Business

CB Governor sets the record straight on speculative theories of US dollar shortage

Published

5 years ago

2021/06/29

Central Bank Governor Prof. W.D Lakshman

Addressing speculations and concerns in various quarters including by the media about Sri Lanka’s international reserves, foreign currency liquidity in the domestic market and drains on such resources, Central Bank Governor Prof. W.D Lakshman yesterday provided a comprehensive account of the true situation and explained the measures taken by the authorities to ensure judicious management of foreign reserves, inflows, debt repayment, imports and the overall stability in the foreign exchange market.

Reproduced below is the full text
of the press statement issued
by the Governor.

Over the past few days, concerns have been raised by various individuals and media about an assumed shortage of foreign currency liquidity in the domestic market, preventing banks from facilitating imports. Reports published or circulated by some media channels indicate seriously negative viewpoints which can be very harmful to the country. I wish to make the following statement to explain the true position about this subject.

Due to heavy foreign currency borrowings in the past several years, there was adverse speculation, even by the time of the formation of the present Government in 2019/2020, about Sri Lanka’s ability to service its debt service obligations falling due in the near term. In spite of such speculation, and amidst added pressures owing to the COVID-19 pandemic on particularly our tourism cash flows, the Government of Sri Lanka reiterated its stance of ensuring that all its external debt service obligations would be met on time, thus maintaining Sri Lanka’s unblemished record of servicing all its maturing obligations.

To enable the country to perform this formidable task amidst reduced foreign currency inflows, Sri Lanka introduced measures to rationalise selected non-essential imports. Some of these restrictions have been gradually removed, although the Central Bank is of the view that there is further space to curtail non-essential and non-urgent imports, given the continued challenges emanating from multiple waves of COVID-19.

As a result of the measures taken by the Government and the Central Bank in the past 1 ½ years, the Government has been able to substantially reduce its foreign debt to GDP ratio to about 40 per cent and the face value of foreign debt from USD 34.1 billion at end 2019 to USD 32.2 billion by end March 2021, while successfully meeting its maturing debt service obligations. I believe that it is in Sri Lanka’s best interest to address the longstanding merchandise trade gap of USD 10 billion as it places Sri Lanka in a vulnerable position, through careful policy action. While doing this, we would continue to meet our debt service obligations and avoid further damage to the country’s reputation and to investor confidence on the Sri Lankan economy and the financial system.

We have also observed that some segments of the Sri Lankan community motivated by political reasons have continued to fuel adverse speculation about the future path of the exchange rate and the ability of the Government to service its obligations. Such self-serving speculations are unwarranted and are harmful to the general public as well as to the business community themselves. These speculative comments have naturally created some unnecessary short-term imbalance in the foreign exchange market between inflows and outflows. However, it must be noted that the Government and the Central Bank has ensured that trade is not unduly disrupted, and intermediate and capital goods imports are given priority in the process of imports. Total import values have remained considerably high at a monthly average of USD 1.7 billion during March, April and May 2021. High import values in these months show that importers, particularly of essential goods, have not been overly inconvenienced as the published media reports claim.

What the Central Bank is doing now with the participation of all commercial banks, is judicious management of imports and foreign reserves. As cash flows are poised to improve in the next few months, the Central Bank will be evaluating the national balance sheet and external macroeconomic conditions in deciding the future policy response.

As an interim solution in managing the mismatch in cash flows, the Central Bank has been working closely with the banking sector to ensure that stability in the foreign exchange market is maintained. Regular meetings with key officials of the banking community are held by the Central Bank, and the banking community has mutually agreed to manage their outflows within inflows, while giving priority to essential and urgent imports, and discouraging orders of speculative nature. It is such prudent action by banks that is being blown out of proportion by parties with vested interests.

Actions taken by the banking community have been supported by the Central Bank of Sri Lanka through measures taken in relation to mandatory conversions of export proceeds and regulatory measures to dampen speculative activity. The Central Bank has enabled commercial banks and corporates to borrow foreign funds so that the banking system could remain non-reliant on the Official Reserves to finance imports, thus supporting the national effort to continue the process of debt servicing without disturbance.

