Category: Daily Financial Times

The Government has attracted strong investor interest in its bid to transform the loss-making Mattala Rajapaksa International Airport (MRIA) into a commercially viable venture, with around 35 to 40 parties expressing interest in partnering with the State to operate the airport as a joint venture.

Civil Aviation Deputy Minister Janitha Ruwan Kodithuwakku said the level of interest marks a significant improvement over the previous Expression of Interest (EOI) process, which drew only one or two interested parties.

‘Around 35 to 40 prospective investors have participated in preliminary discussions over the past few months. However, the final number will be confirmed once official proposals are received after the submission deadline,’ he said.

Since April this year, the Government has invited local and international investors to submit proposals to develop and operate the underutilised MRIA by June in a renewed push to unlock value from the Hambantota-based facility.

The call for Expressions of Interest (EOIs), issued by the Ports and Civil Aviation Ministry on behalf of Airport and Aviation Services Sri Lanka Ltd., (AASL), sought investment partners to utilise airport resources across both operational and commercial segments. A Cabinet Appointed Negotiation Committee (CANC) has been tasked with managing the process, including evaluating submissions and shortlisting qualified parties for the next stage of Request for Proposals (RFPs) (https://www.ft.lk/front-page/Govt-seeks-EOIs-to-revive-Mattala-Airport-by-June/44-791127).

In June, the Government extended the EOI submission deadline by one month, with proposals now due by 9 July, while EOI documents will be available until 8 July. The original closing date for submissions was 9 June (https://www.ft.lk/front-page/Govt–extends-deadline-for-Mattala-Airport-investment-proposals-till-9-July/44-793323).

Kodithuwakku attributed the heightened investor interest to extensive improvements carried out at the airport over the past year.

He said the airport had been in poor condition when the Government took office, with damaged elephant fences and wild animals roaming the premises, making flight operations unsafe.

The Deputy Minister said the Government has since completed essential renovations, established a wildlife office and secured a wildlife-free certification, enabling MRIA to function as a fully operational airport.

The Government is seeking a strategic partner after bringing the airport to a safe operational standard, with the next objective being to improve its commercial performance. The Deputy Minister has previously revealed that MRIA has been incurring annual losses of around Rs. 3 billion, roughly equivalent to its operating costs since its inception.

Built in Hambantota to ease congestion at Bandaranaike International Airport (BIA) and promote regional development, MRIA has the capacity to handle around one million passengers annually.

A notable turnaround was recorded at lMRIA last year, which posted its highest-ever passenger movements since opening in 2013. The airport handled 140,614 passengers in 2025 and accommodated 703 international flights, according to the Ports and Civil Aviation Ministry.

Officials said passenger numbers at Mattala have increased steadily over the past three years, with renewed attention following the appointment of the new Government playing a decisive role.

Previously, airlines had been reluctant to operate at Mattala due to safety concerns linked to wildlife in the surrounding area. Several international carriers launched services to Mattala during 2025, expanding links with Europe, the Middle East, and South Asia. These included Red Wings from Russia, SkyUp operating routes linked to Bahrain and Pakistan, Fly One from Dubai, Centrum Air and Uzbekistan Airways from Uzbekistan, and Bulgaria Air. Belavia Airlines of Belarus is also scheduled to commence flights, marking the first direct connection between Minsk and southern Sri Lanka (https://www.ft.lk/front-page/Sri-Lanka-s-airports-post-strongest-year-since-crisis-as-traffic-airlines-and-regional-hubs-gain-momentum/44-788392).

IMF Mission Chief for Sri Lanka, Evan Papageorgiou, has announced that an IMF mission would visit Sri Lanka from 24 to 30 June. He confirmed that the mission would engage with the Government and a broad range of stakeholders to review Sri Lanka’s ongoing economic reform program and assess the implementation of critical structural reforms. Papageorgiou stated that the IMF looked forward to constructive and productive discussions during the week-long mission.

Meanwhile, the Government has already announced several measures aimed at improving tax compliance, digitalisation, and the efficiency of the tax system. Two important changes have been introduced, and the necessary legislative amendments have been presented to Parliament. First, VAT obligations will be extended to non-resident providers of digital services supplied to Sri Lankan consumers through electronic platforms, thereby ensuring equal tax treatment between overseas providers and resident businesses. Second, the two applicable taxes (VAT and the Social Security Contribution Levy) will be consolidated into a single effective tax rate of 20.5% to simplify tax administration.

