and hostility gradually eroded social cohesion, making widespread violence not only conceivable but, for some, acceptable.

The events of Black July also exposed a catastrophic failure of the State. Numerous investigations, eyewitness accounts, and historical studies have documented the role played by State-sponsored elements and the failure of authorities to protect citizens from organised violence. Whether through direct complicity or wilful inaction, the State became an accomplice in one of the most shameful episodes of independent Sri Lanka’s history.

The dangers of failing to learn these lessons became evident in the years after the war. From around 2012 onwards, organised campaigns targeting the Muslim community echoed many of the same patterns of fear mongering, misinformation, and dehumanising rhetoric that had previously been directed against Tamils. As subsequent investigations into the Easter Sunday attacks have publicly revealed, extremist networks sponsored by the military intelligence apparatus, political manipulation, and failures of State institutions once again played a troubling role in inflaming communal tensions. These developments should have served as a stark reminder that the lessons of July 1983 had not been fully absorbed.

As Sri Lanka navigates a fragile period of peace and recovery, confronting the ghosts of its past is not a luxury but a necessity. Reconciliation cannot rest solely on infrastructure, economic recovery, or political rhetoric. It requires an honest reckoning with history and a collective commitment to ensuring that prejudice, discrimination, and communal violence are never again allowed to flourish.

This demands open public discussion, support for historical research, preservation of survivor testimonies, and official recognition of the suffering endured by victims.

Perhaps the most important step is to ensure that Black July becomes part of Sri Lanka’s school curriculum. Teaching these events is not about reopening wounds or promoting division. It is about equipping young Sri Lankans with the knowledge and critical thinking needed to recognise the dangers of prejudice, propaganda, and majoritarian extremism. Students should understand not only what happened in July 1983, but also why it happened, how democratic institutions failed, and what responsibilities citizens and governments bear in protecting pluralism and the rule of law.

Sri Lanka cannot hope to build a genuinely inclusive future while remaining silent about one of its defining tragedies. Remembering it, teaching it, and learning from it are essential if Sri Lanka is to ensure that such a tragedy is never repeated.

The Chamber of Mineral Exporters (CME), representing exporters and explorers of quartz, graphite, mineral sands, and mica, said the recently unveiled National Mineral Policy is a welcome first step but argued that policy announcements alone will not unlock investment.

Instead, it said the real test lies in how the Geological Survey and Mines Bureau (GSMB) and the Industry and Entrepreneurship Development Ministry implement the policy through regulations, licencing reforms, and institutional change.

Sri Lanka’s mineral exporters have launched to set out a detailed set of reform proposals governing the country’s minerals sector, highlighting that unless the GSMB evolves into a more commercially aware and responsive regulator, the country’s ambitions to become a competitive supplier of strategic minerals will remain largely aspirational.

The Chamber estimates its members currently generate directly and indirectly around $ 100 million in annual exports and believes the industry could comfortably double that if longstanding regulatory constraints are removed. Yet it argues the sector’s biggest challenge today is not a lack of mineral resources but an investment climate characterised by delays, administrative uncertainty, and inconsistent regulatory execution.

Industry representatives said their frustration extends well beyond the pace of policymaking. While acknowledging that the Government has held consultations with the private sector, they contend that engagement has largely become a box-ticking exercise, with industry views rarely reflected in policy implementation. They noted that although exporters had actively participated in developing earlier drafts of the Mineral Policy over several years, they were excluded from subsequent revisions and from the preparation of the standard operating procedures (SOPs) that will ultimately determine how the new framework functions.

The Chamber also questioned whether technical advice informing policymaking adequately reflects commercial realities. It argued that regulatory thinking often leaps directly to high-profile products such as graphene, semiconductors, and electric vehicle (EV) battery materials while overlooking the commercial, technical, and scale constraints that determine whether such investments are economically viable. Exporters said each mineral follows a distinct value chain and that commercially successful industries are built progressively rather than by attempting to leap immediately to the highest-value end products.

According to the Chamber, this disconnect has at times resulted in policy decisions that favour ambitious proposals over commercially proven businesses. It cited previous mineral allocation exercises where companies with established processing facilities and export operations lost access to deposits to proposals promising sophisticated downstream manufacturing that ultimately failed to materialise. The Chamber argued that such experiences have weakened confidence in the credibility of regulatory decision-making.

Exporters also expressed concern over what they described as the slow pace at which strategically important deposits are being brought into production. They pointed to major quartz deposits that have remained largely idle for years despite repeated policy announcements and changing administrations, even as existing processors struggle to secure sufficient raw material to expand operations. While welcoming recent Ministerial attention to the sector, they said businesses continue to await concrete action rather than further policy statements.

Licencing uncertainty emerged as another major concern. The Chamber said exploration and mining companies have invested millions of dollars, recruited staff, and completed geological work only to find projects effectively frozen while the Government finalises new procedures. Companies with exploration licences, mining licences, or renewal applications remain uncertain about when approvals will resume, while investors have received no clear timelines for projects placed on hold pending implementation of the new policy. Exporters warned that prolonged regulatory pauses risk damaging Sri Lanka’s reputation among international investors, particularly when companies have already committed capital in good faith.

The Chamber further argued that the existing licencing regime itself discourages long-term investment. Mining projects require substantial upfront expenditure and often take years before generating returns, yet investors continue to face relatively short licence periods and uncertainty over renewals. Such conditions, it said, inevitably increase project risk and reduce Sri Lanka’s attractiveness relative to competing jurisdictions.

