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Central Bank sets its macroeconomic projections in a firm direction

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But warns of uncertainty surrounding forecasts of given variables

by Sanath Nanayakkare

After the Central Bank of Sri Lanka (CBSL) recently set a more inclusive and predictable Monetary Policy under the new CBSL Act, the business community appears to be taking their cue from the Bank’s medium term economic projections as was evident by the increased buying interest at the Colombo Stock Exchange when the market opened trading for the week on August 7.

On August 3, Dr. P. K. G. Harischandra, Director of Economic Research at the Central Bank of Sri Lanka said that CBSL’s latest Monetary Policy Report would give guidance to financial markets and other stakeholders as to how inflation and price stability would behave in the medium term (next 2-3 years), and therefore, they could assess future trends in the economy while evaluating the matrix of downside risks and upside risks in their investment and business decisions.

“Anchoring inflation expectations is a key element in the Monetary Policy framework. We will be focusing on the need to stabilize inflation expectations in businesses and households alike,” he said on 3rd August addressing journalists at a technical discussion on the Monetary Policy Report.

Illustrating Inflation fan charts for the medium term, Dr. Harischandra said,”CBSL arrives at macroeconomic projections including that of inflation, using a semi-structural macroeconomic model. These projections are usually updated on a quarterly frequency along with the release of GDP data. Projections are arrived at using released data, projections of major global indicators, near-term forecasts of selected variables and judgments,” he said.

However, he pointed out that forecasts are uncertain by nature, which is represented by the confidence intervals, and this uncertainty needs to be taken into consideration when such forecasts are used for various purposes.

“As per latest projections, inflation is expected to reach single digit levels in Q3 2023, and will stabilize at the desired levels over the medium term. So, when inflation stabilizes over the medium term, interest rates also will move in line with it. A major element here is the risk factors on the forecasts. Sometimes the actual figures could differ from the baseline forecasts. We explain such risks in the Monetary Policy report, he said.

Dr. Harischandra noted that CBSL would build up credibility of the projections process through increased communication with the public ensuring a high level of transparency.

“Going forward, we will be publishing a forecast and when we receive actual data in the coming weeks and months, we will be able to see the difference between our forecasts and actual data. Yes, there may be some difference as our projections may not be 100% accurate. We will then explain why any such deviations from the forecasts have happened. And then we can refer to what adjustments are needed on the medium term forecasts for the benefit of the public and businesses. Through this process, we are committed to increasing the transparency and credibility of the Monetary Policy and our projections. Because when we commit ourselves to a medium term target, we have an accountability to achieve it. That is a requirement of the Monetary Policy.”

Speaking further Dr. Harischandra said, “In addition to maintaining price stability, there will be other policy coordination, and we will be creating a platform for discussions in order to support decision making in broader terms”

“In June 2023, Colombo Consumer Price Index (CCPI) was 12%. In July it came down to 6.3%. The core inflation declined to 6.1%. Within this month, we expect that it will come into the targeted range. When headline inflation came down to 6.3%, food inflation became a negative 1.4%. Non-food has gone up by 19.5%, but transportation is a negative 9.3%. These reasons, prudent policies on the fiscal front and the inflation base effect in 2022 mainly brought inflation down. People ask if inflation has decelerated why prices aren’t coming down. We say at every forum that a fall in inflation is not necessarily about a fall in prices of all commodities across the board. Prices of some consumer items have declined notably giving relief to the consumers and prices of some other items have slowed the rate of increase in prices. Overall, there are no price shocks now. Journalists also have a task in communicating this properly to the public because it is a huge incomprehension that a fall in inflation is a fall in prices of everything.”

“Each economy needs some inflation. If there is negative inflation nobody will invest and produce because if prices keep coming down there will be losses. So, no country targets negative inflation. But as we came from a very high inflation to lower inflation, there was some negative inflation. A good rule of thumb for any country is not to let the price of the overall basket to get negative inflation because the consequences of that could ripple through the economy.”

