Category: Daily Financial Times

Sri Lanka Tourism marked yet another milestone with the arrival of an important flight from Kazakhstan – a pleasant Christmas surprise, as the aircraft landed on 25 December itself. The special flight was operated by Air Astana, the national carrier of Kazakhstan, in collaboration with LSR as the ground handler.

This inaugural flight for the 2025/2026 winter season carried 166 passengers aboard an Airbus A321. Air Astana will continue operations until March 2026, with two weekly flights (Monday and Thursday) connecting Almaty, the capital of Kazakhstan, to Bandaranaike International Airport, Colombo.

The arrival was celebrated with a traditional water salute, with the passengers greeted warmly and escorted through a vibrant cultural dance troupe, which showcased the island’s rich traditions and colorful heritage. Souvenirs were presented to mark the occasion, leaving visitors with a lasting impression of Sri Lanka as a welcoming paradise.

Sri Lanka Tourism emphasised that the country offers a 365-day destination experience, where diverse travel opportunities can be enjoyed within a single day’s journey. This accessibility and variety provide exceptional value for international visitors.

Kazakhstan, as part of the East European region, is now recognised as an emerging market for Sri Lanka. Arrivals such as these will help spread Sri Lanka’s uniqueness as a premier travel destination across the region, beyond its traditional source markets.

From 1 January to 25 December, Sri Lanka recorded 2,298,987 tourist arrivals, underscoring the strong recovery and superb impact of tourism on the nation’s economy.

Defending League champions Kandy Sports Club delivered a chilling reminder of their dominance with a crushing 91/3 victory over Sri Lions Sports Club in their Inter-Club Rugby League 2025/26 encounter, which was worked off at Longdon Place last weekend.

Remaining unbeaten, Kandy ran in an astonishing 15 tries to register one of the heaviest winning margins in recent domestic rugby history and issue a strong warning to their title rivals.

Coming off a rare draw against CH and FC last weekend mainly due to poor refereeing, the champions had a clear point to prove and responded in emphatic fashion. Despite being without four of their leading players – Kavindu Perera, Srinath Sooriyabandara, Dilshan Fareed, and Heshan Jensen – depth, structure, and attacking sharpness were on full display, as they dismantled Sri Lions with relentless pace and power.

The rout was built on a devastating first half, in which Kandy raced to a 39/3 lead. Fly-half Asiri Seneviratne set the tone with an early try, converted by Shaahid Zumri, before wingers Dinal Ekanayake and Gayan Perera struck in quick succession. Sri Lions’ only reply came through a Nathan Gunaratne penalty, but Kandy swiftly sealed the bonus point and continued to pile on the pressure.

No. 8 Dahan Wickramaarachchi was outstanding, producing a barnstorming display to cross for four tries, repeatedly breaking tackles and dominating at the gain line. Ekanayake and Perera were equally lethal out wide, completing hat-tricks as Kandy’s backline carved open the defence at will.

The champions showed no mercy after the restart, adding eight more tries through Wewala Panditha, Diluksha Dange, and a further brace from Perera, with Zumri and replacement fly-half Rivin Baudaveen, the former Kingswood youngster, showing good consistency in kicking, keeping the scoreboard ticking.

Veteran centre Danushka Ranjan’s late try capped a remarkable performance. Even without several key stars, Kandy SC’s overwhelming display underlined their unmatched depth and consistency, reinforcing their status as the team to beat and sending a clear warning that the title will once again run through Nittawela. The only worry remaining for their Head Coach Fazil Marija is of the kicks at goal and penalty conversions.

Referee Nalin Lasantha officiated the game.

The late Dr. Amal Utum Herat, Utum to everybody, ex-Deputy Governor of the Central Bank, was a Jack of all Trades and also a Master of Everything. He did excellently in everything he practised.

He was a lay preacher at his Methodist Church in Mount Lavinia, UK-qualified management accountant, master of ceremonies, public speaker, visiting university Don, international civil servant, and an economist par excellence, to mention but a few of the hats he wore simultaneously. Above all, he was a Granda Homo with exceptional human qualities and principles.

I recall how he responded when the Colombo University administration changed the coordinator of its MBA degree program in early 1991. Utum was the lecturer in managerial economics for the MBA students. He felt that there was injustice done to the MBA coordinator when he was removed from the position without following due process. Following the rebellious path which the youth of his age would follow, he protested to the Vice Chancellor in writing and withdrew from the program. With no suitable replacement in sight, the University in desperation reached out to the Central Bank for a solution. The Governor of the Central Bank at that time, the late Nevile Karunatilake, who earlier had helped the University to setup its Graduate Diploma in Business Administration, forerunner to the MBA program, practically ordered me to fill the gap leaving me with no choice. Perhaps, he zeroed on me because I was a pioneering lecturer in that Graduate Diploma program and had taught environmental economics to Colombo University’s Master’s degree students, two positions I held with Karunatilake’s approval when he was the Senior Deputy Governor. When I told Utum that I had to fill the gap he had created, he blessed me wholeheartedly and even supplied me with a copy of the textbook he had been using for his lectures. I did the lectures, but I am still doubtful whether I was a matching replacement to Utum whose lecturing qualities were unparalleled.

