News
Lanka, too, victim of aggressive interest rate hikes in US
By Rathindra Kuruwita
The U.S. Federal Reserve’s aggressive interest rate hikes are having an adverse effect on Sri Lanka’s economy, Professor Samitha Hettige, an international relations analyst, has said.
The Fed’s latest increase brings the federal funds rate to between 3.75% and 4% after sitting at 0% for more than a year during the coronavirus pandemic. This is not only affecting developing countries but other developed nations as well.
“The US interest rate hikes have applied strong pressure on the European economy, leading to higher inflation and energy costs. So, one can imagine the impact US interest rate hikes have on Sri Lanka,” Prof. Hettige said.
He said that because of the higher US interest rates, a large number of individuals who would have invested in Sri Lanka and other developing countries have decided to invest in the US.
“We have seen massive capital inflows to the United States and increased outflows from the developing world. If you look at the Sri Lankan stock market you can see this,” he said.
Sri Lanka is facing many macroeconomic vulnerabilities due to the COVID-19 pandemic which caused a sharp rise in public debt in developing economies, Prof. Hettige said.
“Given this interest rate hikes in the US makes external financial conditions for Sri Lanka adverse. The US did something similar in the 1980s. The Volcker shock reduced inflation in the United States but drove up global interest rates. This caused many emerging economies to default on their debts. They are doing it again now,” he said.
Prof. Hettige said Sri Lanka can do nothing about the US rate hikes. Sri Lanka needs to rethink its economic strategy and focus on savings, he said.
“We have been focused too much on consumption. We have borrowed a lot. Maybe we should make this an opportunity to build a more resilient economy,” he said.
The Cabinet of Ministers has approved the proposal presented by the Minister of Transport, Highways, and Urban Development to award the contract for printing and supplying vehicle number plates for the Department of Motor Traffic for a period of five (5) years to M/s South Asian Technologies based on the recommendations of the High-Level Standing Procurement Committee and the Procurement Appeal Board.
The National Lotteries board has been established subject to the Finance Act No. 11 of 1963. Having identified the requirement of amending that act which was imposed around 62 years to cater the current requirements of the lottery market, the Cabinet of Mnisters at their meeting held on 14.02.2017 granted approval to draft a new bill for the purpose.
Accordingly, the National Lotteries Board has recognized further amendments to be performed to the fundamental draft bill prepared by the Legal Draftsmen.
Therefore, the Cabinet of Ministers granted approval for the
resolution furnished by the President in his office as the Minister of Finance, Planning and Economic Development to direct the Legal Draftsmen to finalize the formulation of the draft bill for the National Lotteries Board as soon as possible including the proposed new amendments as well.
The Werahara office of the Department of Motor Traffic performs issuance of temporary driving licenses in this country based on the driving licenses issued overseas, and measures have been initiated to render the service from a service window of the Department of Motor Traffic established at the Bandaranayake International Airport from 03.08.2025.
The fees charged for issuing temporary driving licenses have been published in Motor Vehicles (Driving License Levy) Regulations No. 3 of 2022 prepared under the provisions of the Motor Traffic (Authority 203) Act.
But, as the fee of Rupees 2,000/- charged for the service is not sufficient, the requirement of amending the regulations has been recognized.
The regulations for introducing the revised fees have been published in the government extraordinary gazette
notification No. 2463/04 dated 17.11.2025. Therefore, the Cabinet of Ministers granted approval to the resolution furnished by the Minister of Transport, Highways and Urban Development to
submit the regulations to the Parliament for its concurrence.
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