Another issue highlighted was the fragmented approval process, where companies may obtain mining licences from the GSMB but remain unable to commence operations because approvals from other Government institutions remain pending. Exporters said projects have in some cases been delayed for years due to land administration issues or approvals outside the regulator’s control, only for companies to later face questions over why production has not commenced.

The Chamber therefore welcomed proposals to establish a single-window approval mechanism through the GSMB, describing it as one of the strongest features of the new Policy if implemented effectively.

The Chamber also challenged the way mineral royalties are administered. It argued that royalties are effectively calculated on the final export value, capturing costs associated with processing, electricity, labour, and logistics rather than simply the value of the mineral extracted from the ground. Exporters further questioned the practice of requiring royalty payments before export proceeds have been received, despite provisions in existing legislation permitting periodic payments. They also called for greater transparency over how royalty revenue is utilised, arguing that a meaningful share should be reinvested into geological exploration, resource mapping, accredited laboratories, and applied research instead of flowing almost entirely into the Treasury.

Research and testing infrastructure was identified as another structural weakness. The Chamber said Sri Lanka still lacks internationally accredited laboratories capable of testing many industrial minerals for higher-value applications, forcing companies to incur significant costs sending samples overseas. It also argued that while universities and public institutions possess considerable scientific expertise and equipment, research funding should be directed more deliberately towards solving commercial processing challenges in partnership with industry rather than remaining largely academic.

Despite its criticism, the Chamber acknowledged several positive developments under the new Policy.

It welcomed the transfer of the GSMB from the Environment Ministry to the Industry and Entrepreneurship Development Ministry, arguing that mining should be managed as an industrial sector while remaining subject to robust environmental regulation.

It also endorsed the Policy’s recognition of the distinction between mineral rights and land rights, describing it as an important step towards resolving one of the industry’s longest-standing legal and administrative obstacles.

The Chamber was equally emphatic that stronger industry participation should not come at the expense of environmental stewardship. It accepted that not every mineral deposit should be developed and argued that the Government must make transparent, science-based decisions on where conservation should prevail and where extraction can proceed under strict environmental safeguards and mandatory rehabilitation. International experience, it noted, demonstrates that properly regulated mining can coexist with environmental restoration and subsequent agricultural, tourism, or commercial development when supported by long-term planning and effective enforcement.

Ultimately, the Chamber agreed that the State should focus on creating a stable regulatory environment rather than attempting to direct commercial outcomes. In its view, the Government’s role is to establish clear rules, uphold environmental standards, and provide investment and policy certainty, while allowing businesses to determine where commercially viable value addition can occur.

As global supply chains increasingly diversify away from traditional sources of strategic minerals, it warned that Sri Lanka risks missing a narrowing window of opportunity if regulatory reform continues to lag behind policy ambition.

Executive Committee members and participants at the 19th Annual General Meeting held at the Head Office.

The 19th Annual General Meeting of the Sampath Bank Retired Executives Association (SBREA) was held successfully on Sunday, 22 March 2026 at the Sampath Bank Head Office, with the participation of around 65 members and spouses.

The meeting was followed by fellowship, karaoke singing, and lunch. The event was well organised and provided an excellent opportunity for retirees to reconnect and renew their camaraderie, with all participants enjoying the occasion.

Activities of SBREA – 2025/2026

Annual Family Get-together/ Outing

Sampath Sanhinda Tharu Rathree – Musical Evening

Meritorious Event to invoke blessings for deceased members

Staging of the drama “Secret File” at the Elphinstone Theatre as a fund-raising initiative

Bodhi Pooja at the Bellanwila Temple to commemorate the 20th Anniversary

Distribution of 100 commemorative T-shirts among members

Health awareness talk on Healthy Living Styles by Dr.Nelum Dharmapriya

Updating SBREA’s Facebook platform

Conducting the Annual General Meeting

Organising a Zoom session for members unable to attend

Membership of SBREA

Membership consists of Founder Members, Life Members, and Ordinary Members. At its inauguration in January 2006, SBREA had 17 Founder Members. As of today, membership has grown to over 200.

Executive Committee – 2026/2027

President – Thilak Abeysinghe

Vice President – Thusitha Nakarandala

Secretary – Indira Hettihewa

Treasurer – H.B. Keerthiratne

Assistant Secretary – Shanika Perera

Assistant Treasurer – Gayathri Jayalath

Social Secretary – Kusal Mendis

Immediate Past President – K.L.G. Pradeep

Committee members:

Maheel Kuragama

Anusha Vidanapathirana

Nalaka Goonetilleke

Lakmini Divigalpitiya

Aruni Mendis

Lakshman Benaragama

Advisory Committee:

Vimal Indrasoma

Bandula de Silva

Lalith Fernando

Women-owned and women-led micro, small and medium-sized enterprises (WMSMEs) accounted for outstanding business loans of Rs. 559 billion as at end-March 2026, representing 28% of the nearly Rs. 2 trillion MSME loan portfolio reported by 12 domestic banks under Sri Lanka’s Women Entrepreneurs Finance (WE Finance) Code.

The report also showed that women entrepreneurs secured Rs. 145.5 billion in new business loans during the first year of the WE Finance Code. Based on data from 11 participating domestic banks, women accounted for 26,087, or 30%, of more than 120,000 MSME business loans approved during 2025/26. In value terms, lending to women-led businesses represented 20% of the Rs. 709.84 billion in total MSME loans approved.

According to the inaugural Implementation of the WE Finance Code in the Sri Lanka Annual Report 2025/26, women entrepreneurs held nearly 46% of the 1.7 million outstanding MSME business loan accounts reported by participating domestic banks. However, by value, lending to women-led businesses accounted for just over a quarter of the total outstanding MSME portfolio.

