Category: Daily Financial Times

Ambeon Securities recently hosted an exclusive investor forum, bringing together clients, investors, business leaders, and market professionals for an insightful discussion on Sri Lanka’s economic outlook and investment opportunities amidst a challenging global landscape.

The event was organised with the objective of providing investors with valuable insights to make better-informed investment decisions while further strengthening the firm’s engagement with its growing client base.

The forum featured Citi Research Director and Chief Economist for Sri Lanka and India Baqar Zaidi, as the keynote speaker. Sharing his perspectives on the evolving global macroeconomic environment, Zaidi discussed key themes influencing emerging and frontier markets, Sri Lanka’s economic trajectory, and the opportunities lie ahead.

The keynote address was followed by an engaging panel discussion comprising Baqar Zaidi, respected investor, entrepreneur, and Arcasia Holdings Chairman Aravinda De Silva, Brandix Group Managing Director Hasitha Premaratne and LYNEAR Wealth Management CEO – Unit Trusts and Head of Equities Asanka Herath.

Moderated by Imran Furkan, the panel explored a range of topics including Sri Lanka’s macroeconomic outlook, the future of the Colombo Stock Exchange, sectoral opportunities, capital allocation strategies, investor confidence, and the role of policy reforms in attracting investment and supporting long-term growth.

Speaking at the event, Ambeon Securities CEO Charith Kamaladasa, reaffirmed the company’s commitment to facilitate quality insights, informed perspectives, and meaningful dialogue to support their clients while building lasting relationships with them. He noted that in an environment where uncertainty has become the new normal, equipping investors with timely information and expert perspectives is essential for successful wealth creation.

The event was well attended by a distinguished gathering of institutional investors, high-net-worth investors, and business leaders. Among those present were members of the Ambeon Group Board, including Group Chairman Sujeewa Mudalige, Group CEO Dr. Sajeeva Narangoda, and Ambeon Securities Chairman Mangala Boyagoda. Their presence, together with the participation of Ambeon Group shareholders and valued clients, enriched the discussions and contributed to a vibrant networking session, fostering meaningful dialogue and stronger connections within the investment community.

Ambeon Securities said through initiatives such as this it continues to reinforce its commitment to helping clients navigate evolving market conditions, make informed investment decisions, and achieve their long-term financial goals.

These high-profile appointments mark a significant milestone for the insurer as it actively scales its digital platforms and redefines its customer service architecture to achieve its long-term corporate vision. Bringing together an exceptional blend of multi-industry operational experience and deep financial sector expertise, the new directors are poised to provide vital strategic oversight.

Silva’s profound banking acumen, extensive experience in corporate governance, and expertise in macroeconomic stakeholder management are set to elevate the company’s financial strategy and regulatory framework. Simultaneously, De Zoysa’s pioneering background in customer experience (CX) and digital transformation leadership will serve as a critical catalyst for driving future-ready disruption across HNB General Insurance’s service channels. Together, their insights will significantly strengthen HNB General Insurance’s market position, helping steer the organisation toward its goal of becoming Sri Lanka’s most customer-centric general insurer while delivering sustainable stakeholder value.

Silva brings over three decades of financial governance and leadership expertise, following a distinguished career within the DFCC Banking Group. He served as the CEO of DFCC Vardhana Bank in 2010, later became the Deputy CEO of DFCC Bank PLC, and ultimately served as its CEO from 2017 until 2021. Throughout his career, Silva held several key governance roles, including serving as Chairman of key DFCC subsidiaries, namely DFCC Consulting Ltd., Lanka Industrial Estates Ltd., and Synapsys Ltd. He also served as Chairman of the Sri Lanka Banks’ Association, and Acuity Partners (Pvt) Ltd. Currently, he is the Chairman of LankaPay and Panasian Power PLC, serves as an Independent Director on the Boards of Seylan Bank PLC, Melstercorp PLC, Distilleries Lanka PLC, and HNB Life PLC as well as a member of the Stakeholder Engagement Committee of the Central Bank of Sri Lanka. A Past President of the Association of Professional Bankers, Silva holds a BCom (Sp.) from the University of Kelaniya and an MBA from the University of Sri Jayawardanapura.