Dr. Utum Herat

A man of a combination of many disciplines

Utum met his untimely demise in 2009 whilst in service, the second Deputy Governor to do so in the annals of the Central Bank. Simultaneously, he held two other positions as well, Chairmen of both the Institute of Bankers of Sri Lanka and the Credit Information Bureau of Sri Lanka.

When I heard the sad news of his demise, I wrote an appreciation of Utum’s contribution to the bank and the nation and it was carried by the Sunday Times. In this appreciation, I summarised Utum’s intellectual traits as follows: ‘Utum’, I wrote, ‘was a combination of many disciplines: mathematics, statistics, finance, accountancy, economics, philosophy, religion, history and many more. A brief conversation with him will leave any stranger in awe, respect and love for the rare intellect, fittingly conditioned by modesty and humility, which he normally displays. He had the remarkable ability of patiently listening to the viewpoints of others, quickly synthesising the main arguments and approving or refuting them without offending or hurting their feelings. He was a master debater, mesmerising preacher and spellbinding speaker. Anyone who had listened to him once would love to do so repeatedly. Many generations of students who had studied under him at universities, professional bodies and numerous other places of learning will vouch for this fact’

A statistician cum management accountant

Utum, after completing his school education at S. Thomas College in Mount Lavinia, joined the University of Jaffna to read for a special degree in statistics. However, the ethnic conflict that broke out at that time forced the authorities to relocate non-Tamil students in Jaffna University in universities in the South of Sri Lanka for their own safety. Accordingly, Utum and his colleagues in that particular course were admitted to the University of Sri Jayewardenepura to complete the degree. Utum passed out from the University with first class honours. By this time, he had completed the final exam of the UK-based Chartered Institute of Management Accountants too. He joined the Central Bank armed with these two qualifications. Naturally, based on his core discipline, in the Central Bank, he was assigned the work relating to the compilation of economic and social statistics of the country.

Late entrant to economics

Utum was a late entrant to the science of economics having embraced the ways of that dismal science only after he joined the Central Bank. However, he was a quick learner and, therefore, could master the core of that discipline much faster than any other learner. His multi-disciplinary background may have helped him to understand the foundation and the underlying philosophy of economics. In public as well as in private discussions, when an economic issue was posed to him, he was able to clarify it with examples drawn from religion, politics, philosophy or even mathematics. In many respects, he was a Guru to us in the Central Bank. Though he was junior to me by many years in the Central Bank, both of us had a very close intellectual relationship, sometimes he functioning as my Guru and me his protégé and me as his Guru and him my protégé. He was a firm believer in the free-market economy, free trade, and individual liberty as pillars for creating wealth and prospering sustainable growth. His public lectures, discussions, writings had displayed his unambiguous position on these key areas of economics.

Doctoral study at Purdue University

On a Central Bank scholarship, Utum proceeded to the USA for his postgraduate studies and joined the Graduate School of Purdue University to complete his master’s degree in economics. Based on his excellent performance at the Master’s degree, he was promptly admitted to the Doctoral program there. On completion of the required coursework and the submission of a thesis titled ‘An Investigation of the Impact of Some Recent External and Internal Shocks on the Economy of Sri Lanka’, Utum was awarded PhD degree in 1990.

Quantification of welfare impact of capital flows and unfavourable terms of trade

Utum’s doctoral thesis consisted of two parts.

In Part I, he used the data for Sri Lanka from 1972 through 1985 to assess the impact of capital flows to Sri Lanka and the changes in the terms of trade, in the presence of economic distortions such as tariffs and taxes that were abundant at that time, on the welfare levels of people. Theoretically, high capital inflows are regarded as a positive external shock and a worsening terms-of-trade, a negative external shock. When the capital inflows increase, the country gets an opportunity to invest more to utilise a higher level of resources to produce goods and services. It should naturally improve the welfare levels of the people.

The terms of trade represent the amount of export goods needed to bring in one unit of imports to the country. When the import prices rise relative to the price of exports, more exports should be used to buy one unit of imports. It reduces the welfare levels of people because people had to make a bigger sacrifice to enjoy foreign goods. Sri Lanka had an unfavourable terms-of-trade during this period, indicating that the country should expend more export units to buy a single unit of imports. For instance, suppose that at the beginning Sri Lanka could import one barrel of crude oil by exporting one shirt. If the crude oil prices go up or export price of shirts go down or both happen simultaneously, Sri Lankans should send out more shirts to buy the needed crude oil. Both are negative external shocks, and they surely reduce the welfare levels of people.

This had been known to economists for a long time, and there was nothing new in representing it. But Utum through his research quantified the extent of sacrifice by using Sri Lankan data and found that they validated the already known facts. The policy requirement arising from these unfavourable developments was that Sri Lanka should strive to get more capital inflows, on one side, and shift the exports to items whose prices rise faster than those of import goods, on the other. Unfortunately, even today, Sri Lanka has not been able to accomplish these policy requirements.