The outstanding MSME portfolio represents around one-fifth of total private sector credit extended by domestic banking units, which rose by Rs. 259.9 billion, or 2.6% month-on-month, to Rs. 10.14 trillion at end-March 2026.

Launched in March 2025 under the Finance, Planning and Economic Development Ministry with technical assistance from the Asian Development Bank (ADB), the WE Finance Code made Sri Lanka the first country in South Asia to adopt the global initiative aimed at improving financial inclusion for women entrepreneurs.

The report said the first year of implementation saw 13 State and private sector financial institutions join the Code, while the introduction of Sri Lanka’s first unified national definition for women-owned and women-led MSMEs established a common framework for identifying, collecting, and reporting data across the financial sector.

The Central Bank of Sri Lanka (CBSL), acting as the National Data Aggregator, has also introduced a standardised framework for reporting gender-disaggregated MSME lending data to support evidence-based policymaking and improve access to finance for women entrepreneurs.

Looking ahead, the report identified improving data quality, measuring unmet demand for finance, integrating informal enterprises into formal data systems, and broadening participation among financial institutions as key priorities for expanding the reach of the initiative.

Sri Lanka has had the world’s largest and smallest cabinet in history. President Mahinda Rajapaksa headed a jumbo cabinet, holding the Guinness World Record, while a more recent transitional cabinet under President Anura Kumara Dissanayake comprised only three ministers. Big fluctuations in the size of the Cabinet means that the names of ministries change often, and the institutions under each ministry are also constantly moved around. When Sri Lanka’s executive presidential system was introduced, one of the main arguments of its proponents was that it was a stabilising reorientation in a previously Westminster-style parliamentary system. However, this ‘stability’ has not meant consistency in the institutional architecture, which is a prerequisite for policy consistency.

Institutional changes often reflect political compromises and policy changes, that is the result of centralised executive authority. In Sri Lanka, creating an entire ministry or moving around institutions across ministries is a decision ultimately made by the President. Some countries such as Brazil or the United States have constitutionally defined processes involving the parliament/congress to establish new ministries. Such models add an additional level of check and balance to executive discretion.

In Sri Lanka, however, there is no recognised process to establish ministries or move institutions around, including even a report or white paper outlining the institutional architecture of a Government and the logic underpinning it. This has meant that some ministries have been created and vanished within the term of a Government. The Ministry of Megapolis and Western Development and the Ministry of Sustainable Development and Wildlife under the Yahapalana Government, granularly defined State Ministries under Gotabaya Rajapaksa, or senior ministers without a portfolio under the Mahinda Rajapaksa second term are some examples of this.

Tracking this institutional flux of around 500 moving parts is a difficult task for citizens and policymakers themselves. This institutional opaqueness impacts transparency of the institutional architecture, and impacts Sri Lanka’s democracy adversely.

Lanka Data Foundation’s (LDF) Department Flow View is an interactive Sankey visualisation of ministry and department changes over time. Across multiple dates of institutions being gazetted, a member of the public can view how a ministry is created and/or transformed. Some ministries have gotten fatter or slimmer over time, with institutions and budgets. Sometimes, institutions have been re-organised in different constellations, with different names and extensions.

When Sri Lanka’s executive presidential system was introduced, one of the main arguments of its proponents was that it was a stabilising reorientation in a previously Westminster-style parliamentary system. However, this ‘stability’ has not meant consistency in the institutional architecture, which is a prerequisite for policy consistency

Politics of Ministry and department flux

Ministries have relatively little contact with citizens as opposed to various departments under them. While ministries are expected to provide an overarching policy and maintain policy consistency, it is the departments that are tasked with operational mandate. How one clusters the departments reflects the policy outlook of a given Government. Sometimes, seemingly unrelated departments get clustered together, which shows lack of a consistent policy framework and the interests of individuals (ministers or the president) being more powerful. With the Sankey view and navigating to the Ministry’s portfolio, the public can see which institutions follow which individuals at a given time. It shows how the whole Government transforms over time during its term, showing how departments have been moved around.

The Department of Registration of Persons, for example, has been clustered under various Ministries under different or the same President. This department has been under the ministry of Home Affairs, Public Administration, Defence, and Digital Infrastructure, reflecting different policy pathways towards achieving similar objectives. On the other hand, the Lotteries Board formed part of the Ministry of Foreign Affairs for a short stint in 2017, reflecting how vested interests of powerful individuals prevailed even when the shift looked clearly irrational. Sometimes what appears as a policy response, of seemingly unrelated departments being clustered, may hide a powerful minister hogging big tenders in a certain sector.

A key downside of the lack of a national roadmap or discourse on institutional restructuring is the haphazard amalgamation of ‘cabinet subjects’ under an umbrella ministry. For example, in the present Government, the Ministry of Health has been lumped together with a relatively less related Ministry of Mass Media. This generally happens due to a few personalities dominating a given cabinet, and relative portfolios distributed among them, regardless of how closely the subjects align with one another. This risks the relatively smaller portfolio being overshadowed, especially as the ministry secretary often represents the larger portfolio (so in this case, health over media). One outcome of this development has been that even the Right to Information Commission (RTIC) is assigned to the Ministry of Health and Mass Media under this Government, leading to serious delays in resource mobilisation to uphold the fundamental right of Right to Information.

Institutional opacity and political realignments

When ministries are changed or departments are moved around, governments hardly explain their decisions. The Department Flow View builds a visual narrative of the impact of these gazettes. This is important for transparency of the governance structure which in turn impacts the quality of democracy.

