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European Union overreacting to Sri Lanka import controls: CB Governor
ECONOMYNEXT
– The European Union, which protested Sri Lanka’s import controls, is over reacting, the island’s Central Bank Governor W D Lakshman said while officials said the data showed affected imports are minimal.
“The statement that was published here from the EU is probably an overreaction presented too early,” Governor Lakshman told reporters.
“We are at a time we are trying to resolve our balance of payments problems. Even under WTO rules, I think a country is allowed to do certain things which are needed to meet the balance of payments problems.”
Analysts have blamed the phenomenon on a strong prevalence of Mercantilism and lack of knowledge of classical economic theory.
Classical economists have blamed the ideology on Keynes naming his book a ‘general’ theory though it could only be practised without the balance of payments troubles when credit was weak or negative (Why Singapore chose a currency board over a central bank) and the teachings of arch-Keynesians like Alvin Hansen (IS-LM) which also has to assume no external trade (Mundell–Fleming model).
In 1971 the US also imposed trade controls called a ‘Nixon-shock’ as the dollar peg with gold collapsed from printing money to target an output gap. Sri Lanka then closed the entire economy.
Trade or current account deficits are driven by foreign-financed savings-investment gaps, while currency falls are triggered by central bank liquidity driven credit, classical economists say. Commodity prices are also expected to spike amid US dollar weakening as demand recovers.
In 2018, Sri Lanka injected liquidity to control rates first by terminating term repo deals, a so-called ‘buffer strategy’ and then through Treasury bill acquisitions in April, critics have said.
The ‘buffer strategy’ refusing to roll over maturing bonds as paper (which happens without an impact on reserve money or the exchange rate) and repaying them with a bank overdraft which was re-finance with window money. As the rupee fell gold imports which were being re-exported through a grey market.
Shortly after gold imports were banned in 2018, the rupee collapsed as more money was injected including through dollar-rupee swap of the types used by foreign speculators to bring down East Asian pegs.
In September more import controls were slammed, making nonsense of the free trade agenda of the then administration and making them a laughing stock.
Governor Lakshman said the emerging problem with the EU could be resolved with discussions.
“I think our external relations authorities are taking up this matter for discussion between Sri Lanka authorities and relevant EU authorities,” he said.
“I think discussions can solve this problem, which I am sure is a short term problem as far as we are concerned until we get out o the present difficulties.”
Officials said the impact on Europe, which had a large trade deficit with Sri Lanka and was a key destination of exports, was minimal.
“We studied the impact of import restrictions on imports from those countries it seems that the impact is quite minimal,” Director of Economic Research Chandranath Amarasekera said.
“As you know the most of the import restrictions are on non-essential imports and agricultural goods that are coming from because the government wants to promote domestic production of agricultural goods.”
“All of us need to understand why the import restrictions have been put in place,” Amarasekera said.
“It is primarily because of the difficult situation that we are in. We have saved about 3 billion dollars because of the reduction of import this year in the first 10 months.”
Analysts, however, have warned that with excess liquidity injected by domestic asset acquisitions, that imports can pick up (or domestic prices to rise) as credit is fungible.
Assistant Governor N Nanayakkara said some of the restrictions have been relaxed; imports for re-exports have also been relaxed. He said the government has said that items such as cars will be kept for a year.
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Sun directly overhead Neriyakulam, Punewa, Kebithigollewa, Pankulam and Sinhapura at about 12.10 noon today (31)
The sun is going to be directly over the latitudes of Sri Lanka from 28th of August to 07th of September due to its apparent southward relative motion.
The nearest places of Sri Lanka over which the sun is overhead today (31) are Neriyakulam, Punewa, Kebithigollewa, Pankulam and Sinhapura about 12.10 noon.
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BASL takes exception to Justice Ganepola being denied a place in SC
… highlights injustice caused to Justice R. Gurusinghe
The Bar Association of Sri Lanka (BASL) has alleged that due to the failure on the part of President Anura Kumara Dissanayake to fill the existing vacancies in the Supreme Court, a Senior Justice of the Court of Appeal, Justice Dhammika Ganepola, retired at the age of 63 without being considered for, or granted, a promotion to the Supreme Court, to which he was well entitled. The BASL pointed out at the time of Ganepola’s retirement there were four vacancies in the Supreme Court.
In a letter dated 17 August, 2026, addressed to President Dissanayake, the BASL declared that the failure to promote and recognise Ganepola’s distinguished judicial service, resulting in his retirement at the age of 63, is indeed a loss to the Judiciary.
A top BASL spokesman told The Island yesterday (30) that the Bar Council, over the weekend, had decided to release the hitherto confidential letter.
The official said that they also wanted to remind the President of his assurance given to BASL, on 12 August, 2026, that vacancies in the Supreme Court and Court of Appeal would be filled as soon as possible, within a month.
The following is the text of the BASL letter, signed by Rajeev Amarasuriya, President, BASL, and its Secretary Nalin De Silva: “We write further to our letters dated 29th December 2025 and 30th June 2026 in relation to the above, to which we have not received any response.
