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Domestic Debt Restructuring plan should reduce funding and liquidity risk for non-bank financial institutions – Fitch
Sri Lanka’s proposed government debt restructuring plan should reduce funding and liquidity risk for non-bank financial institutions (NBFIs), Fitch Ratings said, issuing a press release on Friday.
It said that Sri Lankan government’s debt restructuring plan avoids direct impact on the local-currency government debt holdings of NBFIs and commercial banks, easing uncertainty over the entities’ capital, funding, and liquidity profiles.
Nonetheless, the proposal is only one aspect of the sovereign’s debt sustainability plan, and the weak economic environment continues to pose downside risk to the sector, Fitch said.
Sri Lankan NBFIs’ government debt holdings mainly comprise local-currency treasury securities to meet regulatory liquid-asset requirements and for investment returns.
Finance and leasing companies (FLCs) have boosted government debt securities holdings amid a weak economic outlook, lackluster lending opportunities and a preference for stronger liquidity buffers at a time of extreme market uncertainty, the press release said.
However, these holdings are not excessive, at around eight percent of sector assets at end-March 2023 (they were five percent at end-March 2020), but any direct impact from a government restructuring plan would have added to asset quality and earnings pressure arising from Sri Lanka’s difficult economic backdrop.
On Wednesday, Fitch downgraded Sri Lanka’s Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) to “C” from “CC.”
A day earlier, Fitch said that the Sri Lankan government’s domestic debt restructuring proposal was a significant step in resolving uncertainties in the local banking sector.The Sri Lankan Parliament approved the government’s domestic debt restructuring plan on 01 July.
Given below are excerpts of the press release: “These securities also comprise a larger proportion of banking-sector assets, and any losses arising from a restructuring could have further constrained banks’ capacity and willingness to provide funding to the NBFI sector. Foreign-currency denominated Sri Lanka Development Bonds will be subject to restructuring, but Fitch-rated NBFIs have no exposure to these instruments.
“We also do not expect the latest proposal to prompt a loss of depositor confidence in the banking system that would raise contagion risk for NBFIs’ deposits and bank funding lines. For more analysis on the implications for the banking sector, see Sri Lanka’s Domestic Debt Plan a Significant Step for Resolving Bank Uncertainty.
“Fitch views the funding and liquidity profiles of Sri Lankan NBFIs as closely linked to that of banks, given the NBFIs’ dependence on banks as a funding source. FLCs sourced approximately 73% of total non-deposit funding from other financial institutions as at end-March 2023, of which the bulk would be from banks. Similarly, banks are major funding providers for other NBFI sub-sectors, such as securities firms. FLCs’ credit drivers are also linked to those of banks due to their bank-like business models, common prudential regulator and predominant domestic exposure.
“Sri Lankan NBFIs continue to face significant downside risks beyond those addressed in the recent proposal. The economy contracted by 11.5% in 1Q23, pressuring the FLC sectors’ already-high non-performing loan ratio of 16% as at end-March 2023, while higher funding costs have crimped net interest margins and profitability. We expect economic conditions to remain difficult, particularly for FLCs’ largely sub-prime customer base, despite a modest improvement in inflation, interest rate and exchange rate trends in recent weeks.
“Capital markets are likely to stay volatile despite recent positive moves, keeping the financial prospects of securities firms less predictable in the near term. Any resistance from other government debt holders could also hold back the proposal and raise fresh doubts for the domestic financial system.
The debt announcement and subsequent sovereign rating action do not directly impact Fitch’s national ratings on Sri Lankan NBFIs. The ratings remain on Rating Watch Negative (RWN) due to ongoing operating environment risks, which could weaken NBFIs’ credit profiles relative to other entities on the national ratings scale. We would look to resolve the RWNs upon greater stability in the domestic economy and financial markets, and better visibility on how the economic downturn will affect NBFIs’ franchises and financial profiles. This could require more clarity on the final outcome of the debt restructuring, including on foreign-currency debt, and the impact on the banking and corporate sectors.”
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Prime Minister participates in Global Conscious Food Systems Summit in Bhutan
Prime Minister Dr. Harini Amarasuriya departed Sri Lanka on Monday, 31 August, to undertake an official visit to Bhutan to participate in the Global Conscious Food Systems Summit, scheduled to be held in Bhutan.
During her visit, Prime Minister Dr Amarasuriya participated in the opening plenary of the Summit on 1 September, where she delivered a keynote address under the theme “Rising to the Moment: Igniting Consciousness to Address the Polycrisis.”
The Prime Minister will also engage in discussions with international leaders and representatives on strengthening cooperation towards sustainable food systems, food security and resilient communities.

[Prime Minister’s Media Division]
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Bouchier century sets England up for record 282-run chase against Ireland
Maia Bouchier’s century led England to their highest successful ODI run-chase to defeat Ireland by six wickets in the opening match of their three-game series in Leicester.
Bouchier initially played a supporting role to Sophia Dunkley’s 61-ball 73. But, after the duo had shared a 143-run opening stand off just 118 balls to set the foundations for England, Bouchier finished with an emphatic 104 off 95.