The present iteration of the ‘Department Flow View’ is based completely on the published gazettes, and therefore does not visualise what is not available in a gazette. As the head of the executive branch of the State, the president may assign subjects and departments to ministers, including himself. However, if the president does not assign an institution to a particular subject of a Minister, that body remains under the direct control of the president. For instance, the President’s Fund does not feature in any of the gazettes that allocates departments to subject Ministers. The principle ‘what is not given remains with the president’ is replicated with the same opaqueness.

With the currently available data of LDF OpenginXplore that feeds the Department Flow View, a citizen can explore the institutional shifts under a single presidential term since 2019, i.e., under Presidents Gotabaya Rajapaksa, Ranil Wickremesinghe, or Anura Kumara Dissanayake. For instance, a visual comparison of the first year of cabinets established following a General Election (for Rajapaksa and Dissanayake) and following the election of Wickremesinghe as President by Parliament shows that the subject of Finance has had over 50 departments under its purview. Across the timeframe of three presidencies, this Ministry remains relatively stable under Wickremesinghe and Dissanayake.

In Sri Lanka there is no recognised process to establish ministries or move institutions around, including even a report or white paper outlining the institutional architecture of a Government and the logic underpinning it. This has meant that some ministries have been created and vanished within the term of a Government

However, a significant breakup of the Finance Ministry is observed under Gotabaya Rajapaksa, when in 2021, the cluster of institutions that generally form the subject of Finance are broken and given as two portfolios to the President’s two brothers. Basil Rajapaksa was appointed Minister of Finance, while a new ‘Ministry of Economic Policies and Plan Implementation’ was established and headed by PM Mahinda Rajapaksa, and brought various institutions that were held under the Finance Ministry and other related State Ministries. When compared to the institutional consistency that the Finance Ministry showed subsequently under Wickremesinghe and Dissanayake, this episode reveals the vested interests that shape national policy, in this case, the establishment of ministries and sharing portfolios. Similarly, when observing the movement of departments under the Ministry of Defence under President Gotabaya, again, a bifurcation of the ministry occurs (see image below). Nine departments of 22 are moved to the State Minister of National Security and Disaster Management who happens to be Chamal Rajapaksa, Gotabaya’s other brother, revealing the overdominance of personal political interests over policy sense.

The Department Flow View is also useful when considering that institutional reshuffles also follow external pressures. For example, after Sri Lanka entered the reconciliation paradigm in 2015, many new institutions were created to reflect this mandate. Similar trajectories were seen with a Ministry being named after sustainable development during the term of that Government. Following the economic crisis, the Wickremasinghe Government’s approach of IMF-linked reforms has been reflected in the way many institutions that were considered as needing structural reforms were moved under the Finance Ministry.

Sri Lanka’s policy inconsistency is generally known. At one level, elections are fought on platforms promising knee jerk policy reversals, such as reversing the construction of Colombo Port City during the presidential campaign in 2014 At another level, when governments are elected, they reverse or drastically change policies and projects, as we saw with the cancelling of the Colombo Light Rail Transit project. Ministries are created or discontinued by presidents without having to explain what enables and justifies those changes. National policy has been reduced to executive decree, as quipped by a president ‘my word is the circular!’. A short analysis of how Ministries have been created and discontinued reflects this inconsistency without consequence.

Policy inconsistency has become so commonplace that it is now largely taken as a given. The LDF’s Department Flow View enables one to see the extent of this policy inconsistency, which in turn is an indictment of the excessive and unaccountable powers of the presidency. This executive overreach is constitutionally enabled, as the President has the ‘superpower’ to reassign subjects and reshuffle the cabinet at will, resulting in fast changes with low friction and leaving little room to ask the question why.

Moreover, as it is the President who has the authority to nominate the secretary, total discretion lies with the president. In cases where there are other politically influential ministers besides the president, there can be some pushback or moderation on executive power. But in cases where the President is highly charismatic and has popular appeal, with no comparable heavyweights in the cabinet capable of exerting countervailing influence, Sri Lanka’s overall democratic system is adversely affected. For democracy to work for the people, its institutions must be transparent and exhibit a reasonable degree of consistency. This allows citizens to hold governments accountable to some standards and also have shared ownership of these institutions.

For democracy to work for the people, its institutions must be transparent and exhibit a reasonable degree of consistency. This allows citizens to hold governments accountable to some standards and also have shared ownership of these institutions

(Harindra B Dassanayake is an independent researcher and policy analyst, and Head of Data Operations at Lanka Data Foundation, Sri Lanka. Rajni Gamage is Research Fellow at the Institute of South Asian Studies, National University of Singapore. Yoshan Jayasinghe is Governance and Policy Intern at Lanka Data Foundation, Sri Lanka)

The Attorney General’s Department yesterday informed the Supreme Court that it will institute proceedings before the District Court to recover more than Rs. 6.2 billion in alleged tax arrears owed by liquor manufacturing companies, signalling the State’s intention to pursue judicial recovery of the long-outstanding dues.

Additional Solicitor General Nerin Pulle, appearing for the Attorney General, made the disclosure when a Fundamental Rights petition filed by 17 social activists came up before Chief Justice Preethi Padman Surasena and Justice Arjuna Obeyesekere.

The petition seeks an order directing the relevant authorities to take immediate steps to recover all outstanding tax arrears allegedly due from liquor manufacturing companies.

According to the petitioners, unpaid taxes owed by liquor manufacturers had risen to Rs. 6.221 billion as at 15 June 2023.

