Features

Lion logo loses clout as Ceylon Tea marketing symbol

Published

2 years ago

2023/12/3

Thilina Walpola

Very little pure Ceylon Tea in the packs sold

(Excerpted from the autobiography of Merrill J. Fernando)

The Lion symbol had been used to denote Ceylon Tea for a number of years until, in 1978, it was registered in the UK as a symbol belonging to the Sri Lanka Tea Board. It had also been registered in a dozen countries in Europe, as well as in Australia, South Africa, Pakistan, and in about 15 other countries in the Middle East.

Since the Lion symbol professed to represent quality Ceylon Tea, but without a quality benchmark being attached to the pack which carried the logo, the recommendation of the above committee was that a new symbol should be developed, for the use of the entire export sector, to denote packs containing 100% Ceylon Tea conforming to a specific quality standard. The committee also recommended the promotion of Ceylon Tea in particular geographical areas, such as the Middle East and Western Europe primarily and, secondarily, in the Philippines, Nigeria, and Japan.

Up to that time, as far as I am aware, the above was the most searching examination of Ceylon Tea export promotion carried, out in decades. Unarguably, it was the only evaluation which resulted in proposals giving primary consideration for the benefit of the local exporter.

Discouraging realities

The consumer soon loses interest in a product which does not live up to its projected quality image. As explained in detail above, the Lion logo lost its effectiveness as a promotional tool when the genuine, quality Pure Ceylon Tea packs were debased, by the gradual diminution of the Ceylon Tea content in the pack, and its replacement with cheaper, lower quality tea. My arguments on the matter were based on my firm conviction, that it is important to associate a generic symbol with a guarantee of good quality Ceylon Tea and not of any tea identified as Ceylon Tea. The Lion logo finally became meaningless, as it was available to any brand associated with the legend ‘Ceylon’ on the pack, however tenuous the link.

Another area in which the Secretariat failed was in the very necessary monitoring of rebates and other incentives, extended to exporters to develop their own brands, invest in plant and machinery, and to generate value-added exports, instead of persisting with the export of bulk tea. The concessions were meant to incentivise development and investment with the long-term benefit in view.

What actually happened was that, with very few exceptions, the majority of the exporters discounted these rebates to the benefit of the importers that they were serving, who, anyway, were already buying their tea at prices well below those obtained for finished tea products in their countries.

This highly-irregular strategy resulted in the development of a culture of cutthroat competition among exporters, fighting with each other for the importers’ patronage. Despite the fact that several instances of price-undercutting, through the irregular manipulation of rebates and incentives, were brought to the notice of the Secretariat, it did not take any corrective action. As a result the wide-ranging recommendations of the Advisory Committee, though accepted by the Government and implemented, failed to produce the desired results.

An indication of this type of damaging discounting was provided, in 1988, by no less a person than our Tea Commissioner in Egypt, Hasitha de Alwis, who revealed to the Advisory Committee that Indian and other origin teas were being imported to Egypt, at considerably higher CIF prices than comparable tea from Ceylon. Our research in to this matter confirmed that this was indeed the truth, with Indian tea being offered at around USD 0.50 on average higher than Ceylon Tea.

Quite obviously, the reason was that either the Ceylon Tea was being calculatedly discounted by the exporter, or the tea was of very inferior quality and, therefore, merited the lower price. Either way, it was a highly-detrimental situation for the cause of Ceylon Tea in general. This matter, along with a wide range of other relevant issues, was brought in writing to the attention of the Tea Board by me in July 1989.

`Price warfare’ is an ever-present feature in market competition, irrespective of the product. However, whilst acknowledging the indisputable value of free and healthy competition, it also pre-supposes a private sector which is sensitive to national objectives for the promotion of a product, which identifies the country globally, as in the case of Ceylon Tea.

One of the recommendations of the committee, was that the impact of the rebates and incentives be evaluated by the SLTB, at the end of three years. However, that was never done, and the concessions were allowed to remain, to be abused at will by most exporters. What resulted was a net loss to the industry.