Deputy Finance Minister Dr. Anil Jayantha Fernando stated that maintaining fiscal discipline, strengthening revenue administration, and adhering to the principles of good governance remain essential for safeguarding macroeconomic stability and keeping Sri Lanka’s recovery on track. He further remarked: “We have understood that one of the key factors in stabilising the country and taking the economy towards our objective is the quality of public financial management.”

The Government’s repeated emphasis on fiscal management appears to be a disguised attempt to extend the current IMF program, which is based on the infamous Washington Consensus, beyond March 2027, the scheduled completion date of the existing Extended Fund Facility program.

This article seeks to refute two fundamental principles on which the Washington Consensus is based. It argues that the IMF program is nothing more than barbs wrapped in velvet. Sri Lanka should therefore withdraw from the IMF program and pursue an alternative, pluriversal path of development. Earlier the better.

Distinction between State and household

The IMF’s notion of fiscal management rests on a fundamental misconception that equates the State with a household. According to this view, the Government, like a household, should ensure that its expenditure at any given time does not exceed its current revenue. The revenue constraint is of paramount importance in household income management.

Heterodox economics rejects this analogy. Unlike a household, the State has the authority and responsibility to issue the currency that is legally valid within its jurisdiction. Consequently, it can spend in excess of its current revenue without immediately facing a liquidity constraint. As far as domestic expenditure is concerned, a sovereign State cannot become insolvent in its own currency so long as productive resources remain underutilised. Admittedly, the issue becomes more complex in the case of developing countries integrated into the global capitalist economy. This problem of balance of payment disequilibrium should be dealt with a different policy package the details of which has to be addressed separately.

Nevertheless, by combining (1) Adam Smith’s distinction between productive and unproductive labor, (2) David Ricardo’s class-based theory of economic growth, and (3) the Keynesian conception of the State as deus ex machina, it is possible to formulate an alternative development strategy that is fundamentally different from the prescriptions of neoclassical economics.

State may spend without taxing

When the Jaffna Fort was surrounded by the LTTE, the Chandrika Bandaranaike Kumaratunga Government purchased multi-barrel rocket launchers from the Czech Republic without immediately imposing new taxes. Likewise, when the Sri Lankan Government launched the final military offensive against the LTTE in 2008-09, it financed the war without first raising taxes.

By contrast, the LTTE was ultimately unable to sustain a prolonged war partly because it lacked a sovereign currency that was widely accepted even within the territory it claimed as the Tamil homeland. This illustrates a fundamental point: a sovereign State cannot exist without its own currency, with the partial exception of countries that have voluntarily surrendered monetary sovereignty by joining the European Monetary Union.

For the same reason, Ceylon abandoned the Currency Board system despite its relative stability. The newly independent nation required its own currency to consolidate its sovereignty and national identity.

The principal misconception underlying the IMF’s doctrine of fiscal management is the belief that all Government expenditure must first be financed through taxation. Furthermore, it assumes that the country’s economic difficulties are primarily the consequence of fiscal indiscipline. Certainly, excessive money creation can generate inflationary pressures, and excessive taxation can also produce adverse economic consequences. Historically, English monarchs are said to have withdrawn and even destroyed tax revenues when excessive money in circulation threatened inflation.

If Governments do not require taxes in order to obtain money for spending, what, then, is the purpose of taxation? Taxes serve at least four essential functions:

To promote economic growth by encouraging productive investment, consistent with the Ricardian principle of taxation.

To discourage socially undesirable behavior.

To improve equity through the redistribution of income and wealth.

To reduce inflationary pressures by withdrawing excess liquidity created through Government spending.

Since the overriding priority for a country in the Global South such as Sri Lanka should be the creation of a productive economy, two Ricardian principles of taxation deserve particular attention. First, Ricardo argued that taxes on essential commodities should be kept to a minimum because they raise of the cost of living, increase wage costs, and ultimately reduce profits and in turn capital accumulation. In today’s context, this would imply a zero or very low rate of VAT on essential goods. Such a policy would not only ease the burden on low-income households but also help contain inflationary pressures.

Second, Ricardo mentioned that luxury goods should bear relatively heavier taxation, since taxes on luxuries have far fewer adverse effects on production and economic growth.