The respondents include the Commissioner General of Excise, the State Minister of Finance, the Auditor General, and several liquor manufacturing companies, including W.M. Mendis and Co., Ltd., Wayamba Distilleries Ltd., Globe Blenders and Bottlers Lanka Ltd., McCallum Brewing Co., Ltd., Kalutara Co-operative Distilleries Society Ltd., Finland Distilleries Corporation Ltd., Synergy Distilleries Ltd., Randenigala Distilleries Lanka Ltd., Hingurana Distilleries Ltd., and Royal Ceylon Distilleries Ltd.

The petition was filed by 17 social activists, including Sanjaya Mahawaththa.

Following the Attorney General’s disclosure, the Supreme Court fixed the petition for further hearing on 16 November.

President’s Counsel Saliya Pieris, with Manujaya De Silva, instructed by Manjula Balasooriya, appeared for the petitioners.

Serendib Land PLC has appointed Rajiv Dharmendra to its Board as an Independent Non-Executive Director.

Dharmendra is the Chief Executive Officer of MAS Intimates and has over 21 years of experience with MAS Holdings. During his career, he has held several senior leadership positions, including Business Director – MAS Intimates, CEO of Silueta, Director – Limited Brands, and Chief Marketing Officer of MAS Intimates. He also leads the MAS Innovation Board, which oversees the Group’s innovation strategy and pipeline.

Dharmendra holds a BSc. in Mathematics and Economics from King’s College, London and an MSc. in Finance from the London School of Economics. His executive education was from the business schools of Harvard and INSEAD. He was appointed to the Board of the Sri Lanka Insurance Corporation in the capacity of a Non – Executive Director to both Life and General Insurance companies with effect from 1st January 2025.

The Planters’ Association of Ceylon (PA) yesterday said that it has called on the Government to treat the systematic theft of high-value agricultural crops as a serious economic threat, warning that unchecked losses are deterring investment, eroding export competitiveness, and putting the livelihoods of farmers at risk.

Across Sri Lanka’s plantation districts, the organised theft of pepper, ginger, cardamom, cinnamon, vanilla, avocado, and other high-value crops has reached a scale that the industry says can no longer be dismissed as an isolated or manageable problem, the PA said.

Regional Plantation Companies (RPCs) and smallholder growers have reported increasing losses that wipe out entire seasons of work and companies are spending tens of millions of rupees on security that cuts directly into their ability to compete internationally. The Association said in several cases, farmers and estate managers have abandoned expansion plans for high-value crops entirely after concluding that the returns cannot justify the risk.

The Association estimates that crop losses across the sector may be running into millions, though it is now seeking formally verified data from members to establish the true figure. What is already clear, the Association said, is that the financial damage extends well beyond the stolen harvest itself.

Theft operations are organised and deliberate. Association members report that incidents cluster around the full moon, when natural light allows groups to work through fields without torches. A well-coordinated team can strip a section of cinnamon in two to three hours, clear a cardamom plot in a single pass, or harvest 40 to 50 kilos of pepper from a single vine before dawn. Once the crop leaves the field and enters informal supply channels, it is effectively untraceable.

The PA said that one company is currently spending approximately Rs. 20 million to protect a single crop over a three-month period. Those costs do not appear in any Government measure of agricultural competitiveness, but they are real and recurring and they fall entirely on the producer. For estates already competing against lower-cost producers in Vietnam, India, and Kenya, this adds further strain, with RPCs losing revenue and the State losing tax income as a result.

The PA pointed to pepper as a crop where the damage to investor confidence has been most visible. Several growers who had begun trialling pepper, a high-value crop with strong export potential, have pulled back from expansion after sustained theft on their plots. Cardamom has been similarly affected. One company that committed to planting 18 hectares spent several years deploying watchers and security personnel before concluding that the cost was unsustainable. The project was not extended.

The Government has publicly committed to growing Sri Lanka’s agricultural exports and attracting investment into the sector. The Association’s position is that this goal cannot be achieved while the conditions on the ground make high-value crop production an unacceptable risk for growers.

Agricultural theft is a criminal offence under existing Sri Lankan law. The Association’s concern is that the penalties attached to that offence bear no relation to its economic consequences. In many cases, a fraction of the value of what was stolen provides no meaningful deterrent to repeat offenders. When the punishment is cheaper than the crime, the law becomes ineffective.

Technology has so far failed to fill the gap. CCTV systems are defeated by power cuts. Fingerprint entry controls have been circumvented. Drones face practical obstacles in shade-grown and wind-exposed terrain. The infrastructure installed to protect crops, including fencing and other equipment, has itself become a target for theft.

Accordingly, the PA called on the Government to revise and effectively enforce the penalties for agricultural theft so that fines and sentences reflect the actual value of the crops stolen and create a genuine deterrent. The PA also called for the development of a traceability framework for high-value produce within informal supply chains, so that stolen crops can be identified and prosecuted once they leave the field. Lastly, the Association called for the formal recognition of crop theft in national agricultural policy and the allocation of resources to enforcement accordingly.

The PA is also collecting verified data from its members on the scale of losses across both smallholder and estate operations, and intends to present this to the relevant Government Ministries.

“Sri Lanka has the climate, the land, and the agricultural knowledge to be a serious player in high-value crop exports. But we cannot build that future if a farmer can spend nine months on a crop and lose everything the night before he is paid. This is not a minor inconvenience. It is a structural problem that needs a structural response,” the PA said.