Vindication of the Mahaweli Project

In Part II of his thesis, Utum sought to assess the welfare implications of the accelerated Mahaweli Project that was being implemented by the Sri Lankan Government with support from the World Bank and friendly countries. The project itself was an internal shock involving the utilisation of a massive amount of capital inflows to the country. Utum hypothesised the welfare levels of people with the project by spending the capital inflows on the project as well as by distributing that money as endowments to people without implementing the project.

The results he got were mixed. He had found that by implementing the accelerated Mahaweli Project, Sri Lanka was able to increase employment levels and reduce consumer prices, especially food prices. However, since the project did not produce goods that could be exported, non-tradable goods in the parlance of economists, its contribution to improve the worsening terms of international trade was minimal. However, with declined consumer prices, it would have improved the terms of domestic trade in which one had to spend lesser amount of labour to buy a given quantity of consumer goods.

The alternative assessed by Utum, namely, the distribution of the moneys directly among consumers as Government subsidies, resulted in the increase in the incomes of the rural people, but the overall welfare levels of people did not increase sufficiently. That increase was the highest with the implementation of the accelerated Mahaweli Project. Therefore, the internal shock delivered to Sri Lanka’s economy through the Mahaweli Project was fully vindicated, according to Utum’s findings. In hindsight, we all know that the Mahaweli Project increased rice production, making Sri Lanka self-sufficient in this staple food, added to the electricity generation in leaps and bounds preventing long blackouts and brownouts, and helped the country to boost the services sector of the country through improved retail and wholesale trade.

Utum was a combination of many disciplines: mathematics, statistics, finance, accountancy, economics, philosophy, religion, history and many more. A brief conversation with him will leave any stranger in awe, respect and love for the rare intellect, fittingly conditioned by modesty and humility, which he normally displays. He had the remarkable ability of patiently listening to the viewpoints of others, quickly synthesising the main arguments and approving or refuting them without offending or hurting their feelings. He was a master debater, mesmerising preacher and spellbinding speaker. Anyone who had listened to him once would love to do so repeatedly. Many generations of students who had studied under him at universities, professional bodies and numerous other places of learning will vouch for this fact

Founding secretary to the monetary policy committee

I had the advantage of being associated with Utum closely for nearly two and a half decades and picking up wisdom from him regularly. He was the founding Secretary to the Monetary Policy Committee which the Central Bank had setup as a part of its modernisation program.

This was an informal arrangement since there was no legal backing for such a Committee under the Monetary Law Act under which the Central Bank has been setup. Hence, our role was purely advisory. I was its Chairperson as the Deputy Governor in charge of monetary policy and price stability. Two of us, as the drivers of the monetary policy in the bank, had a very cordial and fruitful relationship. Utum held this position as the Deputy Director of Economic Research handling the monetary policy portfolio. We met every month to assess the monetary policy stance in the light of the emerging inflation developments and make suitable recommendation to the Monetary Board of the Central Bank for adoption.

As is normal for any committee made up of intellectuals, there was differences of opinion among members as to the suitable monetary policy stance and there were even heated arguments at those meetings. I recall Utum made no bones about the true culprit of unsustainable inflation in the country, namely, the reckless Government expenditure by using credit sources from the Central Bank and commercial banks. The papers submitted to the Committee under his supervision were lucid, to the point and sharp on the policy recommendations. Utum was able to carry his viewpoints through those heated debates by aptly clarifying the issues involved. I recall that all the policy papers submitted to the Monetary Board during that period had recommended to the Government that it should go slow on using the Central Bank money for its callous expenditure programs. Some of them were adopted and some of them were rejected by the Treasury Official who used his informal veto as a vote carrying member of the Board. Fortunately, today, under the new Central Bank Act, the Treasury Official has no role in deciding on the monetary policy to be adopted by the Central Bank.

International civil servant at IMF

Utum was eventually elevated to the position of the Director of Economic Research, but he could not serve in that capacity for long. That was because he was picked by the Government to serve as the Alternative Executive Director of IMF representing the constituency made up of India, Sri Lanka, Bangladesh, and Bhutan. It was a career he performed as an international civil servant. He had to travel frequently in the member countries involved to address the issues faced by them on site. After completing his turn at the IMF, Utum returned to the Central Bank to be promoted as Assistant Governor and later as Deputy Governor. It is during this period that he suddenly fell ill and succumbed to his illness.

A worry-free human being

As a human being, Utum led a ‘worry-free’ life. He would have been driven to this state by his deep religious convictions. To my knowledge, he had only two worries, both relating to his name. One was the long list of initials in his name, numbering six. Though his passport carried his full name, every time when he travelled abroad, he had the difficulty of writing his full name in the immigration forms which did not have sufficient space to accommodate it. The other was the spelling of his surname, Herat, which the computer automatically changed to Heart. Perhaps, the inanimate computer would have been correct, because we as well would have wrongly spelt his name all the time when Utum was a big ‘Heart’ for all of us.

In my view, Utum was an unsung hero in the Central Bank.

A financial contribution of Rs. 200 million has been made by Prime Lands to the ‘Rebuilding Sri Lanka’ Fund, which was established to restore the livelihoods of people affected by Cyclone Ditwah and to rebuild the country following the disaster.