De Zoysa is a globally recognised leader in customer experience (CX) and organisational transformation, with over three decades of experience in the ICT industry. As the Founder of CEx Consulting, she advises organisations on digital and CX strategy. During her 28-year tenure at Dialog Axiata PLC, she served as Group Chief Customer Officer, Managing Director of Dialog Business Services, and Chair of Axiata Berhad’s Digital CX Expert Working Group. She is the first executive in the Asia-Pacific region to hold a dedicated C-suite CX role. A founding Charter member of TiE Colombo and founding member and first Chairperson of SLASSCOM, De Zoysa continues to contribute to regional and global thought leadership as a member of the Customer Experience Professionals Association (CXPA) Asia Regional Leadership Council and Chairs the Sri Lanka Institute of Directors- Women Directors Forum. She is a Fellow of the British Computer Society (FBCS). She holds a Master’s in Digital Transformation Leadership, an Executive MBA, a Master’s in Human Resource Management, and is a Certified Scrum Master and Lean Six Sigma Black Belt; she is also the only Certified CX Professional (CCXP) and Training Provider for CXPA in Sri Lanka.

Twelve months ago, Softlogic Finance’s primary focus was stabilisation. Today, the company stands on a stronger foundation, with a clear strategy for sustainable growth and long-term value creation.

The past year has been one of transformation. Amid challenging market conditions and evolving customer expectations, Softlogic Finance has undertaken a disciplined turnaround strategy centered on strengthening capital, improving asset quality, enhancing governance, and rebuilding stakeholder confidence.

The results are beginning to emerge. For the financial year, the company recorded a profit of approximately Rs. 150 million, marking an important milestone in its recovery journey. More importantly, this performance reflects a sustainable business model built on prudent risk management and responsible growth.

Softlogic Finance today manages a total asset base exceeding Rs. 7.5 billion, supported by a lending portfolio of approximately Rs. 6.7 billion and a customer deposit base exceeding Rs. 3.8 billion. These figures reflect the growing confidence of customers and stakeholders in the company’s long-term direction and stability.

A key achievement during the year has been the strengthening of the company’s capital base. Softlogic Finance now maintains one of the highest Capital Adequacy Ratios in Sri Lanka’s finance industry at approximately 61%, significantly above regulatory requirements, while Core Capital has exceeded Rs. 2.8 billion.

“Our objective has never been short-term growth,” said Chief Executive Officer Dhanushka Fonseka. “Our focus has been on building a stronger and more resilient institution capable of delivering sustainable returns while maintaining disciplined risk management.”

The company’s growth strategy is anchored on its core financial solutions, including vehicle leasing, vehicle loans, gold loans, savings accounts, and fixed deposits. Particular emphasis has been placed on secured and asset-backed lending, ensuring that portfolio expansion is accompanied by strong credit quality.

This strategy has delivered encouraging outcomes. The new lending portfolio originated during the year continues to perform exceptionally well, with zero non-performing loans recorded to date, reflecting robust underwriting standards and disciplined credit evaluation processes.

With a network of 15 branches across Sri Lanka, Softlogic Finance remains committed to providing accessible financial solutions while enhancing customer experience through operational efficiency and technology-driven service improvements.

As a member of the Softlogic Group, the company benefits from the strength of one of Sri Lanka’s most diversified conglomerates. The Group’s interests span healthcare, insurance, hospitality, retail, and financial services, providing access to strong governance frameworks, industry expertise, and valuable strategic synergies.

Looking ahead, Softlogic Finance intends to build on the momentum achieved over the past year by further strengthening its balance sheet, expanding its high-quality lending portfolio, and pursuing sustainable growth opportunities.

Beyond financial performance, the company is also exploring a range of conservation-focused corporate social responsibility initiatives aimed at environmental preservation and biodiversity protection, reflecting its commitment to creating a positive impact beyond the financial sector.

“The foundations for future growth have been firmly established,” Fonseka added. “While there is still much to accomplish, we are encouraged by the progress achieved thus far and remain committed to building a stronger, more resilient Softlogic Finance for the benefit of our customers, employees, shareholders, and the wider Sri Lankan economy.”

Treasury officials on Tuesday (14) signalled that Sri Lanka’s next phase of International Monetary Fund (IMF)-backed fiscal reforms will shift from raising taxes to modernising tax administration, with officials revealing that a Medium-Term Revenue Strategy (MTRS) is being prepared to improve compliance, broaden the tax base, and support growth without increasing tax rates.