At present, our focus is managing Sri Lanka’s debt service obligations. In this regard our Gross Official Reserves remain at USD 4 billion, without considering the standby SWAP agreement of approximately USD 1.5 billion with the People’s Bank of China. While there may be short term fluctuations in this level of foreign reserves in the period ahead due to debt servicing of the Government, adequate financing strategies have been lined up to maintain reserves at sufficient levels, through inflows to the country. These include non-debt inflows expected within a short period of time to the Government particularly through its new investment arm, and other inflows to the Government from multilateral and bilateral sources. Inflows expected to the Central Bank include the SWAP facility of USD 250 million from the Bangladesh Bank expected in July 2021, the SAARCFinance SWAP facility from the Reserve Bank of India of USD 400 million expected in August 2021, and the special SWAP facility of USD 1,000 million being negotiated with the Indian counterpart. These are in addition to the receipt of around US dollars 800 million under the IMF SDR allocation expected in August 2021, and the Central Bank purchases of export proceeds and worker remittances from the market, which would help the Central Bank to build Official Reserves through non-debt inflows of around USD 700 million annually in the period ahead. Measures are also being put in place to entice the resident holders of maturing Sri Lanka International Sovereign Bonds (ISB) to repatriate maturity proceeds. It may be noted that 30 per cent of upcoming ISB maturities are held by residents. Moreover, the banking sector and the corporate sector have also seen increased amounts of financial flows at concessionary rates to support real sector activity. Private sector entities are expected to raise funds from overseas counterparts making use of the recent easing of related foreign exchange regulations. Some of these inflows in the period ahead are expected to add to the Official Reserve as well. The recent enactment of the legislation on the Colombo Port City Commission will also enable increased non-debt foreign exchange inflows to the economy.

Overall, I wish to assure the media, the general public, the business community and the investor community that the conditions of foreign currency liquidity observed in the domestic market at present are temporary and are driven by excessive speculative activity. We request these operators in the market to remain calm and not fuel undue speculation, which is not in the national interest, as the careful management of the situation without undue disruption, will result in a beneficial outcome to the country as a whole.

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Business

Climate damage costing Sri Lanka over Rs. 50 billion annually; private capital key to recovery and growth

Published

15 hours ago

2026/06/11

Sahan Weerasooriya

Azusa Kubota

– UNDP Resident Representative Azusa Kubota

Sri Lanka’s climate crisis is no longer merely an environmental challenge but a growing economic threat that is inflicting losses exceeding Rs. 50 billion annually, while placing immense pressure on public finances, investment flows and long-term economic stability, according to United Nations Development Programme (UNDP) Resident Representative Azusa Kubota.

Delivering the keynote address at the Climate Summit organised by the Climate Action Committee of the Ceylon Chamber of Commerce, Kubota said the country urgently needs to transform climate ambition into investable projects capable of attracting private capital, strengthening resilience and driving economic growth.

“Climate change is no longer a distant environmental issue. It is already a risk shaping markets, supply chains, trade, investment and human development. It is fundamentally an economic and development issue,” she stressed.

Kubota warned that climate volatility is intensifying in real time, citing forecasts from the World Meteorological Organisation indicating an 80 percent probability of El Niño conditions during the June-August period, rising to over 90 percent later this year.

For Sri Lanka, this could mean weaker rainfall, higher temperatures, greater pressure on agriculture and hydropower generation, and increased risks to water security, food production and business continuity.

The UNDP official noted that the devastating impacts of recent climate-related disasters had exposed the vulnerability of the economy. Following last year’s severe weather events, the Government’s Post Disaster Needs Assessment estimated damages of approximately Rs. 618 billion, while recovery requirements over the next three years are expected to exceed Rs. 1 trillion, with nearly half the losses concentrated in infrastructure.

“Public finance alone will not be sufficient. Private capital must be strategically directed towards bridging these enormous financing gaps,” she said.

Kubota highlighted that global climate finance reached a record USD 1.9 trillion in 2023, while private climate finance surpassed USD 1 trillion for the first time. However, she pointed out that the world still requires approximately USD 6.3 trillion annually through 2030 to remain on track with climate goals.

“The capital exists. But it will only flow at scale where policies, institutions and project pipelines are credible,” she observed.

She said Sri Lanka has made significant progress in strengthening its climate policy framework through the updated National Climate Change Policy, Nationally Determined Contributions (NDC 3.0), sectoral transition plans and the recently Cabinet-approved Climate Finance Strategy.

However, she cautioned that policy ambitions alone are insufficient unless backed by strong implementation mechanisms.

“The private sector does not invest on the basis of ambition alone. Businesses invest where policy is credible, institutions are clear and projects can move from concept to execution,” Kubota said.

She stressed that investors require certainty regarding procurement systems, regulatory frameworks, financing mechanisms, revenue models and governance structures before committing capital.