The tax policy suggested by the IMF moves in the opposite direction. The repeated increases in VAT have disproportionately burden low- and middle -income households. Over the past four years, under the IMF regime, the VAT rate has been raised from 8% to 18% with an effective increase for certain goods 20.5% following the consolidation of VAT and Social Security Contribution Levy. As a result, the prices of essential goods, medicine, educational materials and many other necessities have risen significantly placing an additional burden on ordinary citizens while doing little to promote productive investment.

Police have uncovered a large-scale illicit liquor manufacturing operation operating under the guise of a bottled drinking water business in Kaduwela, seizing more than 18,500 bottles of illegal liquor and arresting six suspects.

Acting on intelligence, officers of the Western Province North Crime Division raided premises on Sudarshana Road in Kaduwela on Saturday, where they discovered an alleged illegal liquor manufacturing facility concealed within a business purportedly engaged in the production and sale of bottled drinking water.

The raid resulted in the seizure of 18,575 bottles of locally manufactured liquor, each containing 180 ml, amounting to 3,345.5 litres. Police also recovered four one-litre bottles and one 750 ml bottle labelled as foreign liquor.

In addition, officers seized a bottle of ethanol suspected to have been used in the production process, equipment believed to have been used to manufacture the illicit liquor, and 50 grams and 200 milligrams of Kerala cannabis.

The six suspects, aged 30, 43, 58, 59 and 62, are residents of Mihintale, Maradana, Wattala, Webada South, Getalawa and Sippikulama.

Police suspect the operation had been functioning on a commercial scale and are investigating whether the illicit liquor was distributed to multiple areas while operating under the cover of a legitimate bottled water business.

Further investigations are being conducted by the Western Province North Crime Division.

Morocco and Paraguay sent the Netherlands and Germany packing on penalties, while Brazil rallied to edge Japan in the Round of 32 at the FIFA World Cup 2026.

Germany had never lost a FIFA World Cup shootout. They finally did after Paraguay finally struck the euphoria-sparking spot-kick at the third time of asking, validating Orlando Gill’s heroics.

The day’s second shootout was equally balmy. Yassine Bounou, the headliner as Morocco overcame Spain on penalties at Qatar 2022, was at it again, this time against the Netherlands.

In the early kick-off, Brazil rallied off the ropes to KO Japan, Gabriel Martinelli grabbing an 11th-hour winner.

Brazil 2-1 Japan

The Samurai Blue had the Seleção staring at failure to be among the final 16 for the first time in 60 years. Just before the half-hour, Kaishu Sano intercepted the adidas TRIONDA on the halfway line and buried it into the bottom corner from the edge of the box. Casemiro headed home an equaliser, but when Zion Suzuki’s reflexes – and the upright – denied Vinicius Jr a solo goal, extra time appeared on the cards. On its cusp, however, Bruno Guimares faked the shot and slipped in Gabriel Martinelli, whose strike went in off the inside of the upright. Brazil will now await the Côte d’Ivoire-Norway victors.

Germany 1-1 Paraguay (3-4 PSO)

Julio Enciso’s mercurial feet were earmarked as a threat. The shortest player on the pitch, however, used his head, while in between 1.90m and 1.95m centre-backs, to plant La Albirroja ahead. The Germans used their own aerial prowess to equalise, Kai Havertz, with his back to goal, diverting Florian Wirtz’s cross into the bottom corner. After another header, from Jonathan Tah, was ruled out, the tie went to a shootout. Orlando Gill repelled two penalties in it to leave the Paraguayans all but through, only for Manuel Neuer to inspire a remarkable fightback. Finally, though, Jose Canale kept his cool to send Gustavo Alfaro’s charges through to a meeting with the France-Sweden winners.

Netherlands 1-1 Morocco (2-3 PSO)

The Netherlands were all but over the line. Cody Gakpo had responded to the worst moment of his life personally with its biggest goal professionally. Then, in the brink of the referee’s full-time whistle, Issa Diop headed home what was a deserved equaliser. After another 30 scoreless minutes, it was on to penalties. Bart Verbruggen repelled one. Yassine Bounou stopped two to send Morocco into a meeting with Canada.

Stats

Bruno Guimaraes has provided four assists in four appearances in North America. It is a record for one World Cup this century also owned by Michael Ballack (2002), Francesco Totti (2006) and Juan Cuadrado (2014).

Casemiro equalled the World Cup record for appearances without defeat shared by Zagallo and Julio Olarticoechea (12).

Kai Havertz became the first German to score a header with his back to goal since Uwe Seeler in the thrilling 3-2 win over England in the Mexico 1970 quarter-finals.