It was England’s older hands who saved the hosts after Ireland had posted an impressive 281 for 5 on a good batting track, with fifties to captain Gaby Lewis, Amy Hunter and Rebecca Stokell. But while Bouchier, Dunkley and Alice Capsey share more than 100 ODIs between them, in the context of the hosts’ developmental approach to this series, Bouchier’s performance was most on point.
On the eve of this first match, stand-in skipper Charlie Dean had emphasised the opportunities for players to establish themselves as top selection choices with five key players missing from the squad. Bouchier, who since the 2025 Ashes has only played a bit-part for her country, got the message and sent one right back.
With Tammy Beaumont and Heather Knight retired and Amy Jones rested for this series, England entered this match with a new top order, Dunkley promoted to open alongside Bouchier and Jodi Grewcock at No. 3, playing just her third international.
The new opening pair made light work of their task early on as Ireland’s bowlers struggled to make any impact, as England’s attack had earlier.
Bouchier crashed four fours in a row off Jane Maguire and, after 10 overs, they were 72 without loss, compared to Ireland’s 51 for 1.
Dunkley reached fifty first, off 40 balls with 10 fours, including the one that brought up the mark, crashed through the covers off Kia McCartney. Bouchier reached her half-century off 63.
Dunkley survived a stumping attempt while trying to drive legpsinner Cara Murray but she fell next ball, smashing one back for a sharp return catch.
Murray was finding appreciable turn and she bowled left-hander Grewcock through the gate with one that pitched on middle and hit the top of leg stump.
Bouchier raised her ton off 91 balls, driving McCartney through the covers for her 11th four. But she fell moments later, picking out Orla Prendergast at long-on off the bowling of Arlene Kelly.
That left Capsey to combine with another first-choice England player in Freya Kemp to take their side to the brink of victory with a 54-run partnership for the fourth wicket. With one shot needed for victort, Kemp holed out for a typically quickfire 36 off 22 balls, including four consecutive boundaries off Arlene Kelly, before Capsey struck the winning four to remain unbeaten on 41.
Earlier, the hosts had battled to crack a century stand for the second wicket between Hunter and Lewis, before Stokell fired off a 43-ball fifty.
Stand-in wicketkeeper Capsey, taking the gloves for Jones, took an excellent catch dive-rolling to her right to remove Alice Tector off an edge from Issy Wong to put Ireland at 13 for 1 in the fifth over.
But then Hunter and Lewis settled into their stubborn stand worth 136 runs off 152 balls, negating the hosts’ three-pronged spin attack with ease and showing little mercy to the seamers either.
The duo reached half-centuries within a few strokes of one another, Hunter first off 67 balls with a swept four over midwicket followed by a leg-side single off Mady Villiers, the off-spinner playing her first white-ball international in two years. Lewis raised her fifty off 66 balls by pulling a short ball from Lauren Filer for four.
Wong returned to the attack in the 30th over and struck with her third ball back, a fuller one which jagged in through the gate and clattered into Lewis’s stumps to break their union.
Tilly Corteen-Coleman was expensive in her fifth match for England, coming after she had warmed the bench in the shadow of fellow left-arm spinners Sophie Ecclestone and Linsey Smith during the T20 World Cup.
With Corteen-Coleman having conceded 53 runs off seven wicketless overs, England skipper Dean deployed her offspin to prise out Hunter, luring her down the pitch with one that slid past the inside edge and turned onto leg stump.
Stokell had raced to 46 off 37 balls when and was still on the cusp of her half-century when she overturned an lbw dismissal to Dean, with replays showing the ball pitched outside leg stump. Having already celebrated her fifty for a four that replays showed had actually come off her helmet, she brought up the milestone with a single back over the bowler’s head off Dean. who then bowled Leah Paul next ball to claim her second wicket.
Scores:
England Women 283 for 4 in 38.1 overs (Maia Bouchier 104, Sophia Dunkley 73, Alice Capsey 41*; Cara Murray 3-58) beat Ireland Women 281 for 5 in 50 overs (Gaby Lewis 69, Amy Hunter 62, Rebecca Stokell 54*; Issy Wong 2-57, Charlie Dean 2-44) by six wickets
[Cricinfo]
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Showers will occur in the Western and Sabaragamuwa provinces and in Galle, Matara, Kandy and Nuwara-Eliya districts
WEATHER FORECAST FOR 02 SEPTEMBER 2026
Issued at 05.30 a.m. on 02 September 2026 by the Department of Meteorology
The atmospheric conditions are getting favorable for afternoon thundershowers in the Northern, North-central, Eastern and Uva provinces in the next few days.
Several spells of showers will occur in the Western and Sabaragamuwa provinces and in Galle, Matara, Kandy and Nuwara-Eliya districts. Showers or thundershowers may occur at a few places in the Eastern and Uva provinces and in Mullaitivu district after 2.00 p.m.
Fairly strong winds of about (30-40) kmph can be expected at times over the Western slopes of the Central hills, the North-central and North-western provinces and in Hambantota and Matale districts.
The general public is kindly requested to take adequate precautions to minimize damage caused by temporary localized strong winds and lightning during thundershowers.
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