Business
VAT increase could cause inflation to hit 7 percent in January – CBSL Governor
By Hiran H.Senewiratne
Sri Lanka’s inflation could rise to 7 percent in January 2024 due to the VAT increase, the Governor of the Central Bank of Sri Lanka (CBSL), Dr. Nandalal Weerasinghe warned.
Speaking at a special press briefing held yesterday, Dr. Weerasinghe explained that an increase in inflation is likely due to the increase in the VAT and other external factors. He was speaking at the CBSL’s first Monetary Policy Review for this year held at Central Bank head office in Colombo.
The VAT was increased by 3 percent, from 15 percent to 18 percent, with effect from January 1, 2024, after the VAT (Amendment) Bill was passed in parliament on December 11, 2023, he said.
The Central Bank kept its policy rates unchanged at 10 percent at this its first monetary policy meeting in 2024. Market rates should fall further.
The Central Bank has operated a largely deflationary policy, selling down its Treasury bills portfolio against dollar inflows, thereby preventing pressure on the currency and building reserves, resulting in a balance of payments surplus.
Dr. Weerasinghe added: ‘Over the past month, the exchange rate has appreciated, which may also help offset a 3 percent hike in value added tax on traded commodities.
‘Headline inflation is projected to record an upward movement in the near term, as expected, driven mainly by domestic price adjustments due to the increase in the VAT and the elimination of certain VAT exemptions effective January 1, 2024, disruptions to the domestic food supply and dissipation of the favourable statistical base effect.
‘However, this acceleration of inflation in the near term is expected to be short-lived and the spillover effects of such one-off adjustments are likely to be muted due to subdued underlying demand conditions. Therefore, over the medium term, headline inflation is expected to gradually stabilise around the targeted level of 5 per cent (year-on-year), supported by appropriate policy measures.
‘Headline inflation, as measured by the year-on-year change in the Colombo Consumer Price Index (CCPI, 2021=100), was recorded at 4.0 per cent in December 2023, compared to 3.4 per cent in November 2023.
‘Following five consecutive months of deflation, the food category recorded inflation (year-on-year) in December 2023, reflecting mainly the weather-related disruptions, while non-food inflation (year-on-year) moderated compared to the previous month.
‘Despite the recent acceleration, headline inflation remains closer to the inflation target of the Central Bank and is in line with the envisaged inflation projections of the Central Bank. Meanwhile, core inflation (year-on-year) continued to moderate in December 2023, compared to the previous month, reflecting the subdued demand pressures in the economy.
‘The Board took note of the effects of the recent developments in taxation and supply-side factors that are likely to pose upside pressures on inflation in the near term.
‘The Board anticipates a broad based reduction in overall market lending interest rates in line with the monetary policy easing measures that have come into effect since June 2023.
‘The Monetary Policy Board will continue to assess risks to inflation projections, among others, and stand ready to take appropriate measures to maintain domestic price stability in the period ahead while supporting the economy to reach its potential.
‘The Central Bank decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 9.00 per cent and 10.00 per cent, respectively.
‘The Board arrived at this decision following a comprehensive assessment of domestic and international macroeconomic developments in order to maintain inflation at the targeted level of 5 per cent over the medium term, while enabling the economy to reach its potential.
‘However, the Board viewed that the impact of these developments would not materially change the medium-term inflation outlook. Further, the Board noted the space created by past monetary policy easing measures and the decline in the risk premia attached to government securities for further downward adjustment in market lending interest rates.
‘The Board underscored that the envisaged benefit of further reduction in market lending interest rates needs to be adequately and swiftly passed on to businesses and individuals by financial institutions.
‘Market interest rates continued to adjust downwards in line with eased monetary policy and administrative measures taken to reduce overall market lending interest rates.
‘The yields on government securities continue to decline, supported by falling risk premia. The Monetary Policy Board of the Central Bank is of the view that there is further space for market interest rates, especially the lending interest rates and yields on government securities, to decline in the period ahead, in line with the reduction in policy interest rates effected in the recent past.
‘The Sri Lankan economy recorded an expansion in the third quarter of 2023, following six consecutive quarters of economic contraction. Accordingly, the economy is estimated to have grown by 1.6 per cent, year-on-year in the third quarter of 2023, as per the GDP estimates published by the Department of Census and Statistics (DCS).
‘This was a broad-based expansion in economic activity, supported by expansions recorded in Agriculture, Industry and Services sectors, on a year-on-year basis. The rebound in domestic economic activity is expected to be sustained, supported by the faster passthrough of relaxed monetary policy to broader market interest rates and the resultant firming of credit demand, improvements in business and investor sentiments, improvements in supply conditions and the gradual rebound expected in external demand conditions.
‘The merchandise trade deficit is estimated to have moderated during 2023 in comparison to 2022. This, coupled with the notable recovery in trade in services, mainly earnings from tourism, and the strong momentum of workers’ remittances, is expected to have resulted in a surplus in the current account balance of the balance of payments for 2023.
