Business

Fitch Rating downgrade was due to govt failure to implement correct financial policies, says UNP

Published

4 years ago

2021/12/26

The UNP says that the Fitch Rating agency’s downgrading Sri Lanka to a rank of CC indicated an increased probability of a default event in coming months in light of the country’s worsening external liquidity position and drop in foreign-exchange reserves.

Addressing a press conference held at the party headquarters Sirikotha, UNP Chairman and former minister Wajira Abeywardena said that it could not accept the excuse given by the government that the downgrading was a consequence of the COVID-19 pandemic.

“During the same period, except for a few countries such as Sri Lanka, all other countries around the world have strengthened their dollar reserves. Therefore, it is not an excuse that could be accepted as the real cause for this problem. It is nothing but a failure to implement correct financial policies,” he said.

The UNP Chairman said that Fitch has downgraded Sri Lanka to ‘CC’ from ‘CCC’. They did so, stating that there was an increased probability of default as liquidity injections made to sterilize interventions and enforce a 6.0 percent policy rate continue to drain reserves and create forex shortages. This downgrade signals a probability of a default event in coming months in light of Sri Lanka’s worsening external liquidity position underscored by a drop in foreign-exchange reserves set against high external debt payments and limited financing inflows. “We are confronted with the danger of the collapse of the economy. We see the signs of economic collapse. These signs prevent investors coming to this country,” Abeywardena said.

He said that Fitch maintains issuer default ratings from AAA to D. The AAA ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. Ratings AA stands for very high credit quality denoting expectations of very low default risk. They indicate a very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. The ‘A’ ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings. The BBB ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity. The ‘BB’ ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments. The ‘B’ ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment. The ratings of CCC where Sri Lanka had been until last week denote substantial credit risk with very low margin for safety. Default is a real possibility at that stage. The CC is the current rating status of Sri Lanka with very high levels of credit risk and default of some kind appears probable. Hereafter we have three more ratings. The next worst could be ‘C’ ratings showing a near default. It is the stage where a default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired. Then comes RD ratings which indicate an issuer that in Fitch’s opinion has experienced an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but has not entered into bankruptcy filings, administration, receivership, liquidation, or other formal winding-up procedure, and has not otherwise ceased operating. At the bottom there is D ratings indicating an issuer that in Fitch’s opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure or that has otherwise ceased business.

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Business

Sri Lanka educates women but keeps many out of work, ADB warns

Published

22 hours ago

2026/06/5

Thilina Walpola

Shannon Cowlin - ADB Country Director for Sri Lanka

Sri Lanka has one of the most educated female populations in South Asia, yet only about one in three women participates in the labour force, making female workforce participation among the lowest in the region and leaving a significant source of economic growth untapped.

That paradox took centre stage at a knowledge forum organised by the Asian Development Bank (ADB) in Colombo on June 3, where government officials, labour authorities, academics and private-sector leaders examined the deep-rooted barriers preventing women from fully participating in the economy and explored reforms needed to unlock their economic potential.

Opening the event, ADB Country Director for Sri Lanka Shannon Cowlin said the issue extends beyond gender equality and has become a critical economic challenge for a country seeking sustained growth and inclusive development.

“Empowering women to participate fully in the labour force is not only a matter of equality; it is essential for inclusive economic growth and poverty reduction in Sri Lanka,” she said.

The forum, held under ADB’s Serendipity Knowledge Programme (SKOP), focused on findings from a recent ADB-supported study exploring the factors behind Sri Lanka’s persistently low female labour force participation.

Cowlin noted that despite notable progress in education and human development, Sri Lanka continues to lag behind on measures of gender equality and women’s economic participation. She said multiple studies have shown that the factors shaping women’s labour force participation are layered, interconnected and multidimensional.

According to the study, many women remain concentrated in informal, low-paid and insecure employment with limited access to social protection and few opportunities for career advancement. Social and cultural expectations continue to place primary caregiving responsibilities on women, often restricting their ability to pursue careers or remain in full-time employment.

The lack of affordable childcare services, unequal access to digital skills and technology, concerns over workplace safety, sexual harassment and inadequate transport options were identified as major obstacles preventing women from entering or remaining in the workforce.

“These are complex challenges that require action from all stakeholders – government, development partners, the private sector, civil society and academia,” Cowlin said.

She stressed that improving women’s labour force participation would require more than isolated policy interventions, calling instead for structural transformation, stronger infrastructure and care services, progressive workplace practices and broader societal changes that improve women’s mobility, safety and economic agency.

The event featured a presentation by Professor Dileni Gunawardena of the University of Peradeniya, who shared findings from ADB’s study on female labour force participation, followed by a panel discussion involving representatives from the International Labour Organisation, the Department of Labour, MAS Holdings and John Keells Holdings.

Panelists discussed measures to improve the enabling environment for women, including greater investment in the care economy, expanded childcare facilities, enhanced skills development, creating safe, supportive workplaces and career pathways for upward mobility.