Cody Gakpo has now netted six goals in nine games in the World Cup. The only Dutchman with more is seven-goal ’70s star Johnny Rep.

Former State Minister Sivanesathurai Chandrakanthan, better known as Pillayan, was yesterday remanded until 13 July by the Batticaloa Magistrate’s Court in connection with investigations into five murders committed in several parts of the Eastern Province.

The order was made when the case was taken up before the court following Chandrakanthan’s production under heightened security.

The Criminal Investigation Department (CID) had, on 15 June, submitted details to court regarding the killings, which allegedly took place in 2008.

At the previous hearing, the Magistrate directed the Superintendent of the Welikada Prison to produce Chandrakanthan, who has been named as the third suspect in the case, at yesterday’s proceedings.

He was accordingly produced before the Batticaloa Magistrate’s Court under tightened security, following which the court ordered that he be remanded until 13 July.

The International Monetary Fund (IMF) yesterday said exchange-rate flexibility should remain the primary mechanism for absorbing external shocks, while indicating that assessments of market volatility depend on economic circumstances rather than fixed thresholds.

Speaking at a media briefing, IMF Mission Chief Evan Papageorgiou said there was no universal definition of ‘excessive volatility’, explaining that what constitutes excessive exchange-rate movements differs across countries and economic conditions.

He said volatility becomes a concern when it risks destabilising domestic markets or creates actual or perceived spillovers to other parts of the economy, adding that these assessments are made through continuing discussions with the authorities.

Papageorgiou also clarified that the IMF evaluates Sri Lanka’s inflation performance under the Monetary Policy Consultation Clause against the Central Bank’s consultation bands rather than solely against the midpoint inflation target.

He said the Fund would assess inflation outcomes during the Seventh Review and determine whether the consultation bands had been met and, if not, examine the reasons for any deviation.

The IMF’s position is that monetary policy should remain data-dependent, with foreign exchange intervention confined to addressing excessive volatility while allowing the exchange rate to adjust to changing economic conditions.

Sri Lanka’s external current account remained under pressure in May, recording a second consecutive monthly deficit as a sharp rise in import expenditure due to the Middle East war, led by fuel and vehicles, outpaced robust export growth and offset continued strength in workers’ remittances.

According to the Central Bank’s latest External Sector Performance report, the current account recorded a deficit of $ 194.5 million in May, following April’s return to deficit, bringing the cumulative balance for the first five months of 2026 to a deficit of $ 96.7 million, down from a $ 1.29 billion surplus a year ago.

The Central Bank attributed the latest outturn mainly to a widening merchandise trade deficit and a contraction in the services surplus despite stronger remittance inflows.

The merchandise trade deficit widened to $ 967.9 million in May from $ 472.5 million a year earlier as import expenditure rose 45.4% year-on-year to $ 2.19 billion, significantly outpacing the 18.3% increase in merchandise exports to $ 1.22 billion. Over January to May, the trade deficit expanded to $ 4.66 billion from $ 2.73 billion in the corresponding period of last year.

The import bill was driven largely by higher fuel and motor vehicle imports. Fuel import expenditure more than doubled, rising 112% year-on-year to $ 536 million in May amid higher oil prices and import volumes, although it declined 39.5% compared with April.

Meanwhile, expenditure on imported motor vehicles, including personal and commercial vehicles, rose 20% month-on-month to $ 250 million, lifting cumulative vehicle imports during the first five months of the year to $ 1.07 billion.

The Central Bank also said Sri Lanka’s terms of trade deteriorated both in May and over the January-May period as import prices increased faster than export prices.

The services account continued to weaken. Its surplus contracted 36.8% year-on-year to $ 143.2 million in May as services outflows grew faster than inflows, while the cumulative surplus for the first five months declined 20.8% from a year earlier. Total services exports edged up 2.5% year-on-year to $ 475.3 million in May but remained 2.9% lower over the first five months of the year.

Tourism presented a mixed picture. Tourist arrivals increased 9.6% year-on-year in May to 145,745, taking arrivals past the one million mark during January-May. However, estimated tourism earnings declined 5.1% year-on-year to $ 155.7 million in May, while cumulative earnings fell 11.9% to $ 1.36 billion. The Central Bank noted that the Sri Lanka Tourism Development Authority revised its methodology for estimating tourism earnings in May and applied the new methodology retrospectively from January 2026.