We also refer to our meeting with Your Excellency on 12th August. As discussed during the meeting, there have been vacancies in the Supreme Court since May 2025, and the number of vacancies has now increased to four (04). There are also four (04) vacancies in the Court of Appeal. These are all matters we have already written to Your Excellency about.
Your Excellency informed the BASL Delegation when we met that you would be taking steps to make recommendations to fill these vacancies as soon as possible, within a month.
We write to reiterate the importance of giving due consideration to the criteria set out in our aforesaid letter dated 29th December 2025. We also wish to emphasise that, in making judicial appointments and promotions, seniority should be given due priority, in keeping with longstanding practice, until such time there are objective and defensible guidelines governing the assessment of merit.
The only justifiable departure to this criterion would be where there exists a specific and recognized demerit in respect of the particular Judge concerned or such other known compelling circumstances that are objectively identifiable such as where a Judge has previously been overlooked for promotion unfairly or conversely, where a Judge has been unfairly previously granted promotions above others.
This approach will safeguard both the integrity of the Judiciary and the trust reposed in it by the public.
Further, while there has been considerable discussion and representation by the Government regarding the importance of retaining experienced judges, as reminded to Your Excellency at our said meeting that, only a few months ago on 8th May 2026, a Senior Justice of the Court of Appeal, Justice Dhammika Ganepola, retired at the age of 63 without being considered for, or granted, a promotion to the Supreme Court, to which he was well entitled, and in which there were four vacancies at the time.
The failure to promote and recognise his distinguished judicial service, resulting in his retirement at the age of 63, is indeed a loss to the Judiciary.
We also drew Your Excellency’s attention at the said meeting to the fact that the Senior-most Justice of the Court of Appeal, Justice R. Gurusinghe, who joined the Judicial Service in 1996, who also Acted in the Office of President of the Court of Appeal (appointed by Your Excellency) on 11th May 2026, is due to retire at the end of this month. In fact, we learnt through the Media that Her Ladyship then Chief Justice Justice Murdu Fernando, PC, had previously in July 2025 recommended to Your Excellency the promotion of Justice R. Gurusinghe to the Supreme Court, but the same is pending from that time.
He too is well deserving of promotion to the Supreme Court and has already been recommended by the former Chief Justice, and his case must also receive due and urgent consideration before his impending retirement.
We hope that Your Excellency will take due note of and give due regard to the concerns of the Bar, as well as to the established principles, practices and conventions governing judicial appointments, when taking steps to fill these vacancies.
On this, Your Excellency is already open to the accusation that these vacancies have been kept open, to fill with favourites of the Government which is yet another serious indictment on the independence of the judiciary which accusation would be confirmed if recommendations are made outside established practice.
Moreover, the BASL expresses grave concern that withholding promotions of Judicial Officers for extended periods of time places undue pressure on Judicial Officers in the discharge of their duties and constitutes both directly and indirectly, interference with the independence of the Judiciary, in addition to the strain obviously caused to the dispensation of justice in other Courts and the stifling and delay of career progression of Judges legitimately entitled to promotions.
We do hope that Your Excellency would take due note and cognizance of the foregoing when effecting these judicial promotions which have been long overdue and which have already adversely impacted the efficiency and effectiveness of the administration of justice.”
The BASL has copied the letter to Prime Minister Dr. Harini Amarasuriya, Speaker Dr. Jagath Wickremaratne, Opposition Leader Sajith Premadasa and all members of the Constitutional Council.
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Sajith challenges govt. to hold PC polls
Opposition Leader Sajith Premadasa on Saturday (29) challenged the government to hold the long-delayed Provincial Council elections, saying the polls would provide an opportunity to gauge the level of public support enjoyed by the administration.
Addressing a farmers’ meeting in Tissamaharama, Hambantota, Premadasa also criticised the latest Rs. 17 per kilogram increase in wheat flour prices, warning that it would push up the prices of bread, bakery products and other flour-based food items and place further pressure on households already struggling with the rising cost of living.
He said Sri Lanka ranked 120th among 130 countries in an international comparison of minimum wages, arguing that wages remained inadequate to meet the escalating cost of living.
Premadasa also questioned official assessments of living standards, asking whether a person could survive for an entire month on Rs. 17,315, a figure he attributed to the Department of Census and Statistics.
He claimed that between 30 and 40 percent of the population was living in poverty and called for a clear programme to help affected families improve their economic conditions.
Turning to the proposed 22nd Amendment to the Constitution, which seeks to increase the retirement age of superior court judges, the Opposition Leader accused the government of attempting to undermine judicial independence and interfere with democratic institutions.
He also criticised the government’s handling of poverty, employment, agriculture, healthcare and investment, saying more effective measures were needed to provide relief to people facing economic hardships.Premadasa called for stronger policies to attract foreign direct investment and urged the government to formulate a national strategy for developing the tourism industry.
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