Category: Daily Financial Times

Sri Lanka is better positioned than during its 2022 economic crisis to absorb a fresh energy price shock from the Middle East conflict, although high oil prices continue to pose risks to inflation, reserves, and growth, Moody’s Ratings said.

Moody’s said Sri Lanka, along with Bangladesh and Pakistan, remained among Asia’s most vulnerable economies to higher oil prices due to heavy reliance on imported energy.

However, the rating agency noted that reforms undertaken in recent years, including energy-pricing adjustments, cost-recovery tariffs under International Monetary Fund (IMF) programs, and more flexible exchange rates, had strengthened resilience compared with 2022.

The Middle East conflict is expected to keep energy markets volatile, with Moody’s central scenario projecting oil prices mostly within the $ 90-110 per barrel range during the remainder of 2026, although prices could move outside that range periodically.

High oil prices have already contributed to higher inflation pressures in Sri Lanka, but Moody’s said the impact has been significantly lower than in 2022 when oil prices surged following Russia’s invasion of Ukraine, worsening Sri Lanka’s sovereign default crisis.

‘Energy-pricing reforms, cost-recovery tariffs under IMF programs, and more flexible exchange rates have reduced vulnerability to oil shocks,’ Moody’s said.

The rating agency said exchange rates in Sri Lanka, Bangladesh, and Pakistan had remained relatively stable despite elevated energy prices, unlike in 2022 when currencies weakened sharply as authorities depleted reserves to defend exchange rates.

For Sri Lanka, the shift towards a more flexible exchange rate regime has reduced the risk of disorderly currency adjustments, although the rupee remains exposed to higher energy import costs.

However, foreign exchange buffers remain a concern. Moody’s said reserves in Bangladesh and Pakistan had remained broadly steady since the escalation of the Middle East conflict, while Sri Lanka’s reserves had declined as weaker tourism earnings combined with higher energy import costs weighed on external balances.

Despite this deterioration, the rating agency said foreign exchange buffers across the three economies were stronger than in 2022, when authorities rapidly depleted reserves to support currencies amid severe external pressures.

Remittances have also remained resilient, providing an important source of foreign currency liquidity. Moody’s noted that around half of remittance inflows to Bangladesh, Pakistan, and Sri Lanka originate from workers in the Middle East, but these flows have held up despite the conflict.

The agency said more market-based exchange rates had also encouraged workers to channel remittances through official banking systems, unlike in 2022 when currency collapses pushed inflows towards informal channels.

Moody’s has nevertheless lowered growth forecasts for Sri Lanka, Pakistan, and Bangladesh due to the impact of the Middle East conflict. For Sri Lanka (one basis point) and Pakistan, the revisions are smaller than in 2022, reflecting improved capacity to absorb external shocks.

For Bangladesh, Moody’s said the growth downgrade was larger as higher oil prices are expected to delay a post-election recovery in investment and confidence.

Sri Lanka remains exposed to external energy shocks, but Moody’s assessment indicates that reforms following the 2022 crisis have strengthened the country’s ability to withstand another period of elevated global energy prices.

For Bangladesh and Pakistan, Moody’s highlighted similar vulnerabilities, noting that all three economies remain dependent on imported energy and exposed to higher oil prices. However, unlike 2022, exchange-rate flexibility, improved policy frameworks, and stronger external buffers provide greater capacity to manage the shock.

Amid debate over whether Sri Lanka should lower its 5% inflation target, economists highlighted the competing considerations surrounding monetary policy, with Verité Research Executive Director Dr. Nishan de Mel arguing that the immediate credibility test was whether the Central Bank of Sri Lanka (CBSL) delivered whatever target it formally committed to, while Advocata Institute Chairman Murtaza Jafferjee stressed the heavy influence of food, energy, and supply-side factors on domestic inflation.

Speaking at a panel discussion on ‘Sri Lanka’s Future: Forecast, Scenarios and Challenges,’ organised by the Sri Lanka – Korea Business Council, Dr. de Mel responded to the proposition that a lower inflation target could be desirable by drawing a distinction between deciding the appropriate target and delivering the one already agreed.

‘Once you get into a gazetted agreement with the Government about inflation, you have to meet that. There is no management discretion here. These are the simple facts of accountability and competence,’ he said.