The Tea Board then also supported meaningless and costly exercises, such as the promotion, at a cost of around Rs. 50 million over a period of about five years, between 1983 and 1988, for the marketing of Rabea Tea, a well-established brand in Saudi Arabia. At one point this brand was importing about 18 million pounds of tea, annually. Though the brand was registered in the name of an exporter in Sri Lanka, it was actually owned by a foreign company in Saudi Arabia, allowing it to import tea from any producing country and sell under the same label, if desired, labeled as ‘Ceylon Tea’.

Ideally and logically, the money channeled by the Tea Board to Rabea should have been spent on the development of fully Sri Lankan-owned brands. I predicted to the Board that once the owners established the market for the brand on the strength of the ‘Ceylon Tea Packed in Ceylon’ slogan, they would move to another destination, most likely Saudi Arabia itself, and that is exactly what happened a few years later.

I also became aware that whist I was struggling to secure funds for the promotion of Dilmah in Australia, the Board had actually funded the promotion of bulk tea in Canada, doling out a total of around USD 5,000 at different times, to a Sri Lankan living in Canada, who had imported a few thousand kilos of tea from Sri Lanka. This move begs the question, how on earth can one promote bulk tea and to what purpose?

Another instance of a futile, self-defeating exercise which the CTPB (Ceylon Tea Propaganda Board) indulged in was the funding of the promotion and advertising of Lipton Tea, at the 1980 Moscow Olympics. It was a very costly and self-defeating gesture from the organization, which was, ostensibly, responsible for the promotion of Ceylon Tea, but extending goodwill to a brand which did not originate in Sri Lanka.

Between the period 1977 and 1985, the SLTB (Sri Lanka Tea Board) funded 118 projects. An analysis of those ventures and their outcomes would reinforce my position in regard to the imprudent manner in which such funds were disbursed. In fact, Dilmah was the first major tea brand marketing project undertaken by the SLTB, in its history of overseas tea promotion activities.

It was also the maiden initiative to promote a totally Sri Lankan-owned brand in an overseas market. In that context alone the Dilmah, Pure Ceylon Tea project, was of great strategic significance as an export marketing project, to revitalize the position of Ceylon Tea in that part of the world, providing a launching pad in to New Zealand as well.

Square pegs in round holes

The SLTB Secretariat of the day had neither the talent nor the personnel to understand the intricacies and dynamics of international tea marketing. It tried to please every sector of the trade and be all things to all men, despite the fact that, with so many different agendas, there would invariably be wide-ranging conflicts of interests between involved parties. What was lacking then was a strong secretariat, educated in the ways of global tea marketing, and with a clear perception of the importance of Ceylon Tea in the context of the national economy, as a priority which needed to override parochial sectoral interests.

In 1977 the SLFP Government was swept out of power and the UNP, led by J. R. Jayewardene, took over the governance of the country. In 1979 my ex-father-in-law, Major Montague Jayawickrema, was appointed Minister of Home Affairs, Public Administration, and Plantation Industries, succeeding M. D. H. Jayawardena. One of Major Jayawickrema’s first proposals to me, as Minister, was to appoint me to the Tea Board. I advised him that on account of our previous family connections such a move would attract public criticism and refused to accept his offer. I suggested that, instead, he appoint Dr. Rienzie Peiris, as the latter had some knowledge of the industry.

One year later, without any prior notice to me, the Minister appointed me to the SLTB. Shortly afterwards, a group from the tea industry representing the brokers, tea traders, and planting fraternity had gone to N. G. Panditharatne, then Chairman of the UNP, and lodged a protest against my appointment as, according to them, I was not a ‘team player’ but a ‘rebel’. Panditharatne and I were not acquainted at that time.

However, according to reports, he had told this delegation that disruptors were useful in any society and that if my positions and proposals proved to be untenable, I would be automatically neutralized.

Since he refused to consider their request, this group had approached President JR, who also had turned them down, on much the same grounds as Panditharatne. This deputation had informed the President that Minister Jayawickrema had shares in my publicly-listed company. The President had spoken to the Minister and recommended that he sell those shares, which, in fact, he had bought three years before his appointment as minister.

Lost opportunity – Middle East market

In the early 1980s, the SLTB Chairman was the very competent Bradman Weerakoon and on the Board was I. O. K. G. (Oliver) Fernando, another man with a clear vision, who later became Chairman himself. However, other functionaries of the Secretariat, such as Agalawatte, Sambasivam, and Mrs. Jayatilleke, an Assistant Director of the CTPB then, were completely unhelpful and obstructed in the implementation of any creative policy.