‘Gross official reserves (GOR) improved notably to US dollars 4.4 billion by end December 2023, which include the swap facility from the People’s Bank of China (PBOC). This strong rebound of GOR was supported by the notable net purchases by the Central Bank from the domestic forex market and the proceeds from multilateral agencies. The Sri Lanka rupee, which appreciated by around 12 per cent against the US dollar in 2023, continued to show an appreciation so far in 2024.
‘In consideration of the current and expected macroeconomic developments highlighted above, and in keeping with the forward guidance provided at the last monetary policy review in November 2023, the Monetary Policy Board of the Central Bank of Sri Lanka, at its meeting held on January 22, 2024, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 9.00 per cent and 10.00 per cent, respectively.’
Business
GS1 Lanka drives Sri Lanka’s shift to 2D barcodes
GS1 Lanka marked its 10th Annual General Meeting with a focus on the next stage of product identification in Sri Lanka, as businesses prepare for the wider adoption of 2D barcodes and the growing demand for trusted product information.
Addressing the AGM, GS1 Lanka president Revan Fernando noted that GS1 has been giving Sri Lankan products a globally recognised identity for more than 30 years. He pointed to the shift from traditional barcodes to 2D barcodes as the next major step, particularly as consumers increasingly look beyond a product’s identity to information they can trust about its origin, ingredients, authenticity and use.
GS1 Sunrise 2027 is a global industry initiative aiming to transition retail checkout systems to read 2D barcodes such as QR codes and Data Matrix codes alongside traditional 1D UPC stripes by the end of 2027
Under its Sunrise 2027 initiative, GS1 Lanka is working with the retail and healthcare sectors to prepare businesses for the transition to 2D barcodes. Unlike a conventional barcode used at checkout, a GS1 QR code can also connect consumers to a wider range of product information and support traceability and product verification through GS1 standards.
Fernando also called on brands to get involved in the transition, noting that the change will require businesses to rethink how they use the limited space on product packaging and how they communicate with consumers. GS1 Lanka will also introduce a new retail information platform to help member brands provide richer product information and improve the presentation of their products to consumers.
GS1 Lanka CEO Alikie Perera said the organisation’s work is increasingly focused on helping Sri Lankan businesses keep pace with changes in global supply chains and consumer expectations. The next phase will place greater emphasis on 2D barcodes, GS1 Digital Link, traceability and digital product information, as businesses prepare for a more connected and information-rich marketplace.
At the local level, GS1 Lanka continued its awareness programmes for entrepreneurs, SMEs, manufacturers and exporters, covering product identification, barcode standards, traceability, supply chain efficiency and market access. The organisation has also seen growing adoption of GS1 Activate and Verified by GS1, with more than 5,500 member companies registered on the platforms and over 20,000 product records uploaded.
The AGM concluded with a recognition of the contribution of GS1 Lanka’s members, partners, Board and team, while setting the direction for the organisation’s continued work to bring global standards and new product identification technologies into wider use among Sri Lankan businesses.
Business
Sri Lanka must rethink plastics before waste crisis deepens, says OUSL Vice Chancellor
By Ifham Nizam
Sri Lanka’s plastic problem can no longer be treated simply as a waste-disposal issue, with the country facing mounting pressure on its coastal environment, fisheries, communities and public health, Vice Chancellor of The Open University of Sri Lanka Senior Professor P. M. C. Thilakerathne said.
The country must move beyond collecting and disposing of plastic waste and fundamentally rethink how plastics are designed, produced, consumed and recovered, Prof. Thilakerathne said, calling for a national shift towards a circular economy.
Addressing the 3rd International Conference on Plastics, Innovations and Environmental Sustainability, he said Sri Lanka’s experience, particularly the environmental fallout from the 2021 X-Press Pearl disaster, demonstrated why plastic pollution required urgent national attention.
The X-Press Pearl disaster resulted in large quantities of plastic pellets being released into Sri Lanka’s coastal waters, with impacts extending to marine biodiversity, fisheries and coastal livelihoods.
For an island nation whose economy and communities are closely connected to the sea, he said, plastic pollution could not be viewed as an environmental issue separate from national development.
” For Sri Lanka, these figures are not abstract,” Prof. Thilakerathne said, pointing to the global growth in plastic production and waste.
The world produces hundreds of millions of tonnes of plastics annually, while only a small proportion of plastic waste is recycled. A substantial amount ends up in landfills or is leaked, dumped or otherwise mismanaged.
The scale of the global problem has direct relevance to Sri Lanka, he said, because waste that is inadequately collected or managed can ultimately find its way into waterways and the ocean.
The Vice Chancellor said Sri Lanka therefore needed to strengthen not only waste collection and recycling but also the systems that determine what products enter the waste stream in the first place.