Dr. Harishchandra told The Island Financial Review that the exchange rate of the US dollar to LKR won’t see much of an adverse effect when the government begins to make foreign debt repayments because the Domestic Debt Optimization programme is designed to withstand such risk.



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Harnessing nature’s wisdom: Experts highlight “Resist–Align” path to resilience

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As Sri Lanka confronts mounting environmental and economic pressures, a timely national conversation on resilience has underscored the urgent need to rethink how societies respond to change—by balancing resistance with alignment to nature.

The inaugural Nature Talks Webinar Series, titled “Nature’s Secrets for Building Resilience in a Changing World,” took place on Wednesday night, bringing together leading environmental thinkers who argued that resilience is no longer optional, but essential in navigating climate and ecological uncertainty.

Organised collaboratively by the International Centre for Biological Studies (ICBS), GAP HQ, and the Biomimicry Research Centre, the session aimed to bridge science, policy, and innovation, while drawing practical lessons from nature.

Leading the discussion, Professor Sarath Kotagama of the University of Colombo emphasised that resilience must be understood as a combination of resistance and alignment.

“Resilience is about resisting where necessary, but also forming alliances with change,” he said. “We are not saying we can stop everything. The real question is—can we adjust to live with it?”

He urged societies to reflect on their ability not only to prevent or resist environmental change, but also to adapt intelligently to it. Referring to global developments such as Artemis II, Kotagama noted that humanity is increasingly being reminded of how rapidly conditions are shifting on Earth.

Drawing lessons from the COVID-19 pandemic, Professor Kotagama outlined several insights that have reshaped thinking on resilience.

“One of the most important lessons was the role of microbes,” he said. “We always focused on large animals in biodiversity, but COVID showed us that invisible organisms can have a massive impact on the planet.”

He explained that while conservation has traditionally prioritised charismatic species such as elephants and birds, microorganisms—often overlooked—are equally critical to ecological balance.

Professor Kotagama also challenged assumptions about nature. “Nature is not always kind or caring. Under certain conditions, it can be harsh, and humans don’t necessarily feel affection for all forms of life—especially microbes,” he said.

At the same time, he stressed the decisive role of science. “If not for science, we would not have survived as we did,” he noted, pointing to the rapid development of vaccines despite global norms that typically require years of testing.

He further highlighted the importance of governance. “We may not always like governments, but during COVID, governments mattered. Without coordinated action, the outcome would have been far worse,” he said.

Professor Kotagama added that the pandemic exposed vulnerabilities in the global economic system, with industries such as tourism collapsing almost overnight due to what he described as “an invisible microbe.”

“It showed clearly that systems we thought were stable can be disrupted instantly,” he said, warning that unsustainable development models—particularly in tourism—must be reconsidered.

Meanwhile, Professor Sevandi Jayakody of Wayamba University of Sri Lanka highlighted biomimicry as a key pathway to resilience.

“The biggest answer to resilience is biomimicry,” Professor Jayakody said. “Nature already holds solutions—we just need to understand and apply them.”

She explained that biomimicry can operate at the level of form, process, or systems, and cited mangrove restoration as a practical example. Attempts to artificially recreate ecosystems often fall short unless they follow natural patterns such as tidal flows and species interactions.

“In restoring degraded mangroves, we learned that forcing systems does not work. When we followed natural contours and introduced resilient ‘nurse’ species, the ecosystem began to recover on its own,” she said.

Professor Jayakody emphasised that resilience must be embedded within environmental systems rather than imposed externally. “Resilience is a function of the environment we live in. If we ignore that, our interventions will fail,” she said.

She also cautioned against expecting rapid results. “Nature is slow. Humans are in a hurry,” Professor Jayakody noted, pointing to long-term data showing that even measurable ecological changes—such as seasonal shifts—can occur gradually over decades.

“Change is inevitable, but it is not always sudden. We need long-term data, patience, and the wisdom to interpret it correctly,” she added.