Appearing before the Parliamentary Committee on Public Finance (CoPF), Treasury officials said the strategy is being developed with IMF technical assistance following the completion of revenue-based fiscal consolidation, which substantially increased Government revenue through higher taxes, a broader tax base, and reduced exemptions.

Officials said the next stage of reforms would focus on improving tax administration and compliance, estimating that stronger administration alone could generate additional revenue equivalent to 1.9% of GDP.

“At present, we are going to prepare a MTRS. We had IMF technical assistance over the past few weeks and they have submitted a report after assessing the current tax system and proposing reforms that would be growth-friendly and help small and medium enterprises (SMEs). That’s our next step,” a senior Treasury official told the CoPF.

He acknowledged that Sri Lanka’s tax system continues to suffer from weak compliance despite the higher tax effort.

“When we look at the tax system, we mainly see that there is a low compliance rate. We estimate that we can collect 1.9% of GDP through improvements in tax administration without burdening taxpayers through higher tax rates,” he said.

Calls for tax administration reform have intensified in recent months as taxpayers, tax practitioners, and businesses increasingly criticised what they describe as a one-sided reform agenda focused on raising revenue while neglecting the administrative shortcomings of the Inland Revenue Department (IRD).

At the CA Sri Lanka Annual Economic and Tax Symposium, leading tax professionals argued that future reforms should prioritise stronger governance, greater transparency, consistent interpretation of tax laws, faster refunds, improved taxpayer services, and modernisation of the IRD, warning that unpredictable administration and excessive compliance burdens risk undermining voluntary compliance, investment, and long-term economic growth despite record tax collections (https://www.ft.lk/top-story/IRD-on-dangerous-and-scary-path/26-794269).

The discussion at the CoPF ensued after Chairman MP Dr. Harsha de Silva questioned the composition of Sri Lanka’s recent economic growth, highlighting that under the production-based method of measuring GDP, taxes had become the second-largest contributor after construction.

Dr. de Silva argued that while stronger tax collection had helped restore fiscal stability, long-term growth should increasingly come from manufacturing and productive sectors rather than tax receipts.

“If the second-highest contributing factor is taxes collected by the State, what does it really mean? We are having GDP growth, but it is coming because of taxes. Growth explained by taxes is really not very meaningful,” he said.

Treasury officials agreed that the current contribution from taxes reflected the Government’s revenue-based fiscal consolidation following the 2022 economic crisis, noting that taxes less subsidies had risen to around 12.4% compared with about 4-5% previously.

“Over the medium term, we have to have a proper mechanism to generate value addition through manufacturing, construction, and services. In terms of taxes, there should be a lower contribution over the medium term for sustained economic growth,” officials said.

They said the contribution of taxes to GDP should gradually decline as structural reforms stimulate investment and private sector-led growth.

Committee members agreed that Sri Lanka was moving into a new phase of the IMF-supported reform program.

“We have gone through revenue consolidation. Now we have stabilised. Now we are going to the growth phase. We can’t carry this tax structure into the growth phase. That’s what we need to think about now,” CoPF Member Industry and Entrepreneurship Development Deputy Minister Chathuranga Abeysinghe said. “By 2027, the major structural reforms would have been introduced, which will enable us to then focus on tax administration and ease tax rates so businesses can focus on growth,” he said.

MP Ravi Karunanayake observed that the current tax regime benefitted large corporations.

“It is skewered. The big are getting bigger and small businesses are evaporating,” he said.

Treasury officials said fiscal performance continued to exceed expectations despite external shocks.

They noted that public debt declined to 98.3% of GDP in 2025, with projections showing a further decline to around 86.7% by 2032. The Budget deficit narrowed to 2.3% of GDP in 2025, the lowest since 1956, while the primary surplus reached 5.4% of GDP and the tax-to-GDP ratio increased to 15.4%, the highest since 1997.

Revenue is expected to stabilise around 15.5% of GDP over the medium term, while the primary surplus is projected to remain at 2.6% of GDP from 2027 onwards.