“Much of the waste problem is decided at the drawing board,” he said.
Products should be designed for reuse, recycling and disassembly, while businesses should be encouraged to adopt models based on refill, repair and reuse rather than continued dependence on single-use plastics.
He said Sri Lanka also had an opportunity to develop locally appropriate alternatives using renewable resources and agricultural residues.
The country’s coconut industry and other agricultural resources could support research into alternative materials, he said, but scientists must ensure that such substitutes were genuinely environmentally sustainable and did not simply shift the environmental burden elsewhere.
For Sri Lanka, the challenge is particularly important because plastic pollution intersects with several economic sectors.
Fishing communities depend directly on healthy marine ecosystems, while tourism depends heavily on the country’s beaches, coastal areas and natural environment.
Plastic pollution can therefore translate into economic and livelihood pressures in addition to its ecological consequences, Prof. Thilakerathne said.
He also warned that the problem extended beyond visible plastic waste.
Microplastics and nanoplastics have been detected in drinking water, food and air, while research into their potential effects on human health is continuing.
The longer-term public-health implications represented an important area for scientific research, he said.
Prof. Thilakerathne called for stronger cooperation between universities, government institutions, industry and local communities to develop solutions suited to Sri Lanka rather than relying solely on technologies or approaches developed elsewhere.
Universities, he said, had a responsibility to generate the evidence needed for national policy and to ensure that research reached the communities and industries expected to implement it.
This is where OUSL could make a particular contribution, given its nationwide network and large population of students, including working adults, teachers, professionals and learners from rural communities.
The university plans to strengthen environmental sustainability and circular-economy principles across its curriculum, expand professional education on waste management and sustainable materials, develop international research partnerships and improve sustainable practices within its own campuses and centres, he said.
Prof. Thilakerathne also called attention to the thousands of people who earn a living through informal waste collection and recycling.
Any national strategy, he said, must recognise the contribution of these workers and ensure that the transition towards a circular economy does not leave them economically vulnerable.
Sri Lanka has already introduced restrictions on a number of single-use plastic products, but the Vice Chancellor said regulations must be accompanied by enforcement, investment in recovery infrastructure, industry participation and changes in consumer behaviour.
At the international level, he said, Sri Lanka also needed to contribute actively to efforts to address plastic pollution, backed by credible national scientific research.
The global nature of the plastics trade and pollution meant that action by individual countries alone would not be sufficient.
The conference therefore provided an opportunity for Sri Lankan researchers to connect local environmental challenges with international research and technological developments, he said.
Addressing young researchers and students, Prof. Thilakerathne urged them to measure the value of their work not only by academic publications but also by its ability to produce practical change.
He encouraged researchers to work across disciplines, engage with policymakers and industry, and remain connected to communities affected by the problems they study.
“The most meaningful research is that which changes practice,” he said.
He said Sri Lanka’s plastic crisis ultimately required a change in the country’s approach to materials, consumption and waste.
“Our task is not to abandon the material that shaped the modern world but to make it compatible with the sustainable one,” Prof. Thilakerathne said.
Business
The internationally acclaimed play ‘Every Brilliant Thing’ comes to Sri Lanka
Prepare for a theatrical experience that brings people together and celebrates life. The Peterite Arts Foundation, in proud association with World Vision Lanka, announces the showing of an amateur production arranged with Casarotto Ramsay & Associates Ltd. Every Brilliant Thing, the acclaimed solo play by Duncan Macmillan and Jonny Donahoe. Directed by Theruni Indrapala, the play’s lead is played by former Peterite Mario de Soyza. This uplifting, interactive production will run at Kamatha Studio, BMICH, Colombo, from 05 to 08 November 2026.
Every Brilliant Thing tells a deeply moving yet joyful story. At seven, the narrator begins listing everything worth living for, from ‘ice cream’ and ‘things with stripes’ to ‘rollercoasters’, hoping to help his mother through depression. Over time, the list grows to more than a million entries and becomes a lifelong source of comfort for the narrator.
What began as a short monologue in 2006 has grown into a global phenomenon, performed in more than 80 countries across five continents. Its hopeful message has reached audiences in extraordinary settings, including aboard the USS George H.W. Bush aircraft carrier. The play has also been translated into 44 languages, including Arabic and Greek, with a special Chinese adaptation titled Every Brilliant Little Thing.
The play’s need for emotional intelligence, openness and a strong connection with the audience attracted a distinguished line-up of performers. Following a successful West End run featuring Sue Perkins and Minnie Driver, the play made its Broadway debut at the Hudson Theatre, where it ran from 21 February to 9 August 2026. Tony Award winner Daniel Radcliffe opened the Broadway production, receiving critical acclaim and a Tony nomination for Best Lead Actor in a Play. Law & Order: SVU icon Mariska Hargitay then made her official Broadway debut in the role, followed by Golden Globe winner Tracee Ellis Ross, who closed the run.
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