The cheque was handed over last week to the Secretary to the President Dr. Nandika Sanath Kumanayake by Prime Lands Group Chairman Premalal Brahmanage and Co-Chairperson Sandamini Perera. Prime Lands Group CEO Ruminda Randeniya and Director Anura Pathirage were also present

ITOCHU Corporation, S and D Chemicals Ltd, Irrigation Engineering Diplomates Association and Sciences and Information Technology City Campus donated Rs. 14.1 million to the ‘Rebuilding Sri Lanka’ Fund, established to restore the livelihoods of people affected by Cyclone Ditwah and to support the reconstruction of the country following the disaster.

ITOCHU Corporation General Manager Mikinga Hotta donated Rs. 2 million. S and D Chemicals

G.G.A. Dayantha De Silva donated Rs. 10 million, W.J. Priyantha, on behalf of the Irrigation Engineering Diplomates Association, contributed Rs. 1.1 million and Sciences and Information Technology City Campus CEO Cader Rahmathulla, donated Rs.01 million.

The relevant cheques were handed over to the Secretary to the President, Dr. Nandika Sanath Kumanayake, last week.

Sri Lanka’s domestic apparel industry gathered at a critical moment in the country’s economic recovery as the Sri Lanka Apparel Brands Association (SLABA) hosted its annual flagship event recently at Port City, bringing together leading apparel brands, suppliers, and industry partners for an evening of strategic reflection, data-driven analysis, and forward-looking dialogue.

The event, titled ‘Reconnect with SLABA-Exclusive Evening with Industry Knowledge,’ marked a milestone for the Association as it reinforced the growing maturity of Sri Lanka’s homegrown apparel brands and their increasing engagement with broader macroeconomic and policy debates.

The discussions underscored an industry at a crossroads, facing fragile economic stability, but also a rare opportunity to reposition itself through reform, innovation, and global competitiveness.

Of the evening’s key features were two keynote addresses under the theme ‘The Real Economy: What Every Apparel Entrepreneur Should Expect in the Next Three Years,’ which placed the sector’s business outlook squarely within the context of the country’s fragile economic stabilisation.

Deep reforms and competitive markets

Advocata Institute Chairman Murtaza Jafferjee delivered a wide-ranging assessment of the economy, cautioning that while Sri Lanka has moved out of the acute phase of crisis into a period of relative macroeconomic calm, the foundations of stability remain weak.

He warned that without deep structural reforms, increased competition, and a decisive break from inward-looking policy approaches, the current stability would not translate into sustained growth.

Jafferjee framed his analysis through Michael Porter’s competitiveness framework, arguing that Sri Lanka has long misunderstood the difference between competition and competitiveness. ‘Competition is merely participation in the market, while competitiveness is the ability to innovate, upgrade, and consistently deliver higher value,’ he said.

Using a vivid analogy, he told the audience that ‘getting into the ring is competition, but winning the fight is competitiveness,’ stressing that long-term success depends on productivity gains and innovation rather than protection.

Domestic consumers not sophisticated enough to drive upgrades

Jafferjee cautioned that Sri Lanka’s domestic market does not exert sufficient pressure on apparel brands to move up the value chain.

Citing findings from a recent consumer survey, he said local buyers rarely demand advanced quality, design, or innovation, observing that consumers care far more about food choices than clothing.

‘This lack of consumer sophistication weakens the incentive for firms to invest in design, branding, and technology,’ he argued.

For an industry aspiring to compete globally, Jafferjee emphasised that openness is essential.

He warned that restricting imports in the name of protecting local firms only dulls competitive pressure and undermines long-term strength.

According to him, genuine upgrading is impossible unless consumers are free to choose, forcing producers to improve or exit.

External accounts improving but for the wrong reasons

Turning to macroeconomic conditions, Jafferjee provided a detailed breakdown of Sri Lanka’s external accounts, noting that the current account surplus is largely the result of suppressed import demand due to economic contraction, particularly in investment goods.

He stressed that this should not be misread as economic strength. ‘This is not a victory; it is the economy shrinking,’ he said, adding that strong remittances, tourism inflows, and unusually high vehicle-related tax revenues were masking deeper structural weaknesses.

‘We are measuring stability against a very high crisis-era base,’ he said, warning against complacency.

Jafferjee described the recent surge in luxury vehicle imports as economically irrational, yet acknowledged that extremely high taxes on these imports have temporarily boosted Government revenue.

‘Inflation appears stable on a monthly basis, but this is partly a statistical effect resulting from comparisons against an exceptionally high crisis-era base, warning that policymakers and businesses should not mistake this for lasting price stability,’ he said.

Responding to claims that Sri Lanka’s reserves remain dangerously low, Jafferjee said public debate often misunderstands the distinction between headline reserves and usable reserves.

While some components, including swap-linked Chinese reserves, remain inaccessible, he noted that the Central Bank has continued to accumulate net foreign assets.

‘From the peak of the crisis, Sri Lanka’s reserve position has strengthened dramatically, improving by more than $ 6 billion this year alone,’ he said.

Retail expansion and consumer behaviour shifts

Jafferjee also highlighted notable shifts in domestic economic behaviour, including a rapid increase in retail outlets that far exceeds household growth, reflecting changes in consumption patterns, pricing dynamics, and urbanisation.