LOLC Finance Head – Channels Prasanna Karandagolla (left) and LOLC Finance Chief Operating Officer Montini Warnakula, at the opening of the LOLC Finance Mirigama Branch

LOLC Finance PLC has further expanded its islandwide footprint through the opening of two new branches in Mirigama and Galagedara.

The Mirigama Branch, located at No. 14/1, Amarathunga Mawatha, Mirigama, was ceremonially declared open on 18. June 2026, while the Galagedara Branch, situated at No. 179/B, Rambukkana Road, Galagedara, commenced operations on 02 July 2026. The openings mark another significant milestone in LOLC Finance’s ongoing strategy of enhancing accessibility and delivering convenient financial solutions to customers across the country.

As Sri Lanka’s largest NBFI, LOLC Finance continues to strengthen its presence in key regional markets, ensuring that individuals, entrepreneurs and businesses have greater access to a comprehensive portfolio of financial products and services. The new branches have been established to meet the growing demand for reliable financial solutions while supporting the economic aspirations of the communities they serve.

The Mirigama and Galagedara branches will offer the full spectrum of LOLC Finance’s services, including savings and fixed deposits, leasing facilities, business and personal loans, gold loans, SME financing, digital financial solutions and a range of value-added financial services designed to cater to the diverse needs of customers.

The ceremonial opening of the Mirigama Branch was graced by LOLC Finance PLC Chief Operating Officer Montini Warnakula, and LOLC Finance PLC Head – Channels Prasanna Karandagolla, together with members of management, staff, customers and well-wishers. The Galagedara Branch was ceremonially declared open in the presence of LOLC Finance PLC Head – Gold Loan Nishantha Jayasekara, and LOLC Finance PLC Head – SME and Personal Finance Charith Jagoda, along with distinguished guests, customers and members of the local community.

With one of the largest branch networks among Sri Lanka’s NBFIs, LOLC Finance continues to invest in expanding its physical presence alongside its growing suite of digital financial solutions, enabling customers to enjoy seamless and convenient banking experiences through multiple channels.

Backed by decades of industry leadership, financial strength and customer trust, LOLC Finance remains committed to delivering innovative, accessible and responsible financial services while contributing to the country’s sustainable economic growth. The company is rated (SL) A+ (Stable) by the Lanka Ratings Agency and operates under the license of the Monetary Board of the Central Bank of Sri Lanka.

Sri Lanka grew 5.1% in the first quarter of 2026. That is a real number. The industry sector contributed 2.6 percentage points. Services added another 2.0. On the surface, this looks like a recovery that has found its footing.

I want to break that narrative down – not with opinion, but with the CBSL’s own data, published in the Monthly Economic Indicators and the External Sector Bulletin through May 2026. Because what those numbers show is that Sri Lanka is growing in a way that makes it more vulnerable to an external shock, not less. The recovery is real. The architecture underneath it is not.

The growth we have is the growth we cannot afford to repeat

The standard national account’s identity is straightforward. GDP equals consumption, plus investment, plus government expenditure, plus net exports – exports minus imports. Most of the debate about Sri Lanka’s recovery focuses on the first number and quietly ignores the last one.

The CBSL’s own GDP contribution data for Q1 2026 confirms what the external trade numbers reveal. Services and industry drove virtually all of the 5.1% expansion. Agriculture contributed a negligible 0.1 percentage point. And net exports – the difference between what we sell abroad and what we buy from abroad – were a drag on growth, not a contributor.

Merchandise exports grew 3.4% year on year to $3.46 billion in Q1 2026. Merchandise imports surged 18.1% to $ 5.77 billion. The trade deficit widened to $ 2.31 billion from $ 1.54 billion in the same quarter a year earlier.

Import growth is running at more than five times the pace of export growth. That is not a trade balance under pressure. That is a structural mismatch between how this economy grows and what it produces.

The money supply data confirms the consumption driver. Narrow money M1 – the transactional balances that move the economy day to day – grew 5.5% in Q1 2026 alone. Currency in circulation rose 10.4%. Private sector credit was expanding at double-digit rates year on year before the May OPR correction. These are not investment-financing metrics. These are consumption-financing metrics.

Sri Lanka is consuming its way to a 5.1% growth number and funding the difference with remittances and IMF disbursements. That is not a recovery model. That is a timeline.

Oil is no longer a production input. It is a consumption item

This is the single most important structural shift in Sri Lanka’s vulnerability profile – and it has received almost no analytical attention.

Fuel imports in Q1 2026 surged 102.9% year on year, from $ 463 million to $939 million in a single quarter.2 That is not an economy buying fuel to run factories and generate electricity at efficient scale. That is an economy that has expanded private vehicle usage, personal transport, and consumer energy consumption as the primary expression of its rising income.

Read that number alongside the personal vehicle import data: up 80.4% year on year, from $ 172 million to $ 311 million in Q1 alone. These two categories together – fuel and vehicles – accounted for $ 1.25 billion of imports in a single quarter. Sri Lanka’s entire merchandise export base generated $3.46 billion for the same period. We are spending 36 cents of every export dollar on vehicles and the fuel to run them.

And here is the monetary policy problem. The CBSL raised the OPR by 100 basis points to 8.75% in May 2026. That was the right decision – it addresses the credit-financed consumer import channel. Every $10 per barrel increase in Brent crude adds approximately $ 120 to 150 million per quarter to Sri Lanka’s import bill – roughly a quarter to a third of the entire current account surplus for Q1 2026. That is the shock absorber the rate cycle cannot build.