Dr. de Mel said the CBSL had missed its 5% inflation target by more than 200 basis points (bps) for eight consecutive quarters. The target was established under the post-crisis monetary framework, which granted the CBSL greater autonomy, while Sri Lanka’s debt sustainability projections were also constructed on the assumption that inflation would be managed at around 5%.

He rejected the proposition that undershooting should be regarded as acceptable simply because inflation was low, arguing that repeated misses had implications for the credibility of the target and the anchoring of expectations.

Dr. de Mel said the framework provided for explanations when inflation deviated sufficiently from target, similar to arrangements governing the Bank of England, but argued that Parliamentary scrutiny had not been strong enough.

‘We haven’t been able to get Parliament to ask good enough questions to rectify the problem. So it keeps getting missed and it’s getting a little bit complicated,’ he said.

The cost of missing the target extended beyond accountability, Dr. de Mel said, as the credibility of the CBSL’s commitment influenced how businesses and financial markets formed inflation expectations.

‘When inflation is anchored on the expectations set by society, it just becomes that without having to do very much and without having to raise interest rates too much,’ he said.

Conversely, when markets did not believe the CBSL would deliver its stated inflation objective, subsequent inflation could require a stronger interest-rate response.

‘This is a very, very high cost, the loss of trust,’ Dr. de Mel said.

He argued that market pricing provided a better indication of credibility than expressions of confidence in the CBSL by private sector participants.

‘The high real interest rates that we are asking is a sign that the markets don’t trust that inflation is anchored. That’s the problem we try to solve, but we haven’t solved it yet,’ he said.

Lower real rates were important for business investment, Dr. de Mel said, pointing to India’s combination of lower inflation and lower interest rates as a competitive advantage and arguing that Sri Lanka needed to create conditions for businesses to borrow at lower rates.

The inflation outcome also had implications for Sri Lanka’s post-default debt arithmetic.

Dr. de Mel said the actual Government securities yield curve was around 300 bps above the trajectory envisaged in the debt framework, while inflation had remained substantially below the assumed path.

Low inflation combined with high nominal interest rates had pushed real interest rates to among the highest in the region and increased the effective cost of domestic debt, he said.

‘When we get inflation wrong, when we get the yields wrong, we are in the wrong terrain for debt sustainability,’ Dr. de Mel said. ‘These have real consequences and I don’t think we should take them lightly.’

Not all deviations from the original economic trajectory had been adverse. Growth had exceeded earlier projections and current account outcomes had been substantially stronger than forecast, while exchange rate movements also affected debt dynamics. Higher yields and lower-than-assumed inflation, however, worked in the opposite direction.

Jafferjee brought a different consideration to the discussion, highlighting the composition of Sri Lanka’s inflation and the limits of conventional demand-side monetary policy in addressing some of its largest drivers.

He said inflation was heavily influenced by food prices, where exposure could not easily be reduced without structural changes, and by energy prices.

‘The thing is that our inflation is heavily influenced by food, which we really can’t protect unless we make structural differences, and energy prices. That has a huge impact,’ Jafferjee said.

He said conventional demand-side inflationary pressures also took time to work through the economy.

‘These classical demand-side inflationary pressures, it takes a bit of time to really play out,’ he said.

Jafferjee also cautioned against attributing inflation of around 2% simply to monetary policy, pointing to base effects as well as the influence of food and energy.

His comments highlighted the importance of food, energy, and supply-side factors in assessing Sri Lanka’s inflation performance, alongside conventional demand-side pressures.

For Dr. de Mel, however, the question of what level Sri Lanka ultimately chose as its inflation target remained separate from the accountability attached to delivering that target once agreed.

‘There should be absolutely no debate about whether it’s okay or not. It’s absolutely not. It’s a matter of accountability, it’s a matter of democracy, it’s a matter of responsibility,’ he said.

Dr. de Mel also called for stronger domestic economic analysis and more responsive forecasting, noting that several assumptions in Government-International Monetary Fund (IMF) projections had diverged from actual outcomes.

‘If you fail to plan, you plan to fail. But I think equally, if you’ve planned, when facts change, you must change your mind,’ he said.

He said Sri Lanka needed to build greater public sector capacity to analyse its economic trajectory independently and adjust policy as underlying conditions changed.

Softlogic Life has reported its strongest first-half performance to date for the six months ended 30 June 2026 (1HFY26).

Recording the highest increase in premiums amongst Sri Lankan life insurers, the company’s GWP grew by Rs. 7.2 billion year-on-year, lifting its market share to 20.3% as at Q2 2026, up from 18.4% for FY2025, a statement from the Company said.