He pointed to a sharp rise in cash circulation occurring alongside the expansion of digital payments, describing it as evidence that consumer activity is normalising, albeit unevenly across sectors.

Although tourism continues to recover, he warned that the composition of arrivals has shifted towards short-stay Asian visitors, reducing average spending. As a result, he said, arrivals may soon match 2018 levels, but earnings are unlikely to follow the same trajectory.

‘Sri Lanka’s prolonged underinvestment in capital over nearly a decade, with Government capital expenditure falling to historically low levels,’ he stressed.

This erosion of capital deepening, he argued, has left construction severely depressed and several manufacturing segments struggling to regain pre-2018 output levels.

‘Economic growth requires capital deepening. We have done the opposite,’ he pointed out.

Reforms must happen now, not after elections

Jafferjee made a strong call for immediate structural reforms, arguing that the current Government is uniquely positioned to push through politically difficult changes.

He warned against reversing International Monetary Fund (IMF)-backed reforms and argued that historically, major economic reforms in Sri Lanka were often implemented by left-leaning Governments because of greater trust from trade unions. ‘Since independence, reforms were mostly done by left-leaning Governments because unions trusted them,’ he said. ‘With macroeconomic stabilisation largely achieved, the next phase must focus on growth. Without reforms, the current positive momentum would fade within four to six quarters,’ Jafferjee added.

Apparel sector on fragile stability

Echoing these concerns during a panel discussion, Advocata CEO Dhananath Fernando cautioned that the apparel industry faces a year of fragile stability, rising operating costs, and heightened exposure to external shocks.

He said investor confidence remains extremely sensitive, noting that even minor disruptions could trigger capital outflows with direct consequences for exchange rates, interest costs, and business planning.

Fernando said the Central Bank’s current exchange rate framework offers greater predictability than in the past, but warned that volatility is now an inherent feature of a market-based system.

He urged businesses not to assume currency stability at current levels, stressing that macroeconomic adjustments will continue. ‘You should not expect a repeat of the 380-400 levels, but that doesn’t mean the currency will remain at 300,’ he noted, stressing that market-based fluctuations are now part of the operating environment.

He identified weak population growth, a shrinking labour force, and heavy reliance on domestic consumption as long-term structural challenges, arguing that local demand alone cannot sustain apparel growth.

‘If the population is shrinking and incomes are under pressure, demand for clothing will also change,’ he said, urging apparel brands to look beyond domestic markets. ‘The solution is expanding outward and competing internationally, whether we like it or not.’

Exports and need for radical reform

Without improvements in export performance and productivity, he warned, the macroeconomy would be forced to adjust through higher interest rates, currency pressure, or reserve drawdowns.

‘If export performance doesn’t improve, the macroeconomy will be forced to adjust,’ he said, adding that productivity improvement – doing more with the same or fewer inputs – was essential for sustainable growth.

Fernando also pointed to deep structural barriers facing businesses, particularly small and medium enterprises (SMEs), citing Customs procedures, import-export clearance delays, and labour regulations as persistent constraints.

‘Customs is a problem, import and export clearance is a problem, labour is a problem; everywhere businesses turn, they face barriers,’ he said.

He also cautioned against protectionist policies aimed at favouring local apparel brands against international competitors, saying that shrinking domestic demand makes such strategies impractical. ‘Even if you increase protection, the market is too small. The only viable solution is to improve competitiveness and expand abroad,’ he said. However, he acknowledged this is difficult for smaller brands facing price pressures and high operational costs.

He said any Government assistance should be tied to measurable outcomes such as productivity gains or job creation, ideally through transparent tax credit mechanisms to avoid political misuse. ‘Good intentions alone are not enough; without proper safeguards, the benefits will not reach the intended businesses,’ he added.

He said that while Sri Lanka is no longer in immediate crisis, the risks remain significant, and growth must come from productivity, competitiveness, and reform rather than complacency.

‘We are not in a crisis, but we are not out of danger. Growth must come from productivity, competitiveness, and reform, not protection or complacency,’ Fernando said.

AI for apparel sector

The event also featured a forward-looking presentation by Deloitte Sri Lanka and Maldives Strategy and Analytics Leader Mayura Malagala, who explored the practical implications of artificial intelligence (AI) for the apparel sector, highlighting how data automation and analytics will increasingly shape design, supply chains, and consumer engagement.

The SLABA represents more than 50 leading Sri Lankan apparel brands, directly employing over 25,000 people and supporting nearly 400,000 jobs through subcontractors and SME networks.

Its membership includes well-known local brands such as Rainco, Velona, amanté, Kelly Felder, Kriger, Emerald, EKKO, JEZZA, Mimosa, and GFlock.

The Government and its humanitarian partners will coordinate on a $ 35 million Humanitarian Priorities Plan (HPP) for victims of Cyclone Ditwah.

So far, the Government has received $ 20 million of funds, most of which have been channelled through the UN by its development partners. Nearly 1.2 million people are in need of humanitarian assistance in the aftermath of the cyclone.

The humanitarian response will address short-, medium-, and long-term needs in housing, livelihoods, food security, nutrition, water and sanitation, and education.