The UNDP representative identified renewable energy, energy efficiency, industrial decarbonisation, waste management, circular economy solutions, climate-smart agriculture, ecosystem restoration, resilient infrastructure and carbon markets as sectors with substantial investment potential.

She also pointed to Sri Lanka’s emerging carbon market framework under Article 6 of the Paris Agreement as a potentially significant source of climate finance and international partnerships.

“These are not technical details. They are the conditions that determine whether market interest becomes a credible investment,” she said.

Kubota further noted that Sri Lanka’s first Biennial Transparency Report (BTR), submitted to the UN Framework Convention on Climate Change, provides valuable insights into policy, financing and implementation gaps that need to be addressed.

According to her, transparency and accurate climate reporting are increasingly important not only for international compliance but also for investor confidence, risk assessment and financing decisions.

She urged stronger collaboration between government agencies, financial institutions, industry leaders and development partners to accelerate implementation of climate commitments.

“Climate policy succeeds when it becomes economic policy, and when the private sector becomes a co-owner of implementation, resilience and recovery,” she emphasized.

Kubota said resilience should be viewed not as a social cost but as a strategic economic investment.

“Building back better is not simply a humanitarian imperative. It is central to protecting supply chains, lowering long-term costs and strengthening economic confidence,” she noted.

She added that investments in resilient infrastructure, insurance, climate-smart agriculture, water efficiency, early warning systems and sustainable construction could create entirely new markets and competitive advantages for Sri Lanka.

Looking ahead, Kubota called for stronger alignment between NDC 3.0, the country’s long-term economic vision, emerging carbon market frameworks and financing mechanisms.

“The task now is to connect policy to projects, projects to finance, and finance to measurable results for people, businesses and communities,” she said.

She reaffirmed UNDP’s commitment to supporting Sri Lanka through initiatives including climate investment pipeline facilities and the proposed Canopy Fund, a blended finance mechanism designed to mobilise investment for nature-based solutions.

“The decisions we make today will shape not only Sri Lanka’s climate future, but its economic future as well,” Kubota concluded.

By Ifham Nizam

Business

David Pieris Automobiles opens Sri Lanka’s first GWM Flagship Experience Centre

Published

15 hours ago

2026/06/11

Sahan Weerasooriya

One of first GWM customers receiving the keys from Rohana Dissanayake, Group Chairman and Managing Director, David Pieris Group of Companies

A new era of premium mobility begins at Union Place, Colombo 02

David Pieris Automobiles (Private) Limited (DPA), the four-wheeler sales arm of the David Pieris Group, proudly announced the opening of its state-of-the-art GWM Flagship Experience Centre at 250, Access Tower 03, Union Place, Colombo 02, marking a significant milestone in the evolution of Sri Lanka’s automotive retail landscape.

GWM Flagship Experience Centre at Access Tower, Union Place,
Colombo 02

The newly opened flagship facility is designed to deliver a truly world-class automotive experience, showcasing the latest innovations and technologies from GWM, one of the world’s leading automobile manufacturers. As the first and only vehicle experience centre of its kind in Sri Lanka, it offers customers an immersive journey that goes beyond the traditional showroom concept. Visitors can explore GWM’s premium range of SUVs and electric vehicles, including the HAVAL H6 HEV, HAVAL H6 PHEV, HAVAL H6 GT PHEV, TANK 300 HEV and TANK 500 HEV, while enjoying dedicated vehicle demonstration zones, test-drive opportunities, and a host of innovative customer engagement experiences designed to redefine the vehicle purchasing journey. GWM’s product portfolio in Sri Lanka will be further expanded in the coming months with the introduction of several new models, including a range of fully electric vehicles.

GWM vehicles at the newly opened Experience Centre at Access Tower, Union Place, Colombo 02

With a legacy spanning over four decades, the David Pieris Group has earned a reputation as one of Sri Lanka’s most trusted automotive organisations, particularly for its comprehensive after-sales support and customer service excellence. Strengthening its commitment to GWM customers, DPA has already established a dedicated, state-of-the-art GWM service centre at No. 75, Hyde Park Corner, Colombo 02, supported by an expanding network of authorised service dealers across the island to ensure convenient and reliable customer care.

The state-of-the-art Flagship Experience Centre at
Access Tower, Union Place, Colombo 02.