Gross Written Premium (GWP) performance for the period reached Rs. 26 billion, a 39% year-on-year increase from Rs. 18.7 billion in 1H2025. Profit After Tax (PAT) stood at Rs. 1.46 billion, growing 20% over the first half of 2025, while Profit Before Tax (PBT) increased by 14% to Rs. 1.98 billion. The company maintained an impressive Return on Equity (ROE) of 39% and a Capital Adequacy Ratio (CAR) of 245% as at 31 December 2025, more than double the regulatory requirement of 120%, underscoring its financial resilience and long-term stability.

Softlogic Life’s financial position remained robust during the period, with total assets increasing to Rs. 81.6 billion as at 30 June 2026, while total equity reached Rs. 14.6 billion. Financial investments amounted to Rs. 61 billion, accounting for 75% of total assets, reflecting the company’s prudent investment strategy and investment in Government securities were 74% of the portfolio.

Reaffirming its position as Sri Lanka’s largest health and protection claims payer, Softlogic Life paid Rs. 10.4 billion in claims and benefits during the first half of the year, up from Rs. 9.1 billion in the corresponding period last year. Of this, over Rs. 7.2 billion which is more than half of all claims paid went toward health and protection claims alone, underscoring the growing role Softlogic Life plays in safeguarding the health and financial wellbeing of Sri Lankan families. This reflects the company’s core purpose: delivering greater quality of life to Sri Lankans, with meaningful financial protection and long-term peace of mind when it matters most.

Today, Softlogic Life protects more than 1.8 million Sri Lankans through over 870,000 active policies, up from 770,749 policies in 1H2025 making it the country’s largest life insurance provider by customer reach. The company’s sustained growth continues to be driven by a balanced portfolio of protection and long-term savings solutions, supported by an expanding distribution network and ongoing investment in customer experience and operational excellence.

This first-half performance builds on a period of transformative growth for Softlogic Life, including the completion of its acquisition of Allianz Life Insurance Lanka in July 2025 – the first life-insurer-to-life-insurer acquisition in the history of Sri Lanka’s insurance industry and more recently, its acquisition of a 60% controlling stake in Bangladesh’s Diamond Life Insurance in July 2026, marking the first overseas acquisition by a Sri Lankan Life Insurance Company, whilst being the first acquisition by a foreign insurer in Bangladesh. The Bangladesh acquisition marks the next phase of Softlogic Life’s growth strategy, as the company looks to replicate its proven Sri Lankan success, disciplined execution, product innovation, and sustained customer trust in a new regional market.

‘Delivering the industry’s largest absolute GWP growth, while remaining the country’s largest payer of health and protection claims, reflects the strength of our strategy and consistency of execution. We remain focused on sustainable growth, strong financial fundamentals and creating lasting value for our policyholders, shareholders and stakeholders. As the industry evolves, we will continue to strengthen our leadership through innovation, discipline and, above all, customer trust,’ said Softlogic Life Chairman Ashok Pathirage.

The first-half performance comes at a time when Sri Lanka’s insurance landscape is undergoing structural change. An ageing population, rising healthcare costs, and increasing awareness of long-term financial security are driving greater demand for comprehensive protection solutions. Against this backdrop, Softlogic Life continues to invest in strengthening its capabilities, recognising that the future of insurance extends beyond financial protection to supporting healthier, more financially resilient communities. Among these investments is the company’s recent product innovation, Health for Life, a health insurance solution without an expiration date or age.

‘Our first-half results reflect a business built on trust, disciplined execution and innovation. Health for Life is the present that is redefining protection for Sri Lankans, while our expansion into Bangladesh marks an exciting new future. We remain focused on deepening customer trust, expanding access to quality protection in Sri Lanka and taking our innovations and best practices to the region,’ said Softlogic Life Managing Director Iftikar Ahamed.

This strategic direction was reinforced at the company’s recent Investor Forum 2026, further strengthening Softlogic Life’s ability to respond to evolving customer needs while supporting sustainable, long-term growth. The company’s performance and brand strength continue to receive industry-wide recognition, reflected in a series of prestigious accolades, including Overall Silver Excellence in Corporate Reporting, Gold Awards for Insurance Sector Reporting and Digitally Transformative Reporting, and Silver Awards for Integrated Reporting and Sustainability Reporting at the CA Sri Lanka Annual Report Awards. The company also secured a Gold Award for Insurance Overall Excellence in Integrated Reporting, alongside four other main category awards, at the CMA Excellence in Integrated Reporting Awards. Further recognition includes Gold for Service Brand of the Year at the SLIM Brand Excellence Awards 2025 and the distinction of being the only Sri Lankan company to win AI Initiative of the Year at the 29th Insurance Industry Awards 2025.