The Government reported 643 casualties and 183 people still missing in the latest situation report of 19 December, which was released by the UN Resident Coordinator’s office in Sri Lanka. More than 66,000 people are still residing in safety centres in the wake of the cyclone, which was unprecedented in Sri Lanka’s weather annals. The cyclone affected communities in all districts, with the Central, Western, and North Western Provinces hit the most.

Cyclone Ditwah displaced nearly 233 thousand families at its peak and fully or partially damaged more than 100,000 houses. Although these families have started returning to their communities, they are living in partially damaged or makeshift houses, which put them in danger of exposure to weather and health risks. According to the report, damage to water supply and sanitation systems in several affected areas is limiting access to safe drinking water and adequate sanitation, increasing public health risks, particularly in displacement settings. An estimated 109 health facilities and infrastructure require repairs on water and sanitation amenities to become functional.

Households depending on subsistence farming, fisheries, daily wage labour, and small businesses are reportedly seeing severe disruptions to their livelihoods. The report notes how the loss of crops, livestock, fishing gear, and other small productive assets have disproportionately affected poorer households with limited coping capacity and little access to compensation.

The destruction of several early stages of the Maha season’s crops is threatening production and future harvests, which are life-giving for many households, particularly low income and small-scale farmers. According to estimates, more than 106,000 hectares of paddy have been damaged in the Maha season, which typically supplies over 70% of the country’s annual rice production. While a narrow window of up to three months currently exists to replant and recover 25-30% of lost production, delayed or missed planting could have a cascading effect on the availability of local food and trigger income losses going into the next year.

More than 5.5 lakhs of children whose education has been disrupted because schools and pre-schools have been damaged by flooding, landslides, and severe winds will need stationery, uniforms, and other essential learning material. Among them are 900 special needs children who will need adapted learning materials.

Meanwhile, the report states approximately 1,185 schools and 2,720 pre-schools urgently require essential teaching and learning equipment, furniture, and minor repairs to enable safe reopening. ‘Schools that are severely damaged or destroyed may remain non-functional in the near term, necessitating temporary learning spaces to ensure continuity of learning,’ the report adds.

At least 1,200 of the most affected schools require a resumption of the school meal program to reduce the high risk of malnutrition among school-aged children.

The report highlights existential protection concerns among displaced communities, particularly for women and girls, as overcrowded shelters, disrupted services, and prolonged displacement heighten risks of gender-based violence, exploitation, and psychosocial distress.

While time and access constraints to affected areas are impacting field assessments to capture the full extent of the damage accurately, sectoral peculiarities pose further challenges.

For instance, overcrowded safety centres, severe damage to transport networks and markets, and extensive losses to crops, livestock, and fisheries are making it difficult to ensure food security because of resulting disruptions to food supply chains and limited household access to essentials, recovery which requires significant resources and time.

At the same time, the lack of breastfeeding corners in safety centres, insufficient nutritional screening and interventions, and a lack of complementary feeding support have been identified as gaps and constraints to nutritional adequacy.

In the case of access to healthcare, the report flags constraints for the full restoration of essential health services due to damaged or inundated facilities and disruptions to power, water, and infection prevention and control. Other factors contributing to it are the need for staff working both in affected health institutions and welfare centres to be supported, and limited availability of referral pathways for mental health and psychosocial support.

Similarly, limitations to providing required quantities of water, inadequate sanitation facilities at safety centres, insufficient equipment and chemicals to clean wells, and the lack of technical staff are impacting the provision of water and sanitation to required levels.

Among the difficulties protection services are faced with are limited funding which prevents sector partners reaching more safety centres and communities with protection needs, a breakdown of referral pathways for specialised services, inadequacies in safety centre management, and insufficient privacy and safeguarding in these locations, especially for women and children.

The loss of livelihoods, rising costs, and service disruptions could exacerbate the vulnerabilities of those already living in poverty. While 23% of the population was already living in poverty, another 10% risk falling below the poverty line during crises.

The overall coordination for the Ditwah response is led by the Government through its national and sub-national networks, with support from the UN, humanitarian partners, international organisations, national civil society organisations, and the private sector.

The development partners that have contributed to the HPP are Australia, Canada, the EU, Japan, New Zealand, Norway, the Republic of Korea, Switzerland, the UK, and the US. The Gates Foundation, the German National Committee for UNICEF, and the US National Committee for UNICEF have been the other contributors.

The Government requested funds of $ 35.3 million for the HPP and has received $ 20.7 million to date.

The secondary Bond market last week began on a subdued note, with yields largely holding steady amid limited early activity. As the week progressed, market sentiment shifted following the outcome at the weekly Treasury Bill auction which recorded increases in weighted average rates across all three maturities, with the 364-day tenor rising by a notable 16 basis points. This marked a significant departure from the prior 22 weeks which had seen rates broadly anchored.

Despite the upward adjustment in yields, the auction outcome reflected subdued demand conditions. Of the Rs. 150 billion on offer-the largest issuance size in the past 28 weeks-only Rs. 82.45 billion was raised, translating to a 54.97% subscription rate. The T-Bill auction was also notable for its shift in supply dynamics. It marked the first instance where the offered amount materially exceeded the estimated maturity volume of approximately Rs. 95 billion, signalling a clear departure from the undersupply conditions that had characterised recent weeks.

