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Revenue decline puts pressure on govt’s fiscal management

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Moves underway to strengthen gross official reserves

Seeking support from IMF ruled out

by Sanath Nanayakkare

As government revenues have fallen below expected levels, fiscal management of the government is under pressure, Ajith Nivard Cabraal, State Minister of Finance, Capital Markets and State Enterprise Reforms said in Colombo yesterday.

He made this remark while speaking at a media briefing held at the Ministry of Finance.

“Although a sovereign bond of USD one billion needs to be settled this month, the actual outflow would be USD 700 million as Sri Lankan citizens own a share of USD 300 million of it. The current reserves are at USD 4 billion. After making this payment, the reserves will technically remain at USD 3 billion. Agreements have been arrived at with People’s Bank of China for a SWAP loan of USD 1.5 billion. In addition, the foreign exchange reserves will have contributions from Bangladesh Bank (SWAP) – USD 200 million, Reserve Bank of India (SWAP) USD 400 million. IMF (SDR allocation) USD 780 million and China Development Bank (Balance Loan) USD 200 million,” he said.

“In the next six months, the Central Bank will purchase USD 500 million from the forex market to consolidate the gross official reserves,” he said.

Further, a number of bilateral discussions are underway including for a USD 500 million syndicated loan while the Central Bank Governor has forecast a decline of imports by USD 700 million. he said.

The state minister said that the government has been able to collect only 34% of the government revenue in the first six months while 48% of the allocated recurrent expenditure has been spent during the period and 30% of the capital expenditure has already been invested in projects.

“Although the exchange rate is Rs. 200 to a USD, further depreciation is possible. The reasons for this are; reluctance of the exporters to convert their forex earnings and importers acting swiftly to import goods to top up their stocks for a longer time than it is necessary,” he said.

Further speaking he said,” The economy weakened from 2015 to 2019. Growth rate declined to 2.3% from 6.8%. Per capita income reported only a slight increase of USD 33 from USD 3,819 to USD 3,852. Gross Domestic Product was up by only USD 4 billion from USD 80 billion to USD 84 billion. Debt to GDP ratio increased to 87% from 72%. The debt stock increased to Rs.13 trillion from Rs. 7.5 trillion. The government’s interest expenditure in proportion to GDP increased to 6% from 4.2%. Due to rupee depreciation during the period, the debt stock rose by Rs. 1772 billion. Sovereign bond interest rate increased to 7.8% from 5.8%. Exports remained at an average of USD 11.1 billion while the trade deficit increased to USD 9.3 billion from USD 7.6 billion. Although sovereign bonds to the tune of USD 12 billion had been issued during the five years, foreign exchange reserved declined to USD 7.6 billion from USD 8.2 billion. The budget deficit increased to 9.6% from from 5.7%. Employed persons reduced to 8.2 million from 8.4 million. Central Bank’s treasury bill holdings shot up to Rs. 75 billion from zero. Rupee to USD exchange rate depreciated by 39% from Rs. 131 to Rs. 182. USD 3,089 million worth of Central Bank reserves were sold to maintain the value of the rupee. If this had not been done, foreign exchange reserves would have remained at USD 10.7 billion. The country’s credit rating downgraded to B (Negative) from BB- (Stable) – four notches during the period. Foreign debt versus domestic debt shifted to 48:52 from 42:58. From 2015 to 2019, government revenue was up by 65%, but as interest rates were high amid low growth, that advantage slipped through.”

“When Covid-19 hit Sri Lanka in 2020, in spite of the resilience some sectors of the economy had shown, the overall economy further weakened. As the economy had been completely shut for 66 days, it led to a negative growth of 3.6% while per capita income declined to USD 3,682 with the lowering of GDP to USD 81 billion. Debt to GDP increased to 101% from 87% while the debt stock increased to Rs.15.1 trillion from Rs. 13 trillion, therefore, interest expenditure was up by 6.5% to GDP in spite of low interest rate.”