Sounding the alarm against the recent severe threats on enterprises and Government organisations, Kaspersky recently tackled the visibility gap plaguing the Asia Pacific (APAC) region, and how Security Operations Centre (SOC) in the age of AI can help. It stressed one cannot defend what cannot be seen.

This was the main takeaway of Kaspersky’s annual media conference, APAC Cyber Security Weekend, with the theme ‘When Speed Outpaces Visibility’ held at Guangzhou, China

Headlined by the global cybersecurity company’s Asia Pacific Managing Director Adrian Hia, the event tackled one of today’s biggest cybersecurity challenges: attackers, backed by Artificial Intelligence (AI), are moving faster than organisations can see, understand, and respond.

‘As speed and connectivity reshape modern enterprises and organisations in the region, driven mainly by AI and its applications, security teams face growing blindspots across IT and OT environments. As a result, cybersecurity today is no longer just a race against time. It’s a race against invisibility,’ said Hia.

New era of cybersecurity

Hia tackled key cybersecurity trends Kaspersky is observing: AI-assisted attacks, cyber sabotage targeting infrastructure across IT and OT systems, and more sophisticated cyberespionage.

‘Last year, we detected and blocked half a million unique malicious files daily, which is 7% higher than in 2024. Recent cyberattacks across APAC show that the divide between the online and physical realms is completely gone. Recently, Nichirei Corp suffered a cyberattack that disrupted its logistics network. Meanwhile, India’s manufacturing sector has become an APAC hotspot for industrial ransomware, with groups consistently paralysing factory floors and industrial IT services,’ revealed Hia.

‘AI agents introduce a new supply chain layer-this year alone, Kaspersky has identified over 15,000 malware samples disguised as agentic AI software. Because agents dynamically depend on third-party frameworks, APIs, and plugins, a single compromised upstream dependency can cascade across downstream systems, dramatically expanding the surface for cyber sabotage and cyberespionage. As threats become AI-native and defences AI-powered, APAC organisations must look beyond just stopping attacks and ask whether they actually have visibility into what’s already happening inside their environments,’ he added.

Based on a new report from the Kaspersky Compromise Assessment division, in 31% of incidents that were analysed, malicious activity in organisations had been going on for over three months. Over half (52%) of high-severity compromises were only discovered after 90 days of going undetected, and the oldest incident identified over the last year remained undetected for as long as four years.

The findings point to a broader challenge in security operations. Many organisations have invested in security technologies, but technology alone cannot compensate for gaps in monitoring, detection, and operational readiness.

‘Our recent report highlights why a modern, unified SOC is becoming business-critical. When organisations rely on reactive security practices or lack continuous monitoring, attackers gain valuable time to move laterally, escalate privileges, and compromise critical assets. A mature SOC shortens that window by providing the visibility, expertise, and operational discipline needed to detect threats before they become major incidents,’ Hia said.

SOC built with AI expertise to restore visibility

As cybercriminals increasingly leverage AI to scale and automate attacks, defenders must do the same. Kaspersky has been combining AI with human expertise for the last two decades.

Since 2004, Kaspersky has built and refined advanced Machine Learning (ML) models trained on huge volumes of anonymised global telemetry, collected ethically and responsibly from millions of endpoints worldwide. This reservoir of high-quality data has enabled the company to develop and leverage on AI systems that are not only safe and accurate but also resilient to evolving threats.

‘AI isn’t an add-on at Kaspersky. For the past 20 years, AI has been embedded across our entire technology stack, enabling faster detection, smarter automation, and consistent protection. We have always believed that as cyber threats continue to evolve, the future of cybersecurity lies in the collaboration between AI and human expertise. It is not either or – it is HuMachine Intelligence, as we call it. It is the philosophy that has guided our innovation for years and will continue to shape how we protect organisations against the threats of tomorrow,’ Hia explained.

