Connect with us

News

WB: Economy back, but households still hurt

Published

on

Sri Lanka’s economy reached a significant milestone, reaching pre-crisis levels. But the recovery remains incomplete and uneven, with household incomes and labour market outcomes still lagging the broader economic rebound, says the World Bank Group in its twice-yearly economic outlook.

Released yesterday, the latest Sri Lanka Development Update, From Recovery to Transformation, projects Sri Lanka’s GDP to grow by 4.4% this year, exceeding earlier projections, driven by strong industry performance and steady growth in services.

Growth is projected to slow to 4.2% in 2027 as the post-crisis rebound fades and productivity remains weak. Heightened downside risks, including prolonged volatility in global energy markets and the potential impact of El Niño, could affect productivity and food security.

“Sri Lanka’s reclassification as an upper-middle-income country, especially in a challenging global environment, is a testament to the hard work of its people and the government’s commitment to recovery. But reaching this milestone marks a beginning, not the end  —  the country needs to seize this momentum to transform its economy and create jobs,” said Gevorg Sargsyan, World Bank Group Country Manager for Sri Lanka. “Sri Lanka can capitalize on sectors with immense potential such as agrifood, investing in the policies, infrastructure, and enabling environment that allow farmers, businesses, and investors to drive the next phase of growth.”

Sri Lanka’s economy has expanded for twelve consecutive quarters, with real GDP increasing 4.7% in the first half of 2026 and returning to 2018 levels. Fiscal performance has also been strong, with the primary budget surplus rising sharply. However, inflation has picked up in recent months, driven by higher energy and food prices, and poverty remains well above pre-crisis levels at 16.9%.

Moving from recovery to transformation will require shifting the engine of growth away from government spending toward increased private investment, exports, and productivity growth, supported by better infrastructure, a stable environment for investment, and greater private sector involvement in key areas of the economy.

The report includes a special focus on agribusiness as a key driver of future growth, jobs, and poverty reduction. While primary agriculture accounts for about 8% of GDP, the broader agrifood system — spanning food processing, logistics, trade, and food services — contributes an estimated one-sixth of GDP and over 40% of employment.

Agribusiness also accounts for nearly 30% of goods exports, making it a vital source of foreign exchange and rural livelihoods. Sri Lanka also competes successfully in global markets in tea, coconut, cinnamon, seafood, and rubber.

Despite this strong foundation, analysis in the report shows that targeted reforms to trade policy, public spending, infrastructure, and access to finance could unlock a new wave of private investment and expand opportunities across Sri Lanka’s agricultural value chains, particularly for smallholders and rural communities.

The report recommends policy measures to establish a more predictable, export-oriented policy environment and to repurpose public spending from inefficient subsidies toward productivity-enhancing investments in agricultural research and climate-smart technologies.

These can be complemented by improvements to quality infrastructure, digital traceability, and cold-chain logistics, as well as reforms to land tenure and access to finance to unlock long-term private investment, especially for smallholders and agribusinesses.

The Sri Lanka Development Update is a companion piece to the South Asia Economic Update, a twice-yearly World Bank Group report examining economic developments and policy challenges across the South Asia region.

The October 2026 edition titled Adopting AI for Growth says growth in South Asia is expected to increase to 6.9% this year, with strong domestic demand keeping the region resilient to global shocks.

The report explores how AI adoption can help build new sources of growth for the region by boosting labor productivity, expanding export opportunities, and improving public service delivery.



Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News

Fuel crunch looms

Published

on

Govt. tells fuel distributors to maintain stocks to ensure uninterrupted supplies

by Saman Indrajith and Norman Palihawadane

The government had instructed private fuel distributors to maintain minimum stocks and ensure uninterrupted supplies to the market, Energy Minister Anura Karunathilaka told Parliament yesterday (06).

Karunathilaka said the Ministry of Energy Secretary had notified the relevant companies of the requirement, following a reduction in supplies by some private distributors, amid higher international fuel prices.

The Minister said private companies had informed the government that they were facing losses because international prices had risen while fuel was being sold, locally, at prevailing prices. As a result, some companies had reduced the volumes released to the market.

The reduced supplies had increased the burden on the Ceylon Petroleum Corporation (CPC), whose share of the diesel market had risen from about 54% to 82%, the Minister said.

“The CPC currently holds an 82% share of the market,” he said, adding that it had increased its supplies, compared with February, to compensate for the reduction by private distributors.