Due to rupee depreciation, the debt stock increased by Rs. 356 billion. The repayment of USD 1 billion sovereign bond, the loss of income from Tourism around USD 3.5 billion, foreign exchange reserves fell to USD 5.7 billion from USD 7.6 billion. The impact of Covid-19 saw a spike in expenditure by about Rs. 100 billion while the government revenue declined, hence the budget deficit increased to 11.1%. The rupee depreciated 2.6% versus the USD to Rs. 187. However, the Central Bank bought USD 283 million from the forex market, and in 2021, the Bank has bought USD 130 million up to now. While the credit rating was downgraded to CCC(Stable) foreign debt to local debt ratio turned favourable by becoming 40:60 from 48:52. Low interest rate in 2020 brought some relief to the overall economy while the government also gained from it. Although exports were down to USD 10 billion, thanks to import controls, the trade balance was reduced to USD 6 billion.”

The state minister said that although there is a challenge to managing the economy, the government would not run away from its responsibility and would restore it a point where there is space for Sri Lanka to make a favourable turnaround with expected non-debt creating inflows to the Port City, Hambantota Industrial Zone, Pharmaceutical Manufacturing Zone, and last but not least with Sri Lanka Tourism reopening its boarders for the lucrative industry as the vaccine rollout is progressing well.

He empasised the fact that the government would not look to the IMF to get any help from it as those who recommend it want the government to get into difficulty as we would have to fall in line with IMF’s stringent economic recipe and conditions which come in hand in hand with their support.

 

 



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Fertilizer shortages threaten to wither Sri Lanka’s plantation sector output

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A tea plantation in Sri Lanka. (File photo)

The Planters’ Association of Ceylon (PA), the apex body of Sri Lanka’s plantation industry, expressed growing concern over rising prices and limited availability of fertilizer amid the escalation of the crisis in the Middle East.

With the closure of the Strait of Hormuz, shipping traffic through the region is reported to have dropped by 90%. Given that an estimated one-third of global trade in raw materials for production of fertilizer flows through the Strait, these interruptions are already disrupting fertilizer supply chains around the world.

After Russia, Egypt and Saudi Arabia, Iran is the fourth-largest global supplier of urea, the most widely used fertilizer ingredient.

Given the dire implications on domestic agricultural production, the PA commended the Government’s primary focus on safeguarding national food security, and welcomed the fertilizer subsidy for additional crops being increased up to Rs. 18,000. Such measures are part of a broader effort to support the agricultural sector during this period of volatility.

However, the PA cautioned that the implications of another fertilizer crisis extend well beyond direct agricultural impact. Importantly, the next two to four months will have a significant impact on the annual crop yields of the industry. The Association warned that these dynamics could significantly affect balance of payments, inflation, and purchasing power for critical resources like fuel.

The current fertilizer crisis echoes the challenges faced during the 2021 ban, which caused a calamity in the plantation sector. Even after the ban was lifted, it took four years to recover, and just as progress was being made, the current fertilizer issue has emerged.

The PA also highlighted the stress on Regional Plantation Companies (RPCs) and smallholders in particular, noting that the industry was already under significant pressure as result of rising cost of production.

Moreover, the PA noted that only a limited number of companies are authorized to distribute fertilizer, and the PA calls on the government to mitigate these challenges.

Throughout the COVID-19 pandemic, the plantation sector played a crucial role in generating foreign exchange to support the economy, and it is essential that the industry continues to contribute to macroeconomic stability during this crisis.

In a recent news article senior Professor Buddhi Marambe from the University of Peradeniya noted that with paddy cultivation alone needing approximately 98,800 metric tonnes for the Yala season, current stocks cover only about 60% of the total national requirement.

The PA also emphasized the entire plantation industry’s vital role in upholding the economy, particularly in generating foreign exchange via export revenue, and in supporting rural livelihoods.