The remittance paradox: counting someone else’s success as our own

The one genuine bright spot in the Q1 2026 external sector data is workers’ remittances. Secondary income inflows grew 27.7% to $ 2.26 billion in Q1 2026 – the principal reason the current account remains in surplus despite the trade deficit widening by $ 770 million

Year-on-Year (YoY).

I do not want to diminish that contribution. Every Sri Lankan working abroad and sending money home is making a real sacrifice, and their remittances have been the structural buffer that kept the external sector from deteriorating faster. The Central Bank is right to acknowledge it.

Sri Lanka’s 5.1% GDP growth in Q1 2026 is real. So is the fiscal consolidation. So is the reserve recovery. These achievements should be acknowledged – they required genuine policy discipline in difficult circumstances. But the structural fault lines are widening, not closing. A significant deterioration in the merchandise trade deficit in a single year. Import growth at five times the pace of export growth

But we need to be honest about what we are celebrating. A $ 2.26 billion quarterly remittance inflow is Sri Lanka exporting its most skilled and ambitious people to generate foreign exchange that finances domestic consumption. We are solving a balance of payments problem by borrowing human capital from our own future. And we are proud of it – which is, when you hold the logic to the light, a deeply paradoxical position for a country in its seventeenth IMF program.

Compare: FDI inflows in Q1 2026 were $ 184 million. Remittances were $ 2.26 billion. We are attracting twelve times more in remitted wages than in productive foreign investment. Vietnam, which had a comparable per capita income to Sri Lanka in 1995, now receives more FDI in a single month than Sri Lanka receives in a year – because Vietnam made different choices about what kind of foreign engagement it would build its growth model around.

The weak rupee fallacy: fifty years of evidence and nothing to show for it

Every external sector crisis Sri Lanka has experienced has been followed by the same policy reflex: let the rupee weaken, appease the export lobby, and wait for the trade balance to correct. The theory is straightforward – a cheaper currency makes exports more competitive and imports more expensive, closing the deficit. The evidence, accumulated across five decades, is that this theory does not work for Sri Lanka. It has never worked.

Now look at the counter-evidence. Singapore has appreciated the SGD against the dollar significantly since 2002. The Monetary Authority of Singapore manages the exchange rate as a deliberate anti-inflation instrument – not as an export subsidy. Singapore’s exports grew from approximately $ 130 billion in 2002 to over $ 500 billion by 2023. Pharmaceutical exports, semiconductor supply chain integration, precision engineering – none of these compete on price. They compete on capability.6

The difference is not that Singapore had better luck. The difference is that Singapore made a strategic decision in the 1970s to move up the value chain – to build industries where the buyer has no alternative, rather than industries where the buyer can always find someone cheaper. That decision shaped everything: the education system, the investment promotion framework, the capital market architecture, and the exchange rate regime. The strong SGD was not a constraint on that strategy. It was an enabler of it – keeping production input costs low, holding inflation stable, and signaling to international capital that Singapore was a reliable place to deploy long-horizon investment.

Sri Lanka made the opposite choice, repeatedly, for fifty years. And the evidence is in the trade data.

The seventeenth program: what sixteen didn’t teach us

Sri Lanka is currently in its seventeenth IMF program since 1965. That statistic deserves to sit alone for a moment, because it contains a structural indictment that no amount of positive short-term data can dissolve. The IMF program works. Stabilisation happens. The reserves recover. The rupee finds a floor. Growth returns. And then, within a cycle or two, the same combination of expansionary fiscal policy, loose monetary conditions, import-intensive consumption growth, and external shock vulnerability produces the next crisis.

The current program has achieved real things. The primary fiscal surplus is running ahead of target – revenue for January to February 2026 grew 35.5% year on year while recurrent expenditure grew only 1.5%, producing a meaningful consolidation in two months.7 The IMF’s Fifth and Sixth EFF reviews were completed in May 2026, releasing $ 695 million and bringing total disbursements to $2.4 billion. Gross official reserves stand at $ 6.8 to 6.9 billion, providing reasonable import cover. Inflation, at 5.4% CCPI in April 2026, is within the CBSL’s target band.

But stabilisation and transformation are different things. What the program does not and cannot do is restructure the underlying growth model. Sri Lanka can stabilise on an IMF program every decade. The question that has never been answered in sixteen previous attempts is: what do we do between the program to make the next one unnecessary?

The answer has to be structural. And it has three components that no monetary policy decision can deliver.

The architecture of a different growth model: three structural imperatives

First: Build the export base around what you cannot outsource, not what you can undercut.

Sri Lanka’s BOI framework, as it currently operates, attracts manufacturing investment primarily on the basis of cost competitiveness – labour arbitrage, tax holidays, and cheap power. These are second-order incentives in a world where Bangladesh, Myanmar, and Cambodia are competing on the same dimensions at lower wage floors. Tax holidays do not win investment decisions when first-order factors – logistics reliability, contract enforcement, power supply consistency, regulatory predictability – are absent or inferior to regional alternatives.

The model that works in Asia is not generic manufacturing. It is sector-specific industrial clustering with long-horizon policy commitment. Penang in Malaysia decided in the 1970s that it would become a semiconductor and electronics manufacturing hub. That decision was backed by three decades of infrastructure investment, skills development, and regulatory consistency. Today Penang hosts Intel, Motorola Solutions, and a supply chain ecosystem that could not be relocated without a decade of transition. The investment is sticky because the capability is genuine.

Sri Lanka’s geography provides a starting point that Penang did not have: a natural deep-water harbour at the intersection of two of the world’s busiest shipping routes. The Colombo transshipment business already handles volumes that rank it among the top twenty container ports globally. That is the foundation. The question is what you build on top of it.