Companies that manage complex IT infrastructures and handle massive data volumes can leverage the comprehensive solutions from the Kaspersky Next product line, which provide real-time protection, full threat visibility, and robust EDR/XDR investigation and response capabilities. Generative AI models within the platform swiftly transform raw data into structured, actionable intelligence for security teams and decision-makers, enabling them to work more efficiently while reducing manual effort and bridging skill gaps.

Kaspersky also helps organisations restore their visibility through its managed security services such as Kaspersky Compromise Assessment, Kaspersky MDR and Kaspersky Incident Response, which cover the entire incident management cycle – from threat identification to continuous protection and remediation.

To enable a successful SOC deployment and ongoing maintenance, Kaspersky offers early engagement through it Kaspersky SOC Consulting during the initial setup or when enhancing your existing security operations. This comprehensive consulting service is designed to help companies build a robust SOC and streamline its processes.

Kaspersky ensures Cybersecurity True to Business, focusing on providing clear outcomes, protecting revenue, easing workloads and preventing downtime. Kaspersky’s deep threat intelligence and security expertise is constantly transforming into innovative solutions and services for organisations of every size, from small businesses to large enterprises, combining proven AI-driven protection technologies with simple management and expert support.

Recognised in independent tests and trusted by millions of individuals worldwide and nearly 200,000 organisations, Kaspersky helps detect threats earlier, respond faster and operate with greater confidence and freedom, protecting what matters most.

On a track that is beginning to assist the spinners gradually India placed themselves in a commanding position in the first cricket Test against Sri Lanka ending a truncated second day at 460-9 at the Galle Cricket International Stadium yesterday.

Play was not possible till 2.35 pm due to persistent rain and in the 43 overs that was possible for the day India added 172 runs for the loss of seven wickets to their overnight score of 288-2. Sri Lanka bowled a lot better, with their spinners being consistent with their lengths and the wickets column was a testament to that.

Debutant Keshara Nuwantha, trusted with the second new ball, removed Rishabh Pant for 39 for his maiden Test wicket and followed it up with Lokesh Rahul’s wicket. Rahul came to resume his innings after retiring hurt on the first day but was out for 82 (175 balls, 10 fours 1 six). Devdutt Padikkal continuing from where he left on the first day reached the 150-run mark before being deceived by a superb delivery from Prabath Jayasuriya to get out stumped for 167. He batted 339 minutes and hit 15 fours and one six in the 230 balls he faced.

At the tea break India had lost half the side for 364. Ravindra Jadeja became Nuwantha’s third victim after the break which brought Dhruv Jurel and Manav Suthar together. The duo forged a 55-run stand to take India’s total past 400. Jurel who got a reprieve on 29 from the Sri Lankan Captain Dhananjaya de Silva at slip went on to notch up a fifty (51 off 68 balls, 4 fours, 1 six) before de Silva made up for his early lapse by pulling of a stunning catch to end his knock.

Mohamed Siraj tried to be aggressive but perished for 11 to Asitha Fernando who bowled splendidly without much luck. Manav Suthar fell to Jayasuriya off the very next ball, but Sri Lanka couldn’t finish off the Indian innings as the final pair survived the last 17 balls of the day to take their team’s total to 460. Jayasuriya ended up as the most successful bowler with 4/109 off 36 overs. Batting is expected to get tougher as the Test progresses and Sri Lanka will face an uphill task to stage a comeback in this game.

The match resumes on the third day today at 9.45 am with a minimum of 98 overs to be bowled weather permitting.

Sri Lankan engineering and technology company ISF, with bold ambitions in manufacturing artificial intelligence (AI), last week launched the world’s first fully automated coconut de-watering system.

The system improves productivity, reduces labour dependency, and addresses operational inefficiencies across the coconut processing industry, while improving return on investment.

Designed and manufactured in Sri Lanka by local engineers, the system automates a process that has traditionally relied on manual handling.

The system was unveiled through a live demonstration attended by Science and Technology Minister Prof. Chrishantha Abeysena, diplomats representing ISF’s key international markets, industry leaders, and members of the media. Participants were given the opportunity to observe the technology in operation and understand the key benefits it offers to coconut processors.

ISF Director Anjula Sivakumaran said: ‘I am proud to have designed, tested and launched this automated coconut de-watering system. My clients in Indonesia and the Philippines are delighted with this innovation, and this particular machine will be shipped to the Philippines in a few weeks. My team of engineers will be travelling there to oversee the installation and provide after-sales support.’