According to an analysis published on 15 March 2026 by the FAO Chief Economist’s Office, the Gulf region accounts for roughly 30 to 35% of global urea exports, supply chains that have been severely disrupted since the conflict began.

The study found that the farming systems most exposed are those combining high fertiliser application rates with significant dependence on Gulf supply chains, a profile that applies across South Asia, East Africa and parts of Latin America. The FAO analysis projects global fertiliser prices averaging 15 to 20% higher across the first half of 2026 if the disruptions persist, with yield consequences materialising in harvests later in the year and into 2027.(PA)

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Women workers speak out for fair pay, safety and dignity

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Women workers with Rev.Sr. Noel Christine Fernando pledge that they will continue their struggle for a decent wage, better working conditions, safety of workers, healthcare facilities and for a limit to extensive working hours, from the government and employers.

Women workers who gathered at the Shramabimani Centre in Seeduwa to mark World Women’s Day on March 29 demanded a living wage that matches the rising cost of living, decent working conditions, safety of workers, better healthcare facilities and limiting the extensive working hours, from the government and employers.

Free Trade Zone (FTZ) workers urged the lawmakers and their employers to understand the silent tears shed amid the sound of machines.

“We face frequent humiliation and insults within and outside work which a woman cannot bear but we go through them to feed our children, parents and other dependents in our homes, said Shriani Fernando, an employee of a garment factory at the Katunayake FTZ.

Many such sad stories were narrated on the appalling living and working conditions of female workers who have left behind their families, kith and kin to keep the wolf from the door.

“There is no privacy in a ten by ten room shared with other workers who have to walk back to their rooms late night through lonely streets, said Indrani Weerasinghe, a mother who has to feed five mouths with the little wage she earns as a factory employee.

Female workers who are compelled to leave the safety of their homes at a very tender age to support the family fall prey to men seeking opportunities to satisfy their carnal desires.

The predator could either be the employer, landlord, a friend, the partner or a sympathizer with ulterior motives.

“While walking back to our rooms men ask us whether they could give us a lift. When we refuse the offer they pass disgusting remarks, a young worker said.

Speech and hearing impaired workers said that they too are capable of doing any work as others.

They said we have eyes, a good brain, hands and feet to work. We need to be treated like all others instead of attracting verbal sympathies.

Many workers who are victims of sexual exploitation and harassment keep silent to safeguard their jobs.

“We know the outcome if we speak against the unfair treatment by our bosses. If we lose our jobs who will feed our children, said Susumali Dissanayake, a mother of four employed at a garment factory in Gampaha.

What is saddening and gruesome is the act of some workers compensating the low wage or income by offering themselves to fulfill the insatiable sexual appetite of certain men.

Women garment workers in FTZs face severe exploitation, including 16-hour workdays, unachievable production targets, sexual harassment, and hazardous conditions. Many endure poverty, wage theft, and lack of basic facilities, often resulting in Urinary Tract Infections (UTIs) due to poor sanitation and limited bathroom access

Landless female workers in the Gampaha District urged the present authorities to bring an end to their homeless state by fulfilling a fundamental right to live in a house of their own in a decent way.

“The manner in which we are treated sometimes by our landlords is similar to being a slave. Shifting houses each year or two is nothing short of being refugees who have no status and dignity, said A.Shridevi from Walana, Katunayaka.

“We have been living like gypsies moving from one house to another without a permanent address for a long time. What we ask from the government is to give us the title deeds to the houses we are in now so that we have some status and respect, said Shandani Fernando, a member of the Association of Homeless Families in Gampaha.

Unpleasant language

“When we fail to pay the rent by one day we hear so unpleasant language from the landlords and some of us have broken family relations due to misunderstanding while sharing the same house with the siblings, she said.

Rev.Sr Noel Christine Fernando, a prominent rights activist who leads the Sramabimani Kendraya (or Shramabimani Centre) in Seeduwa, a rights group focusing on worker solidarity, particularly within the free trade zones said the battle to secure the rights of workers will go on whichever government is in power.