Moderating the session, Imaduwa Priyadarshana brought a practical perspective on sustainable design and adaptation, highlighting how nature-based thinking can inform urban planning and infrastructure.

With Sri Lanka grappling with climate variability, coastal degradation, and energy challenges, the experts stressed that such knowledge-sharing platforms are increasingly vital. The discussion aligned with a growing global shift towards nature-based solutions—learning from ecosystems that have evolved resilience over millennia.

By Ifham Nizam

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Uber Eats continues Sri Lankan expansion now in Nuwara Eliya

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Uber Eats is now live in Nuwara Eliya, making it easier for locals and tourists to enjoy their favourite meals – from a hot plate of kottu on a chilly evening to a comforting rice and curry spread or crispy egg hoppers – delivered right to their doorstep.

Known for its cool climate, old-world charm, and rolling tea estates, Nuwara Eliya sees a surge of Sri Lankan and international visitors during the April holiday season. But as temperatures drop in the evenings, food options have traditionally been limited, with many outlets closing early.

With Uber Eats now available, consumers can discover and order from a growing range of local restaurants and neighbourhood favourites – without stepping out. The platform also extends access to meals into the late evening, making it easier to find food even after most outlets have closed. In Nuwara Eliya, specially designed temperature-controlled insulated bags will help ensure meals are delivered hot. Consumers can choose from a wide variety of cuisines including Sri Lankan, Indian, Chinese, Thai, and Arabic or order from global brands such as KFC, Pizza Hut, and Domino’s.

The launch supports the local community by enabling restaurants to reach more customers across the city, while creating flexible earning opportunities for delivery partners, especially during the busy holiday season.

Varun Wijewardane, Country Manager – Delivery, Uber Sri Lanka, said: “Nuwara Eliya is one of Sri Lanka’s most loved destinations, especially during the April season. With Uber Eats now live, we’re making it easier to enjoy great food more conveniently – from everyday favourites to late evening short eats while also supporting local restaurants and creating earning opportunities within the community. This comes on the back of an aggressive expansion of our services across Sri Lanka – providing our consumers with convenient access to local favourites and unlocking earning opportunities for more Sri Lankan communities.”

Entry in Nuwara Eliya builds on expansion from last year across 6 districts including Hikkaduwa, Ambalangoda, Chilaw, Wennappuwa, and Puttalam, Jaffna, Gampola, Matale, Matara, Weligama, Mirissa, and Anuradhapura – further strengthening Uber Eats’ position as the country’s go-to delivery platform.

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Five consecutive years as a Company with Great Managers

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Union Assurance PLC is licensed by the Insurance Regulatory Commission of Sri Lanka (IRCSL).

Union Assurance, Sri Lanka’s longest-standing private Life Insurer, was honoured as a ‘Company with Great Managers’ for fifth consecutive year at the CLA Great Managers Awards 2025, held at Cinnamon Grand Colombo. Presented annually by the Colombo Leadership Academy & CLA Coaching Inc, the award affirms that Union Assurance’s approach to leadership excellence is not episodic, but deeply embedded across the Company.

The CLA Great Managers Awards programme, powered by Colombo Leadership Academy & CLA Coaching Inc. in strategic partnership with People Business, The Culture Factor Group – Hofstede & Onehub, is regarded as the international benchmark for assessing managerial and leadership effectiveness in Sri Lanka. Using the scientifically grounded D-ACTI 5X meta-analysis framework, the programme evaluates managers across five leadership pillars: Driving Results & Execution Excellence, Aligning Organizational Vision, Coaching & Developing Others for Growth, Building Team Effectiveness & Collaboration & Leadership Integrality & Holistic Approach.

Reflecting the depth and diversity of managerial capability within the organisation, five Union Assurance leaders were individually recognised across distinct award categories this year. Sashika Perera, Senior Manager – Statutory Reporting & Taxation, and Ishanthi Umedha, Head of Governance & Valuation, were recognised for ‘Demonstration of Well-Rounded Performance and Managerial Effectiveness.

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