In response, secondary Bond market yields were seen increasing across the board as market participants adjusted to the pick-up in the very short end of the yield curve.

However, at the close of the week a partial recovery was seen as renewed buying interest kicked in at the elevated levels which pushed yields back down. Despite the downward retracement secondary market two-way quotes closed the week higher. Overall activity and transaction volumes were at healthy levels.

The details of the upcoming Treasury Bond auction, scheduled to be conducted on 30 December and the weekly Treasury Bill auction were announced. The T-Bond auction will have a total offered amount of Rs. 55 billion across two available maturities against its corresponding maturity volume estimated to be around Rs.53.50 billion, while the T-Bills auction will have a total offered amount of Rs. 120 billion against its corresponding maturity volume estimated to be around Rs. 117.98 billion.

In terms of the secondary Bond market trade summary, the 15.09.27 maturity traded within the range of 9.05%-9.06% during the selling period when rates moved up.

The 15.02.28 and 15.03.28 maturities traded up to intraweek highs of 9.15% each, before recovering towards the close to trade at 9.00% each. The 15.10.28 maturity traded up to 9.23% mid-week before easing back to 9.15% by the end of the week. The 15.12.28 maturity traded at 9.20%.

Further along the curve, the 15.09.29 maturity traded up from 9.55% to an intraweek high of 9.75%, before retracing to trade at 9.65% towards the close. The 15.10.29 maturity traded up to 9.80% mid-week before trading down the range of 9.70%-9.65% at the tail end of the week. The 15.12.29 maturity traded up to 9.85% before easing to trade down the range of 9.83%-9.70%.

On the medium-to-long end, the 01.07.30 maturity traded up from 9.70% to an intraweek high of 9.95%, before trading down the range of 9.85%-9.75% towards the close. The 15.03.31 maturity traded up to 10.15% mid-week before easing back to 9.95%.

The 01.10.32 maturity traded within the range of 10.30%-10.33%, while the 01.11.33 maturity traded at 10.60%. At the long end, the 15.06.35 maturity traded at 10.68%. The long end remained somewhat anchored throughout.

The foreign holdings of rupee-denominated Government securities recorded a net foreign outflow, amounting to Rs. 1.55 billion. Consequently, total holdings reduced to Rs. 140.43 billion during the week ending 24 December.

The daily secondary market Treasury Bond/Bill transacted volumes for the first four days of the week averaged at Rs. 14.17 billion.

In the money market, the total outstanding liquidity surplus in the inter-bank money market increased to Rs. 111.66 billion as at the week ending 26 December 2025, from Rs. 65.92 billion recorded the previous week. The weighted average interest rates on call money and repo were recorded within the ranges of 7.99%-8.02% and 8.04%-8.05% respectively while the Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,508.92 billion as at 26 December, unchanged against the previous week’s closing level.

AIA Insurance has once again demonstrated its unwavering commitment to building a world-class workplace culture, earning a record-breaking five accolades at the prestigious Great Place to Work Awards 2025. These recognitions not only reaffirm AIA’s position as a leading employer in Sri Lanka but also highlight its growing influence across the Asia-Pacific region.

Among the most notable achievements, AIA Insurance was ranked #93 on Asia’s Best Workplaces 2025 list, a significant milestone that places the company among the top employers across the continent. This recognition reflects AIA’s consistent efforts to foster a supportive, inclusive, and high-performing work environment that empowers employees to thrive both professionally and personally.

AIA continued its legacy of excellence by being named one of the Best Workplaces in Sri Lanka – Large Category for the 13th consecutive year. This remarkable streak underscores the company’s long-standing dedication to employee wellbeing, leadership development, and a values-driven culture. AIA’s ability to maintain this standard year after year speaks volumes about its strategic focus on people and purpose.

In addition to these accolades, AIA Insurance was honoured with the Industry Excellence Award for Workplace Culture in the Financial Services and Insurance Sector, recognising its leadership in setting benchmarks for employee engagement and organisational integrity within the industry. This award reflects AIA’s commitment to redefining workplace norms and creating a culture that inspires innovation, collaboration, and trust.

AIA also received the award for Excellence in ‘Maximising Human Potential’ a testament to its robust talent development initiatives, learning platforms, and inclusive leadership practices. The company’s focus on unlocking the full potential of its workforce has resulted in a dynamic and future-ready organisation that continuously adapts to the evolving needs of its people and customers.

Further reinforcing its commitment to the next generation, AIA was recognised as one of the Best Workplaces for Young Talent for the second time. This award highlights AIA’s proactive approach to attracting, retaining, and nurturing young professionals through mentorship, career growth opportunities, and a vibrant workplace culture that encourages creativity and ambition.

AIA Sri Lanka Director – Human Resources Thushari Perera said, ‘These awards are a reflection of our people-first philosophy and the values that drive us every day. We are proud to be recognised not only in Sri Lanka but across Asia, and we remain committed to building a workplace where everyone feels valued, inspired, and empowered.’