Officials also told the Committee that total revenue and grants increased 34.6% during the first four months of 2026, generating a primary surplus of Rs. 863 billion against a full-year target of Rs. 360 billion and an overall Budget surplus of Rs. 105 billion, although capital expenditure execution remained low at 9.8% during the period.

The Committee also examined the Treasury’s latest Fiscal Risk Statement, which for the first time identified climate change and natural disasters among the highest fiscal risks facing the country, alongside macroeconomic uncertainties. Officials said future Budgets would need to incorporate greater fiscal preparedness, institutional resilience, and disaster-risk financing to mitigate the growing risks.

The 11th Colombo Scout Group of Zahira College Colombo successfully conducted the second MOASQAR Annual Scout Camp 2026 under the theme ‘Strength Through Unity’ from 26 to 29 June at Al Mubarak School, Malwana.

The four-day residential Camp brought together more than 250 scouts of Zahira College Colombo for an immersive scouting experience aimed at developing leadership, discipline, teamwork, resilience, and self-reliance through practical outdoor learning.

Throughout the Camp, participants engaged in a comprehensive program of scouting activities, including campcraft, pioneering, navigation, first aid, outdoor survival techniques, leadership development sessions, team-building exercises, problem-solving challenges, cultural events, and campfire activities. These experiences enabled the scouts to strengthen their practical scouting knowledge while fostering friendship, responsibility, and respect for one another.

MOASQAR has become one of the flagship annual scouting initiatives of the 11th Colombo Scout Group, reflecting the group’s continued commitment to producing responsible young leaders who uphold the values and traditions of scouting while making meaningful contributions to society.

Camp Organiser Husaindeen Najimudeen said: “MOASQAR is more than just a scout camp. It is a platform where our young scouts learn to lead, serve, and grow together. Every activity is carefully designed to build confidence, discipline, teamwork, and resilience while strengthening the spirit of unity that defines scouting. We are proud to see more than 250 Zahira scouts embracing these values and preparing themselves to become responsible leaders of tomorrow.”

The organisers expressed their sincere appreciation to the scout leaders, volunteers, parents, old scouts, supporters, and well-wishers whose dedication and commitment contributed to the successful execution of the Camp.

As the second MOASQAR Annual Scout Camp concludes, it leaves behind lasting memories, stronger friendships, and a renewed commitment among the scouts of Zahira College Colombo to live by the Scout Promise and Law while continuing to serve their school and community with pride.

Carey College recently inaugurated its state-of-the-art Carey Lounge marking a significant milestone in the institution’s infrastructural development.

The new lounge was conceptualised and completed with remarkable speed and corporate support:

The facility was delivered by the Old Boys’ Union (OBU) within just One month of the initial request.

Distinguished old boy and Edinborough Group Managing Director R.P.M Zalmy completely funded and supported the completion of the Carey Lounge project.

Addressing the Carey College Principal Dr. Thomas Benjamin said: “The OBU has delivered the Carey Lounge within one month of request.”

Carey College Old Boys Union President Mervyn Ponniah said: “Today marks more than the inauguration of a physical space. It marks the beginning of a new chapter in the continuing journey of Carey College. Standing here, we can proudly say that vision has become a reality. Most importantly, it will be a place where young minds are encouraged to think, create, collaborate and grow.”

Ponniah said the Carey Lounge with seating capacity of around 50, would serve as a modern hub for learning, leadership, innovation, and collaboration, providing students and teachers with a space to exchange ideas, develop new skills, and prepare confidently for the challenges of tomorrow.

Chief Guest at the opening Indian High Commission First Secretary Roshni Abilash said: “I am impressed by the OBU contribution at such short notice and The Indian High Commission will surely support educational development and cooperation.”

Education Ministry Zonal Director Udena Hettiarachchi said: “Carey College is a significant performer in education and leadership development.”

Education Ministry Zonal Director Pubudu Hewage was also present at the opening along with a large gathering of prominent alumni including President’s Counsel Illyas, Dr. A.C. Mahmud, Riaz Cafoor, Riaz Mihular, Ravi Mayan, Musafer Hassan, Fazil Fowzi, Naushad Rasool, and Ramzi Rahman.

– Pix by Shehan Gunasekera

Commercial Bank of Ceylon PLC’s Rs. 20 billion Basel III-compliant Tier 2 debenture issue was oversubscribed on its opening day yesterday, prompting the bank to close the offer at 4:30 p.m. in line with the prospectus.

