News
Food shortfalls, high prices feared after open account, DA/DP ban
ECONOMYNEXT – Sri Lanka may face higher food prices and shortfalls of foods after authorities banned open account and DA/DP (Documents against Acceptance/Documents against Payment) trade, importers warned as the country tried to get out of a currency crisis by raising rates and killing private credit.
Though there were severe forex shortages the country did not face food shortages up to May 2022, due to food importers in the main wholesale market in Colombo somehow keeping the nation fed.
Out of about 1.7-1.9 billion US dollars earned every month by the country’s exporters and overseas workers, only about 200 million US dollars a month go for food.
With no mechanism to give priority allocation of foreign exchange for food, many importers have channelled Middle Eastern remittance via the Undiyal system to keep the nation fed, sources familiar with the process say.
This is why the country did not face severe food shortages, but medicines which were under price controls went off the shelves when the rupee fell. The monthly requirement for medicine is estimated at about 25 million US dollars or about half a fuel ship.
Importers who have long term relationships with regional suppliers in particular ship goods at a moment’s notice.
Food suppliers have been willing to extend credit to their local counterparties due to the strong relationship spanning generations.
Foods such as onions and potatoes are also perishable, which will rot in containers unless cleared quickly, while importers go from bank to bank searching for dollars, the food traders said.
Some foods were spiked in the Pettah market Friday, wholesalers said.
Economic analysts had earlier warned that price controls and banning of DA/DP imports were the easiest way authorities could create food shortages.
The import ban came after the central bank raised interest rates in a bid to stop money printing and private credit was starting to fall.
Sri Lanka has an intermediate regime central bank which had created monetary instability and social unrest ever since it was set up in 1950.
The country suffered balance of payments trouble within two years of its creation, an exchange control law was enacted in 1952 and a ‘hartal’ took place in 1953.
As per the provisions of section 51 of the Public Finance Managaement Act No. 44 of 2024, the public should be issued with a report on the final budgetary situation for each year and, the report is then published in the official website of the Ministry of Finance, Planning and Economic Development.
Thereby the report has to be submitted to the Parliament. The final budgetary situation report (Annual Report) – 2025 has been prepared by the Ministry of Finance, Planning and Economic Development and published. The report contains the Public Finance Policy, strategies and challenges, economic trends in 2025, macro – economic and socio – economic indicators covering all sectors of the economy as well as description on the global economic growth.
Furthermore, it accompanies a detailed description government revenue and expenditure, cash flow management, financing the budget deficit and the loan structure.
Accordingly, the Cabinet of Ministers approved the resolution furnished by the President in his capacity as the Minister of Finance, Planning and Economic Development to submit the Report on the Final Budgetary Condition (Annual Report) – 2025 to Parliament.
Business
Cabinet nod to accept increased Loan Grant provided by the Asian Development Bank under Policy Based Loan Facilities – 2026
Approval of the Cabinet of Ministers was granted at their meeting held on 16.03.2026 to obtain United States Dollars 380 million from the policy – based loan facilities of the Asian Development Bank in the year 2026.
United States Dollars 100 million out of it is allocated for Trade, Investment and Industries Development Programme – Sub Programme 1. However, amidst the economic uncertainty resulting from the current Middle East crisis and the climatic tragedies, the Asian Development Bank has agreed to assist
by increasing a supplementary financing package of United States Dollars 100 million so that it will beMincreased up to United States Dollars 200 million.
Accordingly, the Cabinet of Ministers approved the resolution furnished by the President in his capacity as the Minister of Finance, Planning and Economic Development to take further measures to obtain the said loan grant.
News
Submission of Revenue Protection Order Prepared under the Provisions of the Revenue Protection Act No. 19 of 1962 to the Parliament for its approval.
Approval of the Cabinet of Ministers was given at the meeting held on 23.02.2026 to impose the custom import duty amounts under four (04) categories as 0%, 10%, 20%, and 30% which had been executed only under three (03) categories in order to increase the target export income of the country, to execute the
recommendations of the national customs duty policies committee, and to implement new national sub division customs codes for promoting the local agricultural and industrial sector.
Imposing provisions in relation to the above, the Revenue Protection Order – No. 01/2026 under the Revenue Protection Act No. 19 of 1962 has been published in the extraordinary gazette notification No. 2478/03 of 03.03.2026.
Accordingly, the Cabinet of Ministers approved the resolution furnished by the President in his capacity as the Minister of Finance, Planning and Economic Development to submit the said revenue protection order to Parliament for its concurrence.
Report on the Final Budgetary Condition (Annual Report) – 2025 submited to parliament
Cabinet nod to accept increased Loan Grant provided by the Asian Development Bank under Policy Based Loan Facilities – 2026
Submission of Revenue Protection Order Prepared under the Provisions of the Revenue Protection Act No. 19 of 1962 to the Parliament for its approval.
Resettlement of unauthorized settlers affected by the Land Acquisition process for the implementation of Phase III of the Baseline Road Extension Project
Cabinet approves project to modernize school hostel facilities during the 2026–2028 period at an estimated cost of Rs. 1,008 million
New National Action Plan for Human-Elephant Conflict Management to be drafted
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