After the Gulf Cooperation Council (GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates came into existence in 1981, I pointed out to the Tea Board that it presented an excellent opportunity for Ceylon to consolidate its hold on the Middle Eastern market in totality, and that we should move quickly to establish a monopoly on exports to those regions.

The common economic reforms which were being advocated by this alliance, combined with rising oil prices, would result in a significant increase in buying power across the GCC region, with its total population then of around 70 million. As I have said earlier, the general similarity of consumer preferences for tea, both loose and packeted, across the Middle Eastern countries, would enable us to address the entire region as a common market.

Though the Middle East was one of Sri Lanka’s strongest markets and an area in which Ceylon Tea sells for premium prices, with one or two exceptions in Saudi Arabia, Kuwait, and Jordan, Sri Lanka then had no established brands. Even the prominent Ceylon Tea brands popular in that market did not belong to Sri Lankan firms. Still, the native consumer in the Middle East generally remained loyal to Ceylon Tea for many years, despite the occasional influx of large volumes of Indian tea through bilateral trade agreements, as in the case of Tunisia and Iran.

The Middle East market then was dominated by Lipton in both tea bag and bulk supplies, which was the preference of the expatriate communities in the Gulf region. Much of that tea was sourced from India. Lipton also had in place a very professionally-managed marketing and promotional infrastructure in the region.

For decades, tea sales were conducted largely in the ‘souks,’ the native Arab bazaars, as there were few supermarkets in operation in most Middle Eastern countries. However, the affluence resulting from the oil boom of the 1970s exposed the Gulf world to Western culture and consumerism, and the region started moving swiftly towards more sophisticated marketing. With the growing popularity of tea bags in the Middle East being driven by the expanding supermarket culture, traditional Ceylon Tea started losing market share. Even the desert Bedouin was not immune to the advertising hype!

My point was that if we did not move fast to establish the supremacy of Pure Ceylon Tea in the Middle East sector, leveraging advantage we already had in the traditional popularity of Ceylon

in those regions, the multinationals, with their cheap, multi-origin brands, would soon completely take over those markets. The competition in the Middle East had already created openings for tea from China, Indonesia, and other, cheaper origins.

I advocated an initiative to build a strong, Pure Ceylon Tea brand, commonly owned by say 10 exporters, who would each contribute a reasonable sum of money to establish such a brand. Essentially, it would comprise a Joint Venture public company for the marketing of tea bags in the Middle East, as a single firm would not have the resources to fund such an exercise. That apart, with a common, Pure Ceylon Tea brand, being owned by a group of exporters, the sensitivity demonstrated by the SLTB and other connected State entities, as well as by other local exporters, in regard to sponsoring a single owner brand, would also be eliminated.

I urged that Sri Lankan exporters should quickly develop tea bag export operations, to counter the huge threat from Lipton, which had begun to dominate that segment of the market in the Middle East. I also pointed out that it would be futile to compete with Lipton on its strength, as what it was offering was a near 100% CTC tea with a component of Ceylon Tea. Our counter-initiative should be to offer, on the back of a strong marketing drive, a superior quality Pure Ceylon Tea at a reasonable price.

To this proposed ‘Common Brand Building Exercise,’ the Janatha Estates Development Board (JEDB) and the Sri Lanka State Plantations Corporation (SLSPC), then collectively responsible for managing the nationalized plantation sector, would also contribute in equal proportions. Ranjan Wijeratne, then Chairman of the SLSPC, and Pemsith Seneviratne, Chairman, JEDB, were both very supportive of this proposal, as was Victor Santiapillai.

Finally, it was agreed that the sub-committee to progress this initiative would comprise W. L. P. de Mel (Secretary, Ministry of Trade and Shipping), Mahinda Dunuwille (Chairman, Tea Tang Ltd.), Asoka de Lanerolle (EDB), and the writer. The committee co-opted Victor Santiapillai (Chairman, Export Development Board) and T. G. Peiris (Director, Promotion, Tea Board) as Convenor and Secretary.