Colombo could be Jebel Ali. The Dubai free zone model – a logistics anchor around which manufacturing, warehousing, financial services, and professional services cluster – is directly replicable in the Sri Lankan context. It requires a dedicated free zone with its own regulatory framework, world-class infrastructure built on PPP terms, and an investment promotion mandate focused on specific sectors rather than any investor willing to sign a BOI agreement. The Colombo Port City project is a partial attempt at this logic. But it is finance-sector focused and has not yet created the manufacturing and logistics cluster effect that the Jebel Ali model generates.

Second: Invite capital to build the zones, not just to occupy them.

One of the most persistent constraints on Sri Lanka’s industrial development is that the government has neither the balance sheet nor the project execution capability to build world-class industrial infrastructure at the pace and quality required to attract tier-one investors. The answer is not to try harder with the same model. The answer is to change the model.

The Batam Island free trade zone – established as a joint venture between Singapore and Indonesia in 1990 – is the relevant Asian case study. Singapore provided capital, management expertise, and the regional investor network. Indonesia provided land, labour, and regulatory commitment. Batam became a significant electronics and precision engineering manufacturing location precisely because it combined Singaporean standards with Indonesian cost advantage under a governance framework both parties had reason to protect.

The choice is not between growth and stability. It is between growing in a way that makes the next crisis inevitable and growing in a way that makes it less likely. The CBSL data makes clear which path we are currently on

Sri Lanka’s regional equivalent is an India partnership. The ETCA – the Economic and Technology Cooperation Agreement with India – has stalled for political reasons that serve no economic logic. India’s southern manufacturing corridor, anchored around Tamil Nadu and Karnataka, is expanding. Sri Lanka, 28 kilometres off the coast of Tamil Nadu, is the natural offshore processing and logistics complement. A genuine goods and services trade agreement, backed by dedicated bilateral industrial zones with Indian and Sri Lankan PPP co-investment, would position this country inside one of the world’s fastest-growing supply chain ecosystems at a moment when that ecosystem is actively looking for nearshore capacity.

The PPP model for the zones should include a specific capital market exit mechanism: foreign investors who commit to a minimum operating period of seven years in a qualifying zone should be eligible to list on the Colombo Stock Exchange at the end of that period. This brings patient capital, creates listed equity product for domestic institutional investors, and deepens the CSE’s industrial base – which currently skews heavily toward banking and consumer sectors. The structure needs to connect them to productive assets, not just to financial sector growth.

Third: Restructure the SOEs – not to solve a fiscal problem, but to build a foreign exchange engine.

Sri Lanka’s designated SOEs – CPC, CEB, SriLankan Airlines, the port authorities – are simultaneously the largest sources of import demand in the economy and the largest potential generators of USD-denominated equity value. That combination is not a coincidence. It is the core of what needs to change.

CPC’s fuel import bill is the single largest line item in Sri Lanka’s trade deficit. CEB’s generation deficit – the gap between installed capacity and peak demand, filled by expensive emergency generation – is a direct drag on the competitiveness of every manufacturer in the country. These are not fiscal problems with fiscal solutions. They are structural import dependencies that can only be resolved by changing the energy production model.

The renewable energy PPP model – private capital builds solar and wind capacity, the state retains transmission infrastructure ownership, USD-denominated power purchase agreements provide the investor return – directly reduces fuel import dependency, generates foreign exchange, and creates investable asset classes in the Sri Lankan market. The Adani exit from the $ 400 million northern wind project is a cautionary data point here: when a government renegotiates a signed contract with a strategic investor, the sovereign risk premium it creates accrues to every subsequent transaction. One completed PPP deal, transparently tendered, fully delivered, and contractually enforced, does more for Sri Lanka’s investment credibility than any amount of international roadshow activity. The market watches what you do, not what you announce.

The bottom line

Sri Lanka’s 5.1% GDP growth in Q1 2026 is real. So is the fiscal consolidation. So is the reserve recovery. These achievements should be acknowledged – they required genuine policy discipline in difficult circumstances.

But the structural fault lines are widening, not closing. A significant deterioration in the merchandise trade deficit in a single year. Import growth at five times the pace of export growth. Fuel and vehicle imports consuming 36 cents of every export dollar. A current account surplus that is 44% smaller than a year ago and is being held together by remittances rather than productive export growth. FDI of $ 184 million in a quarter when the trade deficit ran $ 2.31 billion.

A $ 25 per barrel oil price increase erases the current account surplus. Another Middle East escalation, another OPEC supply cut, another global demand recovery – any of these produces that price move within months. Sri Lanka has no structural defence against that scenario, because it has not built one.

The lesson of sixteen previous IMF programs is that stabilisation is not transformation. Sri Lanka can grow at 5% on consumption and remittances and arrive at the next crisis faster than the previous one, because the import bill of a higher-income economy is larger than the import bill of a lower-income economy. Or it can use this window – while the IMF program provides fiscal discipline, while the capital markets are functional, while regional supply chains are actively reconfiguring – to build the export base, attract productive capital, and create private sector labour markets that begin to substitute for a government payroll the country cannot afford.

The choice is not between growth and stability. It is between growing in a way that makes the next crisis inevitable and growing in a way that makes it less likely. The CBSL data makes clear which path we are currently on.

The storm is not a forecast. It is a structural condition. The question is whether we grow into it or grow past it.

(The author is a Chartered Financial Analyst with 25 years of experience in Corporate Finance, Investment Banking, and Restructuring. The views expressed are the writer’s own and do not represent institutional endorsements)