Workers’ remittances remained the strongest support to the external account, increasing 32% year-on-year to $ 847 million in May and 26% over the first five months to $ 3.91 billion. The Central Bank noted that these figures may include other remittances, including those received following Cyclone Ditwah.

On the financial account, foreign investors recorded net outflows of $ 60.3 million from the Government securities market and $ 22.6 million from the Colombo Stock Exchange during May.

Gross official reserves stood at $ 6.9 billion at end-May, supported by the jointly disbursed sixth and seventh tranches under the IMF’s Extended Fund Facility despite sizeable external debt service payments and net foreign exchange sales by the Central Bank. The reserve stock provided an import cover of 3.5 months.

The Central Bank also noted that the rupee had depreciated by 7.9% against the US dollar on a year-to-date basis by end-June, reflecting external sector pressures arising from the conflict in the Middle East, while describing the movement as consistent with depreciation trends observed across peer economies.

Headline inflation, as measured by the year-on-year (YoY) change in the Colombo Consumer Price Index (CCPI), continued to spike in June as expected due to the impact of the Mideast war.

The Central Bank of Sri Lanka (CBSL) yesterday said headline inflation YoY accelerated to a three-year high 6.8% in June 2026, up from 5.5% in May and 5.4% in April. The rate of inflation was 2.2% in March and 1.6% in February, which was lower than 2.3% in January, after remaining stable at 2.1% in October, November, and December 2025.

CBSL raised the monetary policy rate towards the end of May for the first time since 2023 in a bid to contain credit growth led import demand. It has a 5% inflation target with a margin of ±2 percentage points that it must adhere to by law.

CBSL said non-food inflation (YoY) accelerated to 8.4% in June 2026 from 7.8% in May 2026, contributing mainly to the increase in headline inflation. Food inflation (YoY) also accelerated to 3.6% in June 2026 from 0.9% in May 2026.

On a month-on-month basis, the CCPI recorded an increase of 2.1% in June 2026. This increase was driven by the food category, which contributed 1.4 percentage points, largely owing to the increase in prices of fish and vegetables, while the non-food category contributed 0.7 percentage points.

Meanwhile, core inflation (YoY) accelerated marginally to 4.0% in June 2026 from 3.9% in May 2026.

CBSL said the realised quarterly average inflation for Q2-2026 remained broadly in line with the Central Bank’s recent inflation projections. Inflation projections made at the monetary policy round in May 2026, based on available information and assumptions, indicate that headline inflation is likely to remain above the target of 5% in the period ahead, before easing and stabilising around the target over the medium term, supported by appropriate policy measures.

However, amid the fluid nature of the tensions in the Middle East and the wide-ranging spillovers across both global and domestic economic activity, the domestic inflation outlook remains subject to elevated uncertainty, CBSL noted.

Justice was a keyword and a foundational pledge of Maithripala Sirisena’s 2015 presidential campaign. Candidate Sirisena, Ranil Wickremesinghe, and a bunch of oppositional politicians promised to end the repression and the corruption that had become bywords for Rajapaksa governance, and to bring the perpetrators before the law.

Amongst the high profile corruption cases often touted on campaign platforms was that of Avant Garde Maritime Services. This private military contractor (dubbed Sri Lanka’s Blackwater by some) was registered in 2011 as a subsidiary of Avant Garde Security Services, owned by Nissanka Senadhipathi, a retired army major. Around September 2009, the Lankan Navy had commenced providing security to international vessels. In June 2012, the regime abruptly gifted this lucrative task to the new Avant Garde Maritime Services sans cabinet sanctions or parliamentary oversight.

The most favoured status enjoyed by Avant Garde Ltd under the Rajapaksas came to an end with their defeat at the 2015 presidential election. Investigations of the floating armouries owned by the company began soon after. In mid-January, MV Mahanuwara, a floating armoury belonging to the company, was detained by the police at the Galle Harbour. On 23 January, the passport of Nissanka Senadhipathi was impounded.

In April 2015, the then Deputy Solicitor General (DSG) wrote to the Attorney General a letter titled The Case against Avant Garde Maritime Services and others pertaining to the – Floating Armoury (outed by the website The Colombo Telegraph). The letter itemised three legally actionable offenses: unauthorised importation of fire arms to Sri Lanka, possession of fire arms and ammunitions without valid licence, and conspiracy aiding and abetting to commit the above offenses.