Karunathilaka said the government could not, under the existing agreements with private companies, specify the quantities they should supply to individual filling stations. However, it could require them to maintain minimum stocks in the country.

The Minister said the Energy Ministry had already instructed companies that had failed to maintain the required stocks to take steps to prevent supply disruptions.

The Minister attributed the queues reported at some filling stations to reduced supplies from private distributors, as well as normal variations in fuel distribution. He also said demand for CPC fuel had increased because private companies generally did not provide fuel to dealers on credit, while the CPC offered a three-day credit facility.

“We expect that, as the Ceylon Petroleum Corporation takes on this additional burden, the problem will ease to some extent by Wednesday or Thursday,” Karunathilaka said.

He said instructions had also been issued to increase supplies to CPC filling stations. A special discussion on the issue is scheduled for today (07), with officials of the Energy Ministry and CPC expected to participate,

along with President Anura Kumara Dissanayake.

Meanwhile, Petroleum Dealers’ Association officials have called for an early solution to the supply issue. Association Chairman D.V. Shantha Silva said queues had been reported at many filling stations, mainly those operated by private distributors.

He said the situation was not due to an overall shortage of fuel, but was linked to reduced orders by Lanka IOC, Sinopec and R.M. Parks amid concerns over losses incurred on fuel sales.

The Ceylon Petroleum Private Tanker Owners Association has urged motorists to refrain from panic buying, saying there was no nationwide disruption to fuel supplies.

The government earlier increased fuel prices and introduced a per-litre diesel subsidy following concerns raised by distributors over rising international prices.

Continue Reading

News

Gnansara Thera to be assigned to prison printing section: Officials

Published

on

Bodu Bala Sena General Secretary Ven. Galagodaaththe Gnanasara Thera, who was taken into custody to serve the remainder of his prison sentence, was produced before the Colombo High Court yesterday by prison officials in connection with a warrant issued by the court. He appeared before the court in layman’s clothes. Pic by Nishan S. Priyantha.

by Norman Palihawadane

Bodu Bala Sena General Secretary Ven. Galagodaatte Gnanasara Thera, who has been ordered by the court to serve the remainder of his prison sentence, is to be assigned to the prison ‘printing work party’, prison officials said yesterday.

The monk was produced before the Colombo High Court yesterday by prison officials in connection with a warrant issued by the court.

He appeared before the court in civilian attire.

Prison sources said arrangements were being finalised for his detention and that he would subsequently be assigned to the printing work party.

The Thera initially objected when prison officials instructed him to change from his robes into the attire worn by convicted prisoners.

He later agreed to wear the prescribed prison clothes, sources said.

The Supreme Court, in September, annulled the presidential pardon granted to Gnanasara Thera in 2019. He had been serving a six-year prison sentence imposed following his conviction for contempt of court but had served only about nine months when then President Maithripala Sirisena granted him a presidential pardon in May 2019.

Following the Supreme Court ruling, the Thera was required to serve the remainder of his sentence. He was subsequently reported missing, prompting the Court of Appeal to issue an open warrant for his arrest.

The Court of Appeal on Monday ordered the authorities to enforce the remainder of his prison sentence.

Continue Reading

News

Speaker rejects Ajith Perera’s privilege complaint

Published

on

Speaker Dr. Jagath Wickramaratne yesterday ruled that a privilege complaint submitted by SJB Kalutara District MP Ajith P. Perera did not constitute a prima facie breach of parliamentary privilege.

The ruling was made in response to a notice of privilege submitted by Perera on October 02.

Perera alleged that his parliamentary privileges had been breached over the failure to take formal action or reach a final decision on a written request submitted on August 03 by 18 Opposition MPs seeking the appointment of a Special Select Committee to investigate delays in the judicial system and prison overcrowding.

He had also requested that the matter be referred to the Committee on Ethics and Privileges for investigation and recommendations.

In his ruling, Speaker Wickramaratne said the Speaker, as the Presiding Authority and guardian of the powers, rights and privileges of Parliament, could not be subjected to a privilege complaint or disciplinary inquiry by a committee subordinate to the Chair in respect of actions taken in an official capacity.

He said that, under the Standing Orders, the Speaker was required to independently determine whether a prima facie case of breach of privilege existed.

Referring a complaint against the Speaker to a committee functioning under the Speaker’s authority would, therefore, create a procedural contradiction, he said.

Accordingly, the Speaker ruled that Perera’s notice did not constitute a prima facie breach of parliamentary privilege and disallowed the request to refer the matter to the Committee on Ethics and Privileges.

Continue Reading

Trending