Participants agreed that increasing women’s participation in the workforce is not merely ‘a nice to have’ but an economic necessity, particularly as Sri Lanka seeks to accelerate recovery, boost productivity and achieve more inclusive growth.

The ADB said Sri Lanka’s economic recovery presents a unique opportunity to address long-standing structural barriers facing women and to build a more inclusive labour market that fully utilises the country’s human capital.

By Sanath Nanayakkare

Business

ComBank offers exclusive financial solutions to the ‘Guardians of the Skies’

Published

22 hours ago

2026/06/5

Thilina Walpola

Hasrath Munasinghe, Chief Operating Officer of Commercial Bank and Air Vice Marshal Rajinth Jayawardena, Director General Welfare of the SLAF exchange the agreement in the presence of representatives of the two organisations.

Reinforcing its commitment to those who serve the nation, the Commercial Bank of Ceylon has entered into a Memorandum of Understanding with the Sri Lanka Air Force (SLAF) to introduce a comprehensive suite of concessionary financial facilities for its officers and other ranks.

The partnership, unveiled in a year that marks the 75th anniversary of the Air Force, which was founded in March 1951 as the Royal Ceylon Air Force, reflects a shared recognition of the critical role played by the SLAF as the steadfast ‘Guardians of the skies,’ entrusted with safeguarding the country’s security and sovereignty.

Under the terms of the agreement, Commercial Bank will extend a range of specially tailored financial products to SLAF personnel, including personal loans, leasing facilities, housing loans and credit cards. These facilities will be offered at concessionary interest rates, alongside concessions on documentation charges, enabling Air Force personnel to access financial support on more favourable terms.

The Bank said the initiative is part of its continuing efforts to deliver best-in-class lending solutions that are both accessible and responsive to the diverse needs of its customers. By offering attractive and affordable repayment structures, the scheme is designed to empower SLAF officers and other ranks to meet their personal financial requirements with greater ease and flexibility.

A key feature of the programme is the ability for beneficiaries to align repayments with their income patterns, ensuring that the facilities remain practical and sustainable over the long term. This flexibility, combined with preferential pricing, is expected to make a meaningful difference to the financial wellbeing of Air Force personnel and their families.

Business

Treasury Bill rate hike compounds stock market volatility

Published

22 hours ago

2026/06/5

Thilina Walpola

The CSE was extremely volatile yesterday mainly due to external and internal negative factors.

‘The escalation of the war situation in West Asia and the proposed tariff hike on Sri Lanka’s exports to the US by the Trump administration are worsening Sri Lanka’s economic woes. Further, the government’s decision to increase the Treasury Bill rate has also created some uncertainty in the market, stock analysts said.

The All Share Price Index was up by 249.83 points, while the S and P SL20 rose by 67.61 points. Turnover stood at Rs 2.79 billion with 11 crossings.

Companies that mainly contributed to the turnover by way of crossings were: Chevron Lubricants 1.5 million shares crossed to the tune of Rs 294 million and its shares traded at Rs 196, TJ Lanka 2.9 million shares crossed for Rs 90.8 million; its shares traded at Rs 31, Citizens Development Business Finance 2.5 million shares crossed to the tune of Rs 80.2 million; its shares traded at Rs 32.50.

ACL Cables 634,248 shares crossed for Rs 60.9 million; its shares traded at Rs 96, CCS 438,000 shares crossed to the tune of Rs 57.4 million; its shares traded at Rs 131, Overseas Realties 991,500 shares crossed for Rs 49.6 million; its shares traded at Rs 50 and Access Engineering 653,000 shares crossed to the tune of Rs 49.3 million; its shares sold at Rs 75.50.

In the retail market companies that mainly contributed to the turnover were; Dialog Rs 133 million (3.2 million shares traded), Seylan Bank (Non-Voting) Rs 110 million (1.7 million shares traded), Colombo Dockyard Rs 96.8 million (751,548 shares traded), Ceylinco Holdings (Non-Voting) Rs 77.5 million (516,000 shares traded), Sampath Bank Rs 74.2 million (530,000 shares traded), JKH Rs 74 million (3.7 million shares traded) and LMF Rs 65 million (781,000 shares traded). During the day 123 million share volumes changed hands in 26272 transactions.

It is said that the manufacturing sector, especially Chevron Lubricants and several other firms performed well, while the banking and financial sector performed too.

Yesterday the rupee was quoted flat at Rs 334.50/335.50 to the US dollar in the spot market on, unchanged from the previous day’s close, dealers said, while bond yields were broadly steady.

The telegraphic transfer rate for Sri Lanka’s rupee against the US dollar was Rs 330.50 buying, Rs 339.50 selling; euro was Rs 381.1884 selling, Rs 395.1054 buying; and the pound Rs 442.6620 buying Rs 456.7076 selling.

A bond maturing on 01.08.2030 was quoted at 12.12/20 percent, down from 12.15.25 percent.

A bond maturing on 15.06.2034 was quoted at 13.12/20 percent, down from 13.15/25 percent.

A bond maturing on 15.03.2035 was quoted flat at 13.15/25 percent.

By Hiran H Senewiratne