Five suspects were identified, including Nissanka Senadhipathi and Gotabaya Rajapaksa. The DSG’s conclusion was unequivocal: ‘I’m of the view that a strong prima facie case has been established against the said five suspects and that they should be indicted under the above discussed provisions of the law. If you agree with my recommendation, as the first step I recommend that the CID be directed to arrest and produce before the magistrate the five suspects…’ (https://www.colombotelegraph.com/index.php/wijeyadasa-lies-ag-wanted-criminal-prosecution-of-avant-garde/). But no case was filed and no arrests made.

The UNP won the parliamentary election in August 2015. Tilak Marapana was appointed minister of law and order in the new Government. Within weeks, in September 2015, the CID informed the Colombo Magistrate Court that it had failed to find any evidence of misconduct by Avant Garde Ltd and will not go ahead with the case as per instructions of the Attorney General. The court terminated proceedings against the company.

A national uproar ensued. On 4 November, Minister Marapana made a special statement in parliament claiming that this controversy over the termination of proceedings was due to the public’s ‘lack of understanding regarding the floating armoury.’ The floating armoury was in the Galle Harbour legally, he insisted. ‘The police jumped into gain points as soon as the Government changed, similar to the raid on the Millennium City in 2002. That is the reality’ (https://adaderana.lk/news/32941). Outrage mounted. The next cabinet meeting became a shouting match. Several ministers threatened to resign. PM Wickremesinghe was forced to abandon his protégé. Marapana resigned from his portfolio on 9 November.

Marapana was not the only minister who had championed Avant Garde Ltd. Justice Minister Wijeydasa Rajapaksha had also done so. Soon stories began to circulate about a close relationship between Minister Rajapaksha and Senadhipathi. Minister Rajapaksha denied them, challenging JVP leader Anura Kumara Dissanayake and Minister Sarath Fonseka to a debate and promising to resign from his portfolio if the allegations were proved. In early January 2016, Minister Fonseka published a set of 2006 photos showing Messrs Rajapaksha, Senadhipathi and their families enjoying an American holiday together and in style (https://www.dailymirror.lk/print/breaking-news/wijeyadasa/108-98841). Despite this revelation, Rajapaksha continued to function as minister of justice until August 2017.

In October 2015, another Avant Garde floating armoury was seized with 600 unauthorised weapons. In November 2015, President Sirisena ordered the cancellation of all contracts with the company. Avant Garde lost its business but escaped justice.

Favours owed; favours returned

The term ‘state capture’ was birthed by the World Bank in 2000, to explain the effects of mass scale privatisation in the former Soviet Union. The outcome was not the creation of a competitive market but the emergence of a cohort of ‘powerful oligarchs who manipulate politicians, shape institutions, and control the media to advance and protect their own empires at the expense of social interests.’ (https://documents1.worldbank.org/curated/en/537461468766474836/pdf/multi-page.pdf).

The Guardian defined state capture as ‘not corruption of the system but corruption as the system.’ When vested interests such as private companies, political families, and/or lobbying groups acting for foreign powers (like the AIPAC – American Israel Public Affairs Committee) take control of states, these ‘captured states stop being arbiters of public good and become guarantors of elite privilege’ (Forget petty bribes, ‘State Capture’ is corruption so deep it is shaping the rules of democracy itself – 4.11.2025). In countries like ours where religion plays an outsized public/political role, vested interests aiming at state capture can include established clergy.

In Sri Lanka, state capture became a lived reality under the Rajapaksas. The Avant Garde saga was quintessential. As senior journalist Dharisha Bastians wrote in 2015, ‘The shadowy security firm has immensely deep pockets – CID sleuths found the company was raking in up to Rs 15 million daily from its floating armoury operation (this was between 2012 and 2015 when a million had more value than it does today) – and its tentacles reached several tiers deep within the new administration.’ The company had ‘submitted an unsolicited proposal that was authorised without evaluation or tender procedure, by the former Defence Secretary. Weapons were being provided to the maritime security firm that was maintaining floating armouries, through Rakna Arakshaka Lanka Ltd, the Defence Ministry-owned company that was Secretary Rajapaksa’s pet project. In the first flush of investigations, the CID found thousands of extra weapons on-board the Avant Garde than had been authorised by the Defence Ministry’ (https://dbsjeyaraj.com/dbsj/?p=43964).

(A relevant aside: When President Sirisena cancelled all contracts with Avant Garde Maritime Services, the company demanded from the Government-owned Rakna Arakshaka Ltd a Letter of Clearance asserting the legality of the company’s floating armouries. When Rakna Arakshaka Ltd refused to comply, an arbitration case was filed demanding compensation for breach of contract. In May 2019, the Singapore Court of Appeal dismissed the case, ordering Avant Garde to pay Rakna Arakshaka legal costs.)