“It was never a smooth sailing for the Sharmaabimani centre since its start in 1994. However, it waded through high tides, rough waters and stood through thick and thin to be what it is today branching out for every worker to take rest and shelter, Sister Fernando said.

She said it’s these worker’s toil and tears that bring the much needed foreign exchange to the country. We believe this government that came to power through the ballot of the landless people will heed their cry and provide them a permanent house.

Rev. Fr. Sarath Iddamalgoda, core founder and director of Shramaabimani Centre said under whatever condition ‘we musn’t forget the vision and the mission that we are called to ensure justice for the oppressed and the marginalized people’

He said the condition of the landless community in the Gampaha district and in the rest of the country is similar to the estate community who have been living for over 200 years without proper status which reveals the extent of social inequality and discrimination in a nation that is signatory to many UN conventions on right to life and decent living.

“A bottom-top discussion and collaboration with a people-friendly and people-centred administrative mechanism is critical to address the persisting issue of the ‘unknown poor’ in the country whose call for a permanent house has gone unheeded for many decades, he said.

According to the UN an increasing number of people are driven from their homes by crises such as conflict, political instability, climate change, and economic hardship. A record number of people are forcibly displaced and – in an increasingly urbanizing world – displacement is becoming an urban phenomenon.

Meanwhile poverty in Sri Lanka has been rising since the economic crisis in 2022 where many households in the ‘middle income’ bracket have been pushed down to the ‘poor’ segment.

According to the World Bank poverty continued to increase in 2021, and doubled between 2021 and 2022, from 13.1 to 25.0 percent ($3.65 per capita, 2017 PPP) adding 2.5 million people into poverty in 2022.

Eradicating extreme poverty for all people everywhere by 2030 is a pivotal goal of the 2030 Agenda for Sustainable Development.

By Lalin Fernandopulle

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Aitken Spence Travels leads in regenerative tourism

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Aitken Spence Travels has once again reaffirmed its leadership in Sri Lanka’s tourism sector, being recognised as a Category Winner in the Hospitality & Tourism Services sector at the CPM (Chartered Professional Management) Best Management Practices Company Awards 2026 for the third successive year. Achieving a significant milestone, the company was also listed among Sri Lanka’s Top 40 companies for the first time, underscoring its continued commitment to excellence and innovation.

As Sri Lanka’s leading destination management company, Aitken Spence Travels has consistently demonstrated best in class management practices, earning recognition at the CPM awards, which celebrate organisations that uphold high standards of corporate performance, governance, and sustainability.

This year’s recognition reflects the company’s strategic focus on regenerative tourism, an approach that goes beyond sustainability to actively restore and enhance the environmental, cultural, and socioeconomic landscapes in which it operates. By designing travel experiences that create meaningful value for local communities while preserving natural ecosystems, Aitken Spence Travels continues to redefine the role of tourism in a rapidly evolving global context.

Aitken Spence Travels Managing Director Nalin Jayasundera stated, “At ASTL, sustainability is not a standalone initiative, it is central to our strategic direction and governance framework.” This commitment is driven by the continued leadership and dedication of both the Managing Director and the Aitken Spence Group, with the company’s sustainability initiatives closely aligned with Group level policies that ensure strong governance, accountability, and oversight. Notably, Aitken Spence Travels stands as the only destination management company in Sri Lanka to be certified by Travelife and the Global Sustainable Tourism Council (GSTC), in addition to holding ISO certifications, further reinforcing its leadership in responsible and regenerative tourism.

Commenting on this achievement, Chairperson/Chairman of Aitken Spence PLC, Stasshani Jayawardena added “Aitken Spence Travels reflects the broader Aitken Spence Group ethos, where sustainability is embedded into governance and strategic direction rather than as stand-alone projects. This has been an integral part of how our businesses operate, ensuring accountability, consistency, and responsible growth across all our sectors, including travel and tourism.”

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