The bank said it had received applications for more than 200 million debentures, equivalent to over Rs. 20 billion, exceeding the size of the initial issue. The offer comprised an initial 100 million listed, rated, unsecured, subordinated, redeemable debentures at a par value of Rs. 100 each, with options to issue up to a further 100 million debentures in two additional tranches in the event of oversubscription.

Commercial Bank said the basis of allotment would be notified to the Colombo Stock Exchange in due course.

It also noted that the inclusion of the debentures as Tier 2 capital remains subject to approval by the Central Bank of Sri Lanka, with the bank awaiting regulatory clearance following the submission of its formal request.

It has now been nearly two weeks since my note on the farmers’ protests was published. (Peasants in Revolt: A step towards a new mode of agriculture, Daily FT, June 26, 2026). During these two weeks, we have witnessed farmers’ protests in almost every small town across the North Central Province, the Eastern Province, Kurunegala District and Giruwa Pattu. Farmers burned effigies of the Minister and Deputy Minister of Agriculture. They smashed coconuts in ritual protest in nearby devala, invoking curses against the President and the National People’s Power (NPP) Government. There is hardly an agricultural region in the country where farmers have not engaged in demonstrations and struggles. The 19,600 farmers’ organisations scattered across the country have warned the Government that unless satisfactory solutions are provided to their burning grievances, they will organise and bring their protest to Colombo. If they send 10 farmers to Colombo as they claimed, the crowd would be closer to 200,000.

So far, the Government has taken no meaningful steps to resolve the farmers’ crisis. Instead, ministers either insult the farming community or mock them with arrogant rhetoric. This attitude has significantly deepened farmers’ hostility towards the Government. Although the present protests and struggles are largely confined to the paddy-growing regions, there is every possibility that the agitation will soon spread among potato farmers as well. Small tea growers are facing similar difficulties. Why? Because the same rise in production costs that has affected paddy cultivation is also affecting potato cultivation. Nevertheless, this article confines itself to paddy cultivation and the regions where it predominates.

The central issue at present is the inability of either the market or the state to guarantee producers a price that reflects the cost of production including a reasonable level of margin. Estimates of Rs. production costs vary according to different varieties of paddy, and cost structures also differ across agricultural regions. According to figures provided by the Hector Kobbekaduwa Agrarian Training and Research Institute, farmgate/producer prices vary from Rs. 96 in Ampara and Embilipitiya to Rs. 162.80 in Kalawewa. Besides, the farmers know the cost of production from their own experience. Moreover, the farmer leaders at the forefront of these protests are well acquainted with the surveys that have been conducted on production costs. Athula Dissanayake, a farmer leader from Eppawala, who is at the forefront of the campaign told me that according to calculations made by HARTI the average production cost of one kilogram of paddy is Rs. 137. Yet the Government has announced procurement prices of only Rs. 120 per kilogram for Nadu, Rs. 130 for Samba, and Rs. 140 for Keeri Samba that do not reflect the actual cost of production. A young farmer leader from Kekirawa posed the following question with irony:” Why is it that the International Monetary Fund, which insists that the prices of fuel, electricity, and water in Sri Lanka should reflect their production costs, does not apply the same principle to the price of paddy?

Rising farmgate price

There are two closely interconnected reasons for the rising cost of paddy production. The first is the continuous increase in the price of agricultural inputs. With the spread of the Green Revolution during the 1970s, the nature of agricultural inputs in Sri Lanka like in many countries in the global south underwent a fundamental transformation. In many respects, agriculture today resembles the export-oriented garment industry that became the dominant foreign exchange contributor in Sri Lanka after 1977. In garment production, apart from the land on which factories are built and the labor employed within them, virtually every other input is imported. Likewise, under the Green Revolution model, the cost structure of paddy production has come to resemble that of garment production as shown in Table 1.

In recent years the prices of all these imported inputs have shown a persistent upward trend. Moreover, sudden external shocks such as wars can trigger sharp increases in the prices of imported inputs. There are, however, two important differences between these two sectors. First, garment production is primarily export-oriented, whereas paddy production serves domestic consumption. Second, garment production is labor-absorbing, while changes in the cost structure of paddy cultivation have made it increasingly labor-displacing.