Avant Garde Maritime Services got its lucrative business back under President Gotabaya Rajapaksa and retained it under President Ranil Wickremesinghe. After almost a year in power, the Government of Anura Kumara Dissanayake cancelled the contract, returning the profitable business to the Navy. Two writ petitions filed by the company were dismissed by the Appeal Court in February 2026. In August 2026, the Navy revealed that the company owed it over 780million rupees for services provided (https://www.facebook.com/NewsfirstEngSL/videos/sri-lanka-navy-breaks-silence-on-floating-armoury-operations-navy-reveals-unpaid/1340800734922274/). Whether the Government or the Navy takes action against the company remains to be seen.

Are the days of State capture over – or not?

In democracies, state capture, to be effective, must have the blessings of all political players. That was how Avant Garde Ltd saved itself from being buried under the 2015 collapse of Rajapaksa power. In his incendiary parliamentary speech of November 2015, Minister Marapana stated that on 10 January 2015 – i.e. the day after the Sirisena-Wickremesinghe Government was sworn in – he met Nissanka Senadhipathi through Minister Vajira Abeywardena. Subsequently, Marapana admitted that this meeting led to him being retained by the company as its lawyer and that he functioned in that capacity until he was sworn in as Minister of Law and Order in August 2015. With minister in charge of the police as its lawyer and the minister in charge of the AG’s Department as its friend, is it surprising that Avant Garde Ltd escaped justice?

Perhaps Senadhipathi has no such friends in the current Government. Perhaps this Government is not vulnerable to pressure by Avant Garde Ltd for there are no IOUs to be repaid. But this doesn’t necessary mean that this Government is invulnerable to pressure from all vested interests seeking to use state power for private gain.

In May 2025, underworld kingpin Nadun Chintaka Karunaratne alias Harak Kata, while being brought to court, shouted to the waiting journalists that he was being held in the Tangalle prison because he did not pay the 300 million rupee-bribe demanded by former minister of public security Tiran Alles and former IGP Deshabandu Tennakoon. After this public revelation, the police stated that they had begun an investigation into the matter. The question is, why did the police wait until that public statement to begin an investigation? Surely, this can’t be the first time they heard the allegation against Messrs Alles and Deshabandu? Surely, Karunaratne would have made that allegation when the new Government came to power, and especially after Tennakoon fell out of favour?

That incident happened over a year ago. What happened to the promised investigation? Did it vanish into the Lankan version of Bermuda Triangle (where so many high profile investigations go to die) because it involved former minister Tiran Alles? After all, the Government has already demonstrated a worrying willingness to stretch/bend the law in favour of its own allies/favourites. If it can happen with monk Pallegama Hemaratana, it can happen with others too. If so state capture will have a new season, same drama, different actors.

What do they believe in?

During the 2025 Democratic primary debate for New York mayoralty, contenders were asked which foreign country they would visit first as mayor of New York. As on cue, every contender answered Israel. The only exception was Zohran Mamdani who said that as mayor of New York, he wouldn’t be visiting any foreign country; he’ll stay in the city and look after the needs of all New Yorkers, including Jewish New Yorkers.

The New York city has the largest Jewish population outside Israel. The received wisdom was that an absolute majority of these Jewish New Yorkers would not vote for a candidate who wasn’t pro-Israeli. Mamdani’s answer therefore carried a significant risk to his neophyte candidacy. Yet, he stuck to what he believed, refusing to lie for the sake of a win. That rare authenticity would become a key factor in his eventual victory.

The Sirisena-Wickremesinghe administration promised to end political murders, corruption and nepotism. It kept the first promise but failed to keep the other two. After a relatively successful first year, it began to go downhill. The reason was simple: the Government had no belief in its own mandate. It was, in that sense, a Government of unbelievers. And the Government leaders’ lack of belief in their own much touted promises caused the electorate to lost its own collective belief in the Government. Inauthenticity led not to victory but to defeat.

Chandrika Bandaranaike Kumaratunga deserves commendation for being the only national level politician with the courage to speak out about the Pallegama Hemaratana scandal. She recently attributed the silence on the part of almost all other politicians to their fear of losing votes. It might be more correct to say that politicians on both sides of the aisle are more fearful of antagonising a powerful vested interest group – the Sangha.

