News
Colombo Port City awaiting banking regulations
By NETHMI RAJAWASAM
Colombo Port City, which will soon be renamed as the International Financial and Technological City, is awaiting Central Bank clearance for its banking regulations, Saliya Wickramasuriya, a member of its regulatory commission said.
The Colombo Port City is a multi-currency special economic zone (dollarized) that will be free of exchange controls. Some of the laws in the country, like the Urban Development Authority Law, the Municipal Ordinance do not apply to the zone.
In several other listed laws, including the foreign exchange act, and tax laws, the economic commission can recommend exemptions which have to be approved.
The Port City Commission has to work with the relevant agency in charge of the law, like the Central bank in relation to banking, the Department of Immigration for visas or Customs in preparing special regulations to apply within its jurisdiction.
Banks operating within the special economic zone will be licensed by either the central bank or the country it is incorporated in.
“There was a meeting yesterday between some of our members and the Central Bank,” Wickramasuriya told a public forum at the central bank.
“I understand that those regulations have now been discussed and pretty much finalised.”
Authorised Persons – or businesses approved to operate in the area – have to bring capital from abroad.
Foreign exchange controls will not apply to the area. But no rupees are supposed to be used there, except in some retail shops.
“There were some concerns that the central bank had around preventing a leakage of money that is, here,” he explained.
Initially a separate financial regulatory authority was proposed which would come under the central bank’s monetary board, operating under a different set of regulations.
“Why? The objective of one is, simply put, to attract money that is not here into Sri Lanka for the purpose of development and investment,” he said
“One of the objectives of the Central Bank, apart from its other policy responsibilities, is to prevent leakage of money that is here, outside.”
“It’s highly possible, in my humble opinion, that these two cannot be done by the same regulation.
“Because one is designed to prevent and the other one is designed to attract. And right now, we are still, I believe, in the process of unravelling this, this confusion about what is more important.
“Is it more important to prevent money from here, going somewhere else? Or is it more important to bring money that is not here, from somewhere else, here?”
Sri Lanka’s monetary instability started with the setting up of the central bank in 1950 and worsened from 1978 after International Monetary Funds’s Second Amendment left it without a credible anchor, analysts have pointed out.
Foreign exchange controls exist in the rest of the country since the central bank prints money to narrowly target a policy rate through inflationary open market operations and easy standing facilities while operating a de facto pegged exchange rate (trying to collect foreign reserves).
There have been calls to bring legal restraints against the central bank’s ability to mis-target rates (independent monetary policy), trigger forex shortages, currency depreciation, capital flight, high inflation, social unrest and impoverishment through debasement.
(Economynext)
By Shamindra Ferdinando
Iran has sought the Indian intervention, at the highest level, to provide lifesaving support to the crews of empty Iranian vessels stranded just outside Sri Lanka’s 12-nautical mile territorial waters off Galle.
Sources familiar with the issue said that Iran had brought the developing situation to the attention of New Delhi as the crews of almost 20 vessels, included Indian nationals. Sources stressed that the group of vessels that unloaded crude oil a couple of months back were now stranded within Sri Lanka’s Exclusive Economic Zone (EEZ).
The US Navy torpedoed an unarmed Iran frigate, returning from India, on 04 March, 2026, about 19 nautical miles off the Galle coast. The unprovoked attack killed nearly 100 Iranians.
The Iranian Embassy in Colombo has inquired from the Indian High Commission of their response to the situation, sources said. The US has issued a global warning against providing food, water, medicine and other services to the Iranian vessels. The outcome of Iran-India talks on the issue at hand was not known, though sources asserted India may not throw its weight behind Iranian efforts to address the issue.
Responding to The Island queries, sources said both Sri Lanka and India were in a dilemma due to the US warning. India couldn’t ignore the plight of the Indian crew members and the Iranian vessels in its backyard.
The Sri Lankan government remains tight-lipped about the vessels stranded in its EEZ. Our efforts to elicit a response from relevant authorities were in vain. In addition to Indians, there are Bangladeshis among the crew members. Iran has explicitly stated the responsibilities of the countries concerned to provide assistance in terms of international law.
The Iranian position was articulated by its Ambassador to Sri Lanka, Dr.Alireza Delkhosh, recently. In a special statement, Ambassador Delkhosh emphasised that in terms of the Convention on the Law of the Sea (Article 98) as well as SOLAS and SAR
Conventions, Sri Lanka couldn’t refrain from providing the needs of the Iranian vessels stranded in its EEZ.
SLMC leader Rauff Hakeem lambasted the NPP government in Parliament for failing to provide assistance to the Iranian ships. The former Minister alleged that the government was simply carrying out dictates of the US. He strongly criticised the way Foreign Minister Vijitha Herath was handling the issue.
MP Namal Rajapaksa, who is in remand custody over the controversial Airbus deal, was further remanded until October 27 by the Colombo Magistrate’s Court yesterday (13).
Colombo Chief Magistrate Asanga S. Bodaragama made the order after considering submissions by officers of the Commission to Investigate Allegations of Bribery or Corruption and lawyers representing Rajapaksa.
Sri Lanka’s economy is expected to sustain its recovery over the next two years, although growth is projected to moderate amid mounting global uncertainties, according to the International Monetary Fund’s (IMF) latest World Economic Outlook.
In its World Economic Outlook 2026: Resilience Under Strain, Urgent Choices, the IMF projects Sri Lanka’s economy to expand by 4% in 2026, slowing to 3.7% in 2027, following estimated growth of 5% in 2025.
Inflation, meanwhile, is forecast to rise to 5.3% in 2026 and 5.4% in 2027, reversing the average deflation rate of 0.5% recorded in 2025.
Unemployment is expected to remain steady at 3.9% throughout the forecast period.
The projections come amid growing pressure on the global economy from the ongoing conflict in the Middle East, elevated energy prices, geopolitical tensions and trade disruptions.
Sri Lanka’s external position is also expected to weaken, with the current account balance projected to shift from a surplus of 1.6% of gross domestic product (GDP) in 2025 to deficits of 0.5% in 2026 and 0.3% in 2027.
The IMF’s outlook points to continued economic expansion in Sri Lanka, but with slower growth, rising inflation and a narrowing external surplus giving way to current account deficits over the forecast period.
Heavy showers above 100 mm are likely at some places in the Western, Sabaragamuwa, Southern, Central, and North-western provinces and in Anuradhapura district.
Sri Lanka, India caught in US-Iran ship crisis
Namal further remanded
IMF projects Lankan economic growth to moderate amidst mounting global uncertainties
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