The second major reason for the continuous increase in production costs is the “urbanisation” of rural lifestyles. This new pattern of living is especially evident in education, healthcare, transport, recreation, and consumer aspirations. As a result, the gap between the income farmers require for the maintenance of their families and their expenditure has widened considerably. Nonetheless, the producer margin has not increased accordingly.

People and class

Many of those participating in and leading these protests openly state that they voted for the National People’s Power in both the 2024 presidential and the 2025 parliamentary elections to bring it to power. The election results in agricultural districts confirm this claim. Before the two elections, large crowds identified as “the people” flocked to NPP meetings. They expected the new Government to bring about positive changes for the satisfaction of ‘people’. Why? Because they viewed the National People’s Power as a popular and populist force that represented the people and would fulfil their aspirations. The people cannot be blamed for holding such expectations. However, once in power, the Government refused to step outside the policy framework laid down by the International Monetary Fund and the peasants interpreted it as a betrayal of their interests. At first glance, one might think that the farmers’ protests over paddy prices, which recur during the harvest season each year, are merely another routine episode of the normal cycle. However, there is a difference this time. The agitation is wide-spread, and peasants tend to think that they were neglected.

The very struggle of the peasants leaves two interrelated theoretical questions unanswered. Although a comprehensive answer to these questions cannot be offered here, they should at least be flagged.

The first question is: how should we understand the current peasant agitation? In 2022, we witnessed an urban uprising, particularly led by urban youth, anticipating a “system change.” This was followed by an electoral victory of the NPP. What lies ahead? As Daniel Bensaïd argues, we can make no oracular predictions, but only conditional anticipations. This means that we have been passing through not a uniform and homogeneous time, but through the discordance of times. From this perspective, the current peasant agitation should be understood not as an isolated event but as a manifestation of the contradictions of Sri Lankan history including its agrarian structure. Crises occur with less frequency and growing intensity.

The second question relates to the choice of the language. Some tend to suggest that the class as an important category and explanatory device in a situation like this has now waned and it should be replaced by simple and popular word people. Who are the peasants in revolt? Can they be understood as a class, or is identifying peasants as a class merely a discursive articulation? Let me briefly address this issue. “People” and “class” operate in two different political fields. The people act and identify themselves primarily in parliamentary politics, where expectations of gradual change shape political action. By contrast, class operates in the non-linear temporality of history, marked by social breaks and ruptures. Careful observation reveals that the protesters identify themselves as goviyo (peasants or farmers), rather than janathava (the people), thereby emphasising a structurally determined identity rooted in their social relations within the class structure.

The present farmers› protests, and the potential they contain, demonstrate that this is not merely an interlude in parliamentary competition. Rather, it is an untimely eruption of the ongoing struggle for livelihood within the capitalist structure.

Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe recently stated:

“I want to make it clear: CBSL does not promote economic growth or productivity or FDI in the economy.”

He made this remark in response to a media question at the unveiling of the Bank’s Annual Economic Review 2025. According to the Governor, the CBSL’s legally defined objectives are limited to maintaining domestic price stability and safeguarding financial system stability, while creating the stable macroeconomic environment necessary for the Government to foster growth.

Governor has emphasised that policy instruments required for direct economic growth, such as productivity improvements, industrial upgrading, and structural reforms, sit squarely outside the Central Bank and are the responsibility of the Government. “There are different institutions in the country that are responsible and mandated to improve productivity,” noted the governor.

These remarks appear to be a deliberate attempt by the CBSL to clearly define the institutional boundaries of its mandate under the Central Bank of Sri Lanka Act No. 16 of 2023 (CBA) and Sri Lanka’s IMF-backed stabilisation program.

Central Bank’s policy agenda for 2026 and beyond

However, the Governor’s recent remarks appear somewhat inconsistent with the position articulated earlier in the year.

On January 8, 2026 – nearly fourteen weeks before the unveiling of the Economic Review – the Governor presented the Central Bank’s Policy Agenda for 2026 and Beyond. During the occasion, he stated: “Central Bank will remain committed to fulfilling its mandate of maintaining domestic price stability and safeguarding financial system stability. This would provide a platform for the economy to confront future challenges with great confidence, thereby achieving sustained growth and prosperity.”

