News
EPF asked to pay 30% tax unless it participates in domestic debt restructuring process
Banks, which pay taxes over 50%, least affected
By Sanath Nanayakkare
If the Employees’ Provident Fund (EPF) and other pension funds did not wish to participate in the proposed domestic debt restructuring process, there will be an application of higher annual income tax of 30%, Central Bank Governor Dr. Nandalal Weerasinghe said yesterday. The EPF is currently taxed at the rate of 14%.
Dr. Weerasinghe said so, addressing the media in Colombo.Finance Ministry Secretary Dr. R. Samaratunga, Treasury Secretary Mahinda Siriwardena were also present. Dr. Weerasinghe said, “Banking sector has already borne a significant burden of the fiscal adjustment and the economic crisis in several ways. The banking sector has been paying higher tax rates than other corporations.
The total tax burden on the banking sector, which is serving 57 million customer deposits, is more than 50%. Through high tax payment, the banking sector is helping the government’s fiscal consolidation efforts. Further, banks gave moratoriums and faced the brunt of non-performing loans during the Covid-19 pandemic. So, any disturbance to financial system stability could be costly. And disruptions to the banking system will adversely impact the effective transmission of monetary policy. So, the main effort is preserving the 57 million customer deposits in the banks and letting no room for a bank run.
“In contrast, superannuation funds are subject to a tax of 14%. It has been proposed for superannuation bonds to be exchanged for longer term maturity T-Bonds at a coupon rate of 12% until 2025m which will be 9% minimum beyond 2025. So, there is at least 9% return on EPF funds ensured on a long-term basis while there will be no reduction on the current balance of any individual’s EPF. In the event it has to be lowered below 9%, the Treasury has agreed to fill the balance.
“If superannuation funds don’t want to take part in this process, they will be liable to be taxed at 30% instead of the current 14%.”
The minimum participation requirement for EPF is set at 50% for outstanding bonds maturing in 2023 and 100% of bonds maturing between 2024 and 2032, according to CBSL.
Speaking further the CBSL Governor said:
“What we expect from this is to bring the government debt stock to a sustainable level within 10 years as per the agreement with the IMF. The number one benchmark in this context is reducing the public debt to GDP to 95 % from 128%. Secondly, the Gross Financing Needs (GFN) of the government needs to be reduced to below 13% of GDP from 34.6 % of GDP between now and 2032. Thirdly, Foreign Debt Servicing needs to be reduced to below 4.5 % of GDP from the current 9.4 % of GDP within the same period. If these targets are achieved, it should help close external financing gaps of USD 16.9 billion. For this, we need to restructure loans obtained from official bilateral creditors such as Japan and China.
Then there is the need for restructuring international sovereign bonds (ISBs) and negotiations are underway for these two elements. Our foreign exchange debt service target is set at 4.5% max. of GDP in 2027-2032. Thirdly, it is important to restructure domestic debt in some form and that is why we are presenting a plan to execute it. One available option in optimizing government debt is to increase taxes and improve the Primary Account Balance. These measures have already been taken. So, the remaining option is restructuring government debt stock through optimization of Treasury Bills and Treasury Bonds. At present Treasury Bill stock is worth LKR 4.1 trillion. 62.4 % of it is owned by the Central Bank of Sri Lanka (CBSL). CBSL has already agreed that its holdings of Treasury Bills would be converted to Treasury Bonds because this will help reduce gross financing needs of the government. And there are
Treasury Bonds worth of Rs. 8.7 trillion of which 20.5% is from superannuation funds including the Employee Provident fund (EPF); 36% from the banks and the balance from insurance funds and other private funds. So, we are looking at the best solution which can protect the banks, depositors and the EPF. That’s why CBSL has agreed to take part in these domestic debt optimization negotiations,” Dr. Weerasinghe said.