‘This forms part of my vision to help regional and local firms to automate their operations so that they can compete globally. I also want to realise this vision by leveraging Sri Lanka’s outstanding engineering talent. In doing so, we will help customers achieve their commercial goals through a very short return on investment. What ISF does extends beyond coconut de-watering,’ Sivakumaran added.

‘We continue to develop technologies across the entire coconut processing value chain, including dehusking, deshelling, and paring. By combining engineering expertise, automation, and AI, I aim to create solutions that solve difficult business problems. I am proud that we continue to invest in pioneering technologies through extensive research and development, while working closely with our global partners,’ she said.

Established in 1977, ISF has evolved from a manufacturing company into a provider of complete technology, engineering, automation, and process solutions serving the dairy, coconut, food, pharmaceutical, chemical, and fast-moving consumer good (FMCG) industries.

‘It’s a new world,’ Sivakumaran said. ‘My goal is to help transform companies in Sri Lanka and across the region to global standards at a fraction of the cost charged by Western technology companies.’

Bangladesh continued to impress in the ICC World Test Championship with a superb nine-wicket victory against the current WTC table-toppers Australia in Darwin.

With this landmark win, Bangladesh are now placed fourth in the WTC standings with 66.67 PCT.

Opting to bat first, Australia could not get going against the pace attack of Bangladesh as Hasan Mahmud got rid of both the openers.

The visitors continued to attack with wickets at regular intervals with just Steve Smith showing some resilience for the former World Test Champions.

Australia eventually folded out for 198 with player of the match Mahmud delivering a memorable spell (6/55) that set up things nicely for Bangladesh.

Bangladesh’s reply in the first innings with the bat was led by opener Tanzid Hasan’s magnificent century (101 off 197 balls) combined with Captain Najmul Hossain Shanto’s 84 off 126 balls.

A crucial contribution of 65 off 154 balls by Mehidy Hasan Miraz overshadowed Josh Hazlewood’s six-wicket haul as Bangladesh were bowled out for 426.

Mahmud continued to impress in the second innings as well as he removed the Australia openers cheaply again giving Bangladesh the dream start.

With a hefty lead lead of 228, spin played a significant role for the visitors as Mehidy took charge with a wonderful five-wicket haul.

Cameron Green (104 off 201 balls) waged a lone battle but the Shanto-led side gave little away as Australia were bowled out for 284 runs.

Requiring just 57 runs to win, the visitors got there with nine wickets to spare marking a significant moment in Bangladesh cricket.

The historic win came up after Bangladesh were skittled out for 54 runs in the warm-up match against Cricket

Australia XI.

Shanto, who was determined to put up a fight against a challenging Australia side, credited the team after the momentous victory.

‘Very happy, proud of myself and the way the boys played. We did lot of hard work,’ he said during the post-match presentation, calling it the biggest Bangladesh win across formats.

‘Earlier, five years ago, pacers didn’t want to play Tests. But we’ve been playing lots of Test cricket and they are giving importance to Test format.

‘They want to play, want to perform, want to be world-class. That is the mindset they now have.

‘This is the biggest win so far for Bangladesh in any format. Going forward, we want to do something special in the future.’

Parliament’s Committee on Public Finance (CoPF) has called for a review of the cost structure of Sri Lanka’s liquor security sticker system, questioning why digital codes are charged at the same rate as physical stickers despite their lower production cost.

The CoPF, chaired by MP Dr. Harsha de Silva, examined the cost, technical standards, and fiscal benefits of the system, which was introduced following the 2016 Budget to curb untaxed and counterfeit liquor and safeguard excise revenue.

The contract was awarded in 2017 to Indian company Madras Security Printers (MSP). The system was subsequently expanded in 2021 to permit digital inkjet codes to address difficulties in applying physical stickers on high-speed liquor production lines.

However, the Committee was told that the fee of $ 5.99 per 1,000 paper stickers is also charged for 1,000 digitally printed codes.

The CoPF noted that while initial infrastructure costs for digital printing machinery at bottling plants had to be considered, digital codes would generally cost less than paper stickers. It therefore called for a review of the existing pricing structure and the economic benefits accruing to the Government.

The Committee also called for the adoption of relevant international ISO standards and a Track and Trace system covering liquor products from production to the consumer, alongside a mobile application allowing consumers to verify product authenticity.

With a new tender process under consideration, the CoPF stressed that evaluation should cover price, quality, data security, and technical standards, with officers possessing the required technical expertise included in the evaluation process to guard against counterfeit stickers and imitation.