He further stated: “It is designed to remain flexible and responsive to evolving macroeconomic conditions, enabling us to better fulfil our mandate of maintaining price stability and financial system stability while supporting the economy’s continued progress.”

He also acknowledged that: “This credit expansion supported sustaining the growth momentum in 2025.”

The Governor concluded by emphasising: “These efforts will be vital in unlocking higher, more inclusive, and durable growth and enabling the economy to progress to greater heights without compromising stability. In this journey, the Central Bank will remain steadfast in fulfilling its mandate to maintain price stability and safeguard financial system stability, while setting the platform for sustainable and inclusive economic growth.”

Clearly, the Governor himself recognised a role for the CBSL in facilitating growth – particularly in “setting the platform for sustainable and inclusive economic growth.”

The Annual Economic Review 2025

The Governor’s remarks prompted me to examine the Annual Economic Review 2025 in greater detail. The report spans over 120 pages and contains numerous references to the role played by the CBSL in supporting economic growth and economic recovery during the year. The full report can be accessed through (chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/publications/aer/2025/en/Full_Text.pdf).

A few extracts from the report are reproduced below:

“Accordingly, it is expected that banking sector consolidation will facilitate financially and operationally sound banks, thereby strengthening the resilience and stability in the banking sector while supporting inclusive and sustainable growth of the economy.”

“The Credit Counselling Centre (CCC), operating under the oversight of the Central Bank in collaboration with the Sri Lanka Banks’ Association (SLBA), continued to primarily assist non-performing Micro, Small and Medium Sized Enterprises (MSMEs).”

“In 2025, the Central Bank pursued a comprehensive set of regulatory, supervisory, and financial system development initiatives to align the financial system with evolving economic and technological dynamics.”

“The Central Bank strengthened its sustainable finance initiatives in 2025 with the launch of the Sustainable Finance Roadmap 2.0.”

“By sustaining price and financial system stability, the Central Bank’s policies in 2025 supported a conducive environment for high and sustainable economic growth.”

“The return of economic activity to normalcy was supported by continued accommodative monetary conditions, enabling a stronger expansion in private sector credit.”

The report also underscores the importance of coordination between monetary and fiscal policy:

“Effective coordination between monetary and fiscal policies plays an important role in maintaining macroeconomic stability and supporting sustainable economic growth.”

It further notes that the CBA institutionalised such coordination through the establishment of the Council for the Coordination of Fiscal, Monetary and Financial System Stability Policies. The Coordination Council serves as the formal platform for information sharing and dialogue between the Ministry of Finance, Planning and Economic Development (MoF) and the Central Bank on macroeconomic developments, outlook, and risks.

The report additionally highlights the Central Bank’s collaboration with line ministries and other public institutions in responding to external shocks such as global tariff changes, adverse weather conditions, and geopolitical tensions.

Another significant observation states:

“This coordinated policy approach played a vital role in navigating a period of severe economic distress and placing the economy back on a path towards economic stability.”

“Central Bank engages constructively with other line ministries and public sector institutions on matters requiring coordination, reflecting a holistic approach to economic policy.”

The report also points out that the CBSL’s foreign exchange market reforms and monetary policy easing supported investment, consumption, trade competitiveness, and broader macroeconomic performance.

Taken together, the Economic Review strongly suggests that the CBSL played a substantial and constructive role in promoting economic recovery, growth, productivity, and investor confidence during 2025.

This raises an important question: Is the Governor being overly cautious in publicly describing the Bank’s role, or were the broader growth implications of the CBSL’s policies understated during his media remarks?

Is the Governor too modest to acknowledge this publicly, or were those responsible for drafting the Economic Review unable to fully brief him on its contents before he made those remarks on the role of the CBSL?

Who is responsible for promoting growth?

There is no dispute that the Government bears the primary responsibility for driving economic growth and development. However, growth cannot be achieved by the Government alone.

The state sector, public corporations, SOEs, universities, banks, financial institutions, private enterprises, and small-scale producers all contribute in different ways to the national development process. The Government establishes institutions through Acts of Parliament to perform specific functions that collectively contribute to economic progress.