As a leading life insurer in Sri Lanka, AIA Insurance continues to set new standards in workplace excellence, guided by its mission to help people live healthier, longer, better lives. These recognitions serve as a powerful endorsement of AIA’s culture, leadership, and vision for the future-one where people are at the heart of everything the company does.

As the floodwaters recede and the health authorities scramble to contain the re-emergence of vector-borne diseases in early 2025, a familiar narrative is unfolding. The new administration, fresh off a historic mandate in late 2024, finds its ambitious economic agenda hijacked by a natural calamity.

To the casual observer, this is just bad luck. To the data analyst, however, it is a statistical certainty.

An analysis of Sri Lanka’s political and environmental history over the last 75 years reveals a startling correlation: almost every major change of Government has been met with a significant natural disaster or public health crisis approximately within its first 12 to 36 months in power.

I call this the ‘Governance Hazard Window.’ While natural disasters are unpredictable, their historical alignment with Government formation periods underscores the need for mechanisms that ensure fiscal resilience regardless of political cycles.

The Historical Cycle: A Timeline of Crises: When we visualize the data from 1947 to 2025 (see info-graphic), the pattern is too consistent to ignore. It suggests that the ‘honeymoon period’ for any Sri Lankan Government is a myth; it is, in reality, a countdown to crisis.

The Independence Shock: The 1947 election was followed almost immediately by the devastating 1948 Kelani Valley Floods.

The 1956 Turning Point: Just one year after the historic 1956 revolution, the country faced the “Great Flood” of 1957, recorded as the worst of the 20th century.

The 1960s Bookends: The unstable political era of the early 60s was marked by the catastrophic 1964 Cyclone (December), followed by a massive Malaria Resurgence and Severe Drought in 1969, which crippled agriculture just before the 1970 power transfer.

The 1970s Mid-Term Crisis: The United Front Government faced further calamities with the 1974 Landslides and a Cholera Outbreak midway through their term.

The 1977 Open Economy: The massive mandate of 1977 was tested by the 1978 Cyclone, which ravaged the Eastern province.

The 1980s Public Health Collapse: Following the 1982 Referendum, the country faced the worst Malaria Epidemic in its history by 1987, with record-high cases as vector control systems failed.

The 1994 Change: The ending of 17 years of UNP rule was met with the crippling Drought of 1996 (causing a national power crisis) and the official declaration of Dengue as a “notifiable disease”

following a major spike.

The Tsunami Shock: The 2004 election victory was followed just months later by the 2004 Tsunami, the single deadliest disaster in Sri Lankan history.

The Modern Era: The 2015 ‘Yahapalanaya» victory was followed by the 2016 Aranayake Landslide and 2017 Floods. The 2019/2020 mandates ran headfirst into the COVID-19 Delta Wave (2021).

The Current Cycle: The 2024 mandate is now facing the 2025 Floods and the re-emergence of Chikungunya.

We cannot stop elections and we cannot stop the monsoon. But we can change the financial instrument we use to deal with them. The data argues strongly that Sri Lanka needs to implement a National Disaster Insurance Scheme or a Sovereign Risk Transfer (SRT) mechanism. If one such mechanism existed previously, it should be re-activated immediately. Instead of keeping this liability on the Government’s Balance Sheet, we must transfer the risk to global reinsurance markets

Why does this happen? While it is tempting to look for supernatural explanations, the ‘Governance Hazard Window’ likely stems from a collision of nature and administrative transition. New Governments are often distracted. In the first 24 months, ministries are reshuffled, officials are transferred, and institutional memory is lost. Public health surveillance (such as mosquito control) often dips during these transitions. When a weather event strikes during this period of administrative ‘reset,’ the impact is magnified and the response is a challenging task.

The economic implication: Reactive vs. proactive

The problem is not the disaster itself-Sri Lanka is a tropical island; floods are inevitable. The problem is our financial response. For 75 years, our strategy has been reactive. A disaster strikes, the Budget is derailed, we appeal for foreign aid and development projects are halted to divert funds to relief. This ‘begging bowl’ approach is unsustainable for a middle-income nation attempting to recover from debt default.

A new Government’s economic manifesto is usually the first casualty of this cycle. The fiscal space they planned to use for development is instantly consumed by disaster recovery.

The solution: Sovereign Risk Transfer

We cannot stop elections and we cannot stop the monsoon. But we can change the financial instrument we use to deal with them. The data argues strongly that Sri Lanka needs to implement a National Disaster Insurance Scheme or a Sovereign Risk Transfer (SRT) mechanism. If one such mechanism existed previously, it should be re-activated immediately.

Instead of keeping this liability on the Government’s Balance Sheet, we must transfer the risk to global reinsurance markets. Instruments like Parametric Insurance-which pays out automatically when rainfall or wind speeds exceed a certain threshold-could provide immediate liquidity within days of a crisis, bypassing the months of bureaucratic assessment that currently delay relief.

The timeline from 1948 to 2025 is a wake-up call. The risk of a major crisis hitting a new Government is not an anomaly; it is a systemic feature of our political cycle. It is time to move beyond superstition and start treating this risk with the seriousness of a financial liability. Rather than hoping for the best, we have the opportunity to use data-driven decision-making to proactively secure our economy against climate risks.