The Excise Department was instructed to study international practices and submit a report to the Committee.

In the latest July 2026 round of the Gallup-style ‘Mood of the Nation’ poll conducted by Verité Research, the Government’s approval rating moderated to 50%, following a post-election high of 65% in the previous February 2026 round. The polling partner was Vanguard Survey Ltd.

Perceptions of the economic outlook reduced sharply. Those who think the economy is ‘getting better’ declined to 42% from 64% in the previous round. Those who said it was ‘getting worse’ increased to 40%, and those who said they disapproved of Government increased to 31%, both from around 15% in the previous round.

Over half, 56%, said that the current economic conditions in Sri Lanka are ‘poor.’ Only 38% said conditions are ‘good’ or ‘excellent,’ in contrast to the previous round where a majority said so.

The net rating on the economic outlook and the state of the economy are averaged to create an Economic Confidence Index ranging from -100 to +100. This was -39 in mid-2024 but came into positive territory after February 2025, and declined to -8 in this round of polling.

The precise phrasing of questions and response percentages to two decimal points on this ‘Mood of the Nation’ survey are detailed below. They add up to less than 100 because some percentage said they did not know or refused to answer.

*Government Rating | ‘Approve’ 49.83% | ‘Disapprove’ 31.40% | In response to the question, ‘Do you approve or disapprove of the way the current Government is working?’

*Economic Outlook | ‘Getting Better’ 41.63% | ‘Getting Worse’ 40.29% | In response to the question, ‘Do you think that the economic conditions in the country as a whole are getting better or getting worse?’

*State of the Economy | ‘Good’ or ‘Excellent’ 38.00% | ‘Poor’ 55.59% | In response to the question, ‘Rate the economic conditions in the country today as either excellent, good, or poor.’

These questions were different from those in other recent national surveys published. For instance, the ‘Social Indicators Survey’ said it asked about satisfaction with specific political figures or groups, and reported satisfaction with the President and Prime Minister as 76% and 68%, and satisfaction with ‘MPs of the ruling party’ as 45%. The ‘Mood of the Nation’ survey, in contrast, asked about approval of Government as a whole, and got a result of 50%, which is close to the response on ruling party MPs in the ‘Social Indicators Survey.’

The regularly conducted ‘Mood of the Nation’ poll is part of the Sentiment Survey instrument of Verité Research, and enriches its regular macro-political briefings. The instrument allows other organisations to add survey questions to check the sentiments of Sri Lankans. More details on the polling results are available to clients.

The latest poll was administered between 11 and 30 July based on a nationally representative, multi-stage, randomised sample of 2,013 Sri Lankan adults from separate households. This survey was designed to have a maximum sampling error margin of ±2.21% for the full sample at a 95% confidence level. Error margins can be further affected by lapses that could arise in the implementation process.

Unlike most economic forums where the spotlight falls on Government policy and reform, a discussion on Sri Lanka’s economic future turned the focus on the private sector.

Verité Research Executive Director Dr. Nishan de Mel described the economy as a ‘racket’ marked by tax non-compliance and high real returns to those with financial assets, while Advocata Institute Chairman Murtaza Jafferjee said economic policy was effectively shaped for about 1,000 people and called for greater competition to change the status quo.

Speaking at a panel discussion organised by the Sri Lanka – Korea Business Council on ‘Sri Lanka’s Future: Forecast, Scenarios and Challenges,’ the two economists highlighted structural constraints facing the post-crisis economy.

Jafferjee argued that substantial macroeconomic reforms had already been undertaken but competition, productivity, and trade remained critical to growth, while Dr. de Mel cautioned that growth which failed to improve the lives of the majority would ultimately prove unsustainable.

Dr. de Mel said Sri Lanka spent less than most countries on welfare, with the International Monetary Fund (IMF) having to push the country to spend 0.6% of GDP, which he said remained below levels in many poorer countries.

‘We have a country-and this is why I said it’s a racket-the people who earn don’t pay taxes,’ he said.

He pointed to the substantial revenue generated from withholding taxes (WHT) as an indication of weaknesses in wider tax compliance. If taxpayers were already fully declaring and paying their liabilities, increased WHTs should largely be deductible against final tax payments rather than producing a substantial increase in overall revenue, he argued.