Institutions such as the CBSL, BOI, EDB, IDB, RDA, UDA, CEA, Government Departments, and SOEs each operate within legally defined mandates. No single institution can independently generate economic growth. Growth emerges from the combined activities of multiple institutions functioning effectively within their respective spheres.

As the Governor correctly pointed out, the CBSL’s role is not to directly formulate industrial policy or attract FDI in the same manner as the Ministry of Finance or the BOI. Likewise, maintaining price stability is not the mandate of the BOI, nor is national highway connectivity the responsibility of the CBSL. It is the responsibility of RDA.

Each institution including CBSL contributes to the broader development process through the role specified by the respective Act.

The CBSL’s contribution lies in creating macroeconomic stability, maintaining confidence in the financial system, ensuring liquidity, supporting credit flows, stabilising inflation, safeguarding the payments system, and strengthening financial markets. These are indispensable preconditions for sustainable growth.

Therefore, while the CBSL may not directly “drive” economic growth, it unquestionably facilitates and supports it.

The Central Bank has a crucial role in growth

The CBSL may not target a specific GDP growth rate as a policy objective, but its role in economic growth remains fundamental.

By maintaining price stability and financial system stability, the Central Bank creates the essential environment within which businesses invest, banks lend, entrepreneurs expand, and consumers spend with confidence.

The CBSL secures the availability and stability of financial capital (one of the four Factors of production) through monetary policy, banking supervision, financial regulation, and market oversight. It supports long-term capital formation, promotes financial inclusion, and strengthens confidence in the economy.

Through refinancing schemes, targeted credit programmes, SME support initiatives, sustainable finance frameworks, and regional financial development, the Central Bank directly influences economic activity and productive capacity.

Whether this role is described as “direct” or “indirect” is largely a matter of terminology. In practical terms, the CBSL remains a pivotal institution within the country’s economic growth framework.

The Bank is not isolated from the broader machinery of Government. Rather, it functions as a central pillar of the national economic system.

Conclusion

As the Governor correctly stated, the CBSL’s legally defined objectives are to maintain domestic price stability and safeguard financial system stability while creating the stable macroeconomic environment necessary for growth.

That principle applies equally to other state institutions, each of which operates within a distinct statutory mandate.

As beneficiaries of growth, the real issue for the public is not whether one institution alone is responsible for growth, productivity, or FDI. The important question is whether all institutions – including the CBSL – effectively perform the roles assigned to them under their respective Acts so that the Government can successfully promote growth, productivity, investment, and national development.

The National People’s Power (NPP) Government is targeting its first sovereign credit rating upgrade since the debt crisis, with Treasury officials yesterday telling the Parliamentary Committee on Public Finance (CoPF) they expect the country’s rating to improve to B- by early 2027 as fiscal reforms and debt reduction continue.

Officials said discussions were underway with the three major international credit rating agencies, which are reviewing Sri Lanka’s recent macroeconomic and fiscal performance.

Responding to questions from CoPF Chairman Dr. Harsha de Silva, officials confirmed Sri Lanka’s current sovereign rating is CCC+ and said the immediate objective is to secure an upgrade to B-.

“For B-, by early next year,” a Treasury official said, adding that one of the principal concerns of rating agencies remains Sri Lanka’s debt-to-GDP ratio.

Dr. de Silva said improving fiscal indicators alone would not be sufficient, stressing that Sri Lanka would soon have to regain investor confidence as it returns to international capital markets.

“Whatever you say, you will have to go to the markets in 2027-28. You have to go to the market and raise $ 1.5 billion,” he said.

He noted that Sri Lanka’s governance-linked Bonds maturing in 2035 were trading at yields of around 8.3%-8.5%, describing those levels as “very high” despite the country’s improving macroeconomic performance.

The CoPF Chairman also cautioned that moving from CCC+ back to B+, where Sri Lanka was before successive downgrades, would require four rating upgrades.

“You can show us all these internal numbers. But ultimately, external perception matters a lot,” he said.

Treasury officials said public debt declined to 98.3% of GDP in 2025 and is projected to fall to around 86.7% by 2032, supported by sustained primary surpluses and continued fiscal consolidation.

They said continued progress under the International Monetary Fund (IMF)-supported reform program and further debt reduction would strengthen Sri Lanka’s case for future sovereign rating upgrades and support its planned return to international capital markets.