Latest News
Heat index likely to increase up to ‘Caution level’ at some places in the Northern, North-central, North-western, Western, Sabaragamuwa, Southern and Eastern provinces and Monaragala district
Warm Weather Advisory
Issued by the Natural Hazards Early Warning Centre at 3.30 p.m. on 11 April 2026, valid for 12 April 2026
The Heat index, the temperature felt on the human body is likely to increase up to ‘Caution level’ at some places in the Northern, North-central, North-western, Western, Sabaragamuwa, Southern and Eastern provinces and Monaragala district.
The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.

Effect of the heat index on human body is mentioned in the above table and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.
ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated.
Dress: Wear lightweight and white or light-colored clothing.
Note: In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.
Latest News
Sun directly overhead Cheddikulam, Kebithigollewa, Gomarankadawala and Nilaveli about 12:11 noon. today [12]
On the apparent northward relative motion of the sun, it is going to be directly over the latitudes of Sri Lanka from 05th to 15th of April in this year.
The nearest areas of Sri Lanka over which the sun is overhead today (12th) are Cheddikulam, Kebithigollewa, Gomarankadawala and Nilaveli about 12:11 noon.
News
CEB orders temporary shutdown of large rooftop solar systems
The Ceylon Electricity Board (CEB) has directed owners of large-scale rooftop solar systems to temporarily disconnect their installations for a 10-day period beginning from Friday (April 10), citing growing concerns over grid stability amid low electricity demand and high solar generation.
The directive applies to rooftop solar systems exceeding 300 kW capacity, which are required to remain switched off until April 20. The move coincides with the extended holiday season, during which national electricity demand typically declines, alongside prevailing sunny weather conditions that significantly increase solar output.
Senior electrical engineers told The Island that the decision, though exceptional, was necessitated by operational risks posed to the national grid.
“We are seeing a pronounced imbalance between supply and demand,” a senior CEB system control engineer said. “With industries and commercial establishments operating at reduced levels during the holidays, demand drops. At the same time, solar generation remains high, creating excess power that the grid struggles to absorb.”
He explained that such imbalances could lead to fluctuations in system frequency, potentially threatening the stability of the grid. “If generation exceeds demand, frequency rises beyond acceptable limits.
This can trigger automatic protection mechanisms or, in extreme cases, lead to partial outages.”Another senior engineer attached to the transmission division noted that managing distributed solar generation remains a technical challenge.
“Unlike conventional power plants, rooftop solar systems are not centrally dispatchable. We cannot directly control their output in real time. This limits our ability to balance the system during periods of excess generation,” he said.
He added that the country’s grid infrastructure is still adapting to the rapid growth of renewable energy. “We lack sufficient large-scale battery storage and advanced grid management systems to effectively handle these fluctuations. Until such capabilities are enhanced, temporary curtailment becomes necessary.”
Engineers also pointed out that conventional thermal plants cannot be abruptly shut down or adjusted to compensate for sudden surges in solar generation.
“These plants require minimum stable operating levels. When solar floods the grid during low demand, it creates operational constraints that are not easy to manage,” one official said.
The CEB, in its statement, expressed appreciation for the cooperation of solar system owners affected by the measure, stressing that it is a short-term intervention aimed at ensuring uninterrupted and stable electricity supply across the country.
Energy experts say the development underscores the urgent need for grid modernization, including investment in battery energy storage systems, smart grid technologies, and improved demand-side management.
“This is part of the transition challenge,” an independent analyst noted. “As solar penetration increases, the grid must evolve to become more flexible. Otherwise, curtailment will remain a recurring necessity.”
Despite the temporary shutdown, CEB engineers reaffirmed their commitment to expanding renewable energy.
“Solar power is a key pillar of Sri Lanka’s future energy mix,” a senior engineer said. “But integration must be carefully managed. Grid stability cannot be compromised.”
The temporary disconnection order, which took effect yesterday, marks a critical moment in Sri Lanka’s energy transition—highlighting both the progress made in renewable energy adoption and the technical hurdles that remain.
By Ifham Nizam
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