Dr. de Mel had earlier used the ‘racket’ description when discussing the impact of high real interest rates and taxation. He said low inflation alongside high interest rates disproportionately benefitted those with substantial savings, while people dependent on wages faced higher taxation, including 18% Value Added Tax (VAT), with Government revenue in turn used to service interest payments.

‘This is a racket in which people like us, you know, benefit enormously on the backs of those who see very little benefit of the economy,’ he said.

Jafferjee said Sri Lanka’s productivity problem was closely linked to inadequate competition and the influence of a narrow group of interests over economic policy.

He said, figuratively, that economic policy was effectively shaped for about 1,000 people, rather than referring to a literal list of individuals, arguing that policies had frequently been framed and implemented to accommodate incumbent interests.

‘The main determinant of productivity is competition,’ Jafferjee said.

At the same time, he rejected the perception that little reform had taken place following the economic crisis.

‘If not for this crisis, there are so many things that were fixed in this country on the macro side that would have never been possible,’ Jafferjee said.

He cited the new Central Bank law, Fiscal Management Act, and Public Debt Management Act as three crucial pieces of legislation, alongside changes in governance and tax administration. Significant technical assistance had also been undertaken as part of the IMF-supported reform program.

Jafferjee pointed to increased scrutiny by tax authorities of assets, including overseas accommodation, art, and gems as evidence of changes in revenue administration.

He identified productivity, competition, and the structure of the economy as key challenges beyond macroeconomic stabilisation and legislative reforms.

The State-owned enterprise (SOE) footprint was part of the problem, with State enterprises capable of distorting competitive neutrality where they operated alongside private businesses, he said.

Jafferjee called for more competition, liberalisation of imports and exports, a reduced SOE footprint, and greater foreign direct investment (FDI).

‘We don’t need FDI because we need capital, we need knowledge,’ he said.

Sri Lanka also needed to reconsider its approach towards domestic production and international trade.

‘What people misunderstand in Sri Lanka is there being a need to produce what Sri Lanka needs. What Sri Lanka needs to do is to produce what the world needs,’ Jafferjee said.

Contrasting Sri Lanka with East and Southeast Asian economies, he said successful export economies were also substantial importers and more integrated into international production networks. Sri Lanka’s economic complexity ranking had improved only from around 89 to 83, while Vietnam had advanced from around 65 to 45.

Trade agreements and economic diplomacy were important to expanding Sri Lanka’s integration with international markets, he said.

Jafferjee also identified the diaspora as a source of knowledge needed to diversify production. Sri Lankans who had spent long periods working in overseas companies could bring expertise, corporate networks, and knowledge of international markets, he said.

Several institutional changes to facilitate greater private sector participation were also progressing. Jafferjee said an insolvency framework was due to come into force in December, while public-private partnership (PPP) legislation was at an advanced stage and would enable greater private sector participation. Reforms were also envisaged for the commercial management of SOEs.

He acknowledged that the previous SOE restructuring process had failed to complete proposed transactions, but rejected the conclusion that reform efforts had been absent.

Jafferjee attributed the failure partly to efforts to ensure due process following previous Supreme Court decisions reversing privatisations where procedures had been questioned. The process had to balance transparency with practicality, he said.

The political timetable subsequently ran out ahead of the Presidential Election, while bureaucratic willingness to complete transactions diminished as the election approached.

Jafferjee also flagged structural labour constraints, noting that annual births had fallen from around 370,000 to about 240,000, around 20% of certain young working-age cohorts appeared to be missing largely due to migration, and female labour force participation remained around 30% despite women comprising a larger share of university students.

Large numbers of workers also remained in low-productivity employment, requiring improvements in skills and technology, economic restructuring, and greater competition, he said.

Dr. de Mel, meanwhile, said growth had to be assessed against its impact on living standards.

Poverty had more than doubled from around 14.3% to close to 29-30%, adding that even if it had since fallen into the lower 20s, the increase remained substantial. Available Employees’ Provident Fund (EPF) data showed 92% of formal private sector employees earned less than Rs. 100,000, he said.

He called for greater attention to healthcare, education, and other support structures for lower-income households.

‘Growth that doesn’t make the lives of people, the majority, better off, ends up, like in lots of places, biting back, even on those who benefit from that kind of growth,’ Dr. de Mel said.

He also questioned development priorities centred on expensive road infrastructure and increased private vehicle use while public transport remained underdeveloped.

‘Putting more roads at very high costs and more cars on the roads are not the solution,’ he said.