The Opposition’s promises regarding the rule of law, justice, and equality before law have become somewhat threadbare due to its past performance. But the Government had a reputation to lose, and showed no hesitation in losing it. In the Pallegama Hemaratana case which pitted a socio-economically powerful monk against a poor and an unprotected child, the Government sided instinctively with the elite accused rather than the non-elite accuser.

The case has come this far due to public pressure. Without that, the case would have been buried by the Government with the Opposition’s connivance. Monk Pallegama Hemaratana might still be the Atamasthanadhipati while Child X would have joined the ranks of victims for whom justice will always remain a goal too far.

This is not the most corrupt Government in history. That distinction goes to the Rajapaksas. This is not the most tyrannical Government in history. There are many contenders for that title. But this Government might gain both titles someday, because it shows a disturbing capacity to be cavalier about its weightiest pledges and principles. Already promises to abolish the executive presidency and the PTA are dead. Pallegama Hemaratana case indicates that the promise to end corruption and the principle of justice too can be abandoned. Only belief in one’s principles and promises can enable governments to withstand the creeping power of vested interests. And once vested interests succeed in state capture, any infamy becomes possible.

‘Do you believe in anything?’ Abdul El Sayed, epidemiologist turned Democratic senate candidate for Michigan rhetorically asked leaders of his own party during an appearance on the podcast I’ve had it. This is a question valid for all countries, a question that Lankan voters across the political divide should ask their leaders (including religious ones). Do you believe in anything or is power (and wealth) your only divine?

People’s Leasing and Finance PLC (PLC), Sri Lanka’s leading non-banking financial institution and subsidiary of People’s Bank, officially presented its 13th Integrated Annual Report for the financial year 2025/26 to People’s Bank Chairman Professor Narada Fernando at the People’s Bank Head Office on 22nd June 2026.

The Annual Report, themed ‘A Living Network,’ reflects the Company’s commitment to fostering meaningful connections among customers, employees, business partners, investors and communities while creating sustainable value through resilience, innovation and responsible growth. The theme draws inspiration from the interconnected mycelium networks found in nature, symbolising how strong relationships contribute to collective strength, shared prosperity and long-term sustainability.

Continuing its longstanding tradition of reporting excellence, People’s Leasing has published its 13th Integrated Annual Report with a strong focus on transparency, accountability, governance and sustainability. The report provides a comprehensive overview of the Company’s financial and non-financial performance, strategic priorities, value creation process and sustainable growth initiatives during the financial year under review.

This year’s report builds upon the innovative digital reporting initiatives introduced in the previous year, including the AI-powered video chat bot, AI-powered text chat bot, and a series of ten video-based report summaries designed to enhance stakeholder engagement and information accessibility. Expanding on this foundation, the current year introduces several advanced digital accessibility features that further redefine the corporate reporting experience. Leveraging cutting-edge technologies, stakeholders can now engage with the report through WhatsApp based interactions, AI-powered video chat bot, AI-powered text chat bot, series of ten video-based report summaries and dynamic financial data visualisations. Together with interactive QR code access and intelligent information retrieval capabilities, these enhancements create a more inclusive, accessible, and engaging AI-powered reporting ecosystem, enabling stakeholders to access and interact with corporate information anytime, anywhere, and in their preferred format.

Demonstrating its commitment to inclusivity, the report is further enhanced with AI-powered video summaries in Sinhala, Tamil and English, sign-language enabled content for hearing-impaired stakeholders and a specially developed Braille Report designed to improve accessibility for visually impaired audiences. These initiatives reinforce the Company’s vision of ensuring that corporate information remains accessible, understandable and meaningful to all stakeholders.

The report also marks the Company’s transition to full compliance with the newly introduced SLFRS S1 and SLFRS S2 sustainability disclosure requirements, further strengthening the quality, transparency and credibility of its sustainability reporting framework.

Over the years, People’s Leasing has earned widespread recognition for its reporting excellence, receiving numerous local and international accolades, including prestigious awards from ARC International Awards, CA Sri Lanka and other renowned institutions. The publication of the 2025/26 Integrated Annual Report further reinforces the Company’s position as a benchmark setter in integrated reporting within Sri Lanka’s financial services sector.

The presentation ceremony was attended by senior representatives of People’s Bank and People’s Leasing, underscoring the strong partnership between the two institutions and their shared commitment to creating sustainable value for stakeholders and contributing to the economic development of Sri Lanka.