Commenting on the opening, Mahesh Gunathilake, Director, David Pieris Automobiles, stated: “The opening of the GWM Flagship Experience Centre represents a significant milestone in our journey with the GWM brand in Sri Lanka. This is the country’s first dedicated state-of-the-art experience centre for GWM vehicles, offering customers the opportunity to experience world-class automotive technology, premium comfort and advanced safety features. GWM has successfully redefined modern mobility by delivering high-end luxury and innovation at an affordable price point, and we are proud to bring this exceptional experience to Sri Lankan motorists.”

GWM vehicles at the newly opened Experience Centre at
Access Tower, Union Place, Colombo 02

The opening of the flagship facility further reinforces David Pieris Automobiles’ commitment to expanding GWM’s presence in Sri Lanka, while providing customers with an unmatched ownership experience, backed by the Group’s renowned sales and after-sales expertise.

GWM vehicles at the newly opened Experience Centre at Access Tower, Union Place, Colombo 02

Customers interested in learning more about the GWM vehicle range, booking test drives or making pre-bookings can contact 011 7888 866, visit www.gwmsrilanka.lk or follow the GWM Sri Lanka by DPA Facebook page for the latest updates and promotions.

Rohana Dissanayake, Group Chairman and Managing Director, David Pieris Group of Companies, along with Mahesh Gunathilake, Director, David Pieris Automobiles (Private), cutting the ribbon to open GWM Flagship Experience Centre at the Access Tower, Union Place, Colombo 02.

One of first GWM customers receiving the keys from Mr. Rohana Dissanayake, Group Chairman and Managing Director, David Pieris Group of Companies

Business

Home Lands bets US$150m on Port City as it targets global property investors

Published

15 hours ago

2026/06/11

Sahan Weerasooriya

The Home Lands press conference held at Cinnamon Life - City of Dreams on June 9. From Left: Mario Offen - Deputy Director Sales and Marketing , Ashinsanie Weerasinghe - Head of Business Development and Marketing, Nalin Herath - Chairman and Managing Director, Amaya Herath - Executive Director, Rishad Mansoor - Deputy Director Marketing and Lanka Jayasinghe - Director Operations and Administration

Sri Lanka’s largest private real estate investment by Home Lands Group is set to test the country’s ability to attract foreign capital into the Port City Colombo project, with the upcoming unveiling of its US$150 million twin-tower residential development.

The company announced that its flagship project, Central Park Boulevard Port City Colombo, a 37-storey twin-tower development located within Port City’s Central Park District, carries an estimated end value exceeding US$300 million and has already sold about 50 percent of its units ahead of the official launch.

Speaking at a media briefing, Home Lands Chairman and Managing Director, Nalin Herath, said the project represents more than another luxury apartment development and is intended to position Sri Lanka within the international real estate investment market.

“The total investment is around US$150 million and the total value of the project is over US$300 million. This will generate a useful cash flow to the Sri Lankan economy,” Herath said.

The launch, branded as “The Grand Launch Weekend”, will be held from June 12 to 14 at Cinnamon Life and is expected to attract around 1,800 invitees, including business leaders, professionals, artists, celebrities and international guests.

Herath said changing conditions in regional property markets had created an opportunity for Sri Lanka to compete for international investors.

“The current geopolitical tensions in the Middle East have adversely affected segments of the property market in the Gulf region, particularly Dubai. This creates an opportunity for us to enter the global real estate market. Port City is the ideal location because it has the infrastructure and resources required to cater to that market,” he said.

His comments came amid growing confidence that world-class infrastructure would draw international capital into the Port City ecosystem.

Home Lands’ latest project therefore represents one of the most significant private-sector bets yet on Port City’s future growth prospects.

Responding to concerns regarding the source of investment flows, Herath said the necessary regulatory safeguards were already in place.

“Government regulations and the Port City Commission’s compliance frameworks ensure that the project attracts legitimate institutional and private funds,” he told The Island Financial Review in response to a question.

The development will comprise more than 640 residential units overlooking Port City’s central green park and waterfront district. Home Lands describes the project as Sri Lanka’s first high-rise residential development inspired by an international ultra-luxury lifestyle brand.

The company, which has delivered approximately 3,750 apartments and villas across Sri Lanka and has more than 2,200 units currently under construction, is positioning the project as a landmark investment capable of generating foreign currency inflows as well as creating thousands of jobs.

The unveiling will also mark one of the biggest real estate launches ever staged in Sri Lanka, with former Sri Lanka cricket captain Mahela Jayawardene serving as the project’s brand ambassador.

For investors and policymakers alike, however, the larger question extends beyond the launch itself: whether Port City can evolve from a high-profile development concept into a functioning international financial centre, as envisaged when the project was first conceived.

By Sanath Nanayakkare