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Features

The rupee is warning us again

Published

23 hours ago

2026/05/27

Sahan Weerasooriya

Speak the truth, before the crisis does

The Sri Lankan rupee is not merely depreciating. It is sending a warning. Once again, the country is being reminded that recovery is not the same as stability, and that an IMF programme is not a substitute for disciplined national economic management.

Beneath the casual conversations of scholars lies a serious argument: Sri Lanka is not yet out of danger. The country may have escaped the worst of the 2022 collapse, but it has not escaped the habits that produced it: delayed decisions, weak communication, excessive import appetite, fuel-intensive lifestyles, and a political reluctance to tell citizens the hard truth.

The vicious cycle

The latest pressure on the rupee should, therefore, not be dismissed as a temporary market fluctuation. It reflects a familiar and dangerous sequence. When the rupee begins to fall, exporters hold on to dollars in expectation of a better rate. Importers rush to buy dollars before costs rise further. Banks become reluctant to release foreign exchange. The interbank market tightens. Anxiety feeds behaviour, and behaviour feeds anxiety. That is how a currency problem becomes a confidence problem.

Sri Lanka has seen this movie before, precisely during 2020-2022. The names, personalities, and policy language may have changed, but the underlying pattern is recognisable. First, the exchange rate comes under pressure. Then the authorities speak calmly. Then temporary measures are discussed. Then import restrictions are considered. Then citizens are told certain goods are “non-essential.” Finally, when pressure becomes unbearable, the truth emerges: the country had less room than officials implied.

The danger today is not that Sri Lanka is exactly back in 2022. It is not. The fiscal position is stronger. The IMF programme is in place. The Central Bank has more credibility than during the worst period of denial. But that is precisely why complacency is dangerous. A country that has just survived a crisis should be more alert, not less and announce “there is no problem”.

The IMF tranche expected shortly may calm the market. It may bring dollars into the system. It may help the Central Bank reassure banks, exporters, importers, and investors. But IMF money is not a national economic strategy. It is breathing space. If that breathing space is used merely to postpone difficult choices, then the country will have learnt very little from its own trauma.

The most dangerous illusion is that import controls can solve the problem. They cannot. They can delay pressure, redirect it, and make the government look active for a few weeks. But they do not eliminate underlying demand. If people cannot import vehicles, the credit and purchasing power do not vanish. They move elsewhere: housing, construction, consumer goods, machinery, travel, or other import-linked spending.

Vehicle imports illustrate the dilemma. They consume foreign exchange and increase future fuel demand. But they also generate large tax revenue and support leasing, insurance, repairs, spare parts, logistics, and employment. A crude ban may reduce one form of dollar demand while damaging revenue and pushing economic activity into other channels. The correct answer is not panic prohibition. It is intelligent demand management.

Fuel is the real battlefield

Petroleum is one of the country’s largest import burdens, yet Sri Lankans still behave as if fuel consumption is a private matter with no national consequence. It is not. Every unnecessary trip, every idle engine, every fuel-inefficient commute, and every avoidable private-car journey becomes part of the country’s dollar problem.

If fuel prices are artificially softened, people continue as before. If the rupee falls further, the eventual pain comes through every channel at once: fuel, electricity, food, water, transport, and imported inputs. The country then discovers that avoiding one price increase only produced a larger national price increase later.

Poor households must be protected

That is why targeted support is essential. Public transport must be supported. But subsidies should not be thrown blindly across the economy. They should be directed through systems that can be monitored: Aswesuma for vulnerable households, route-based support for buses, and transparent cash or coupon mechanisms linked to actual public service.

Sri Lanka should be making public transport the patriotic option, not the poor man’s punishment. If citizens are being asked to reduce fuel consumption, they must be given a credible alternative. That means better buses, cleaner buses, more AC services, higher frequency, safer routes, and regulations that reflect reality rather than outdated assumptions.

Transport system management is vital

Discussions about metro-style bus services is important for precisely this reason. If commuters are willing to stand in an air-conditioned bus because it is cleaner, quieter, smoother, and more comfortable than the ordinary alternative, policy should expand that service. Do not suffocate better service with rules written for a different era. Regulate for safety, yes. But do not block improvement in the name of procedure.

Rail is even more important. A serious country does not solve urban commuting only with buses and private vehicles. The railway should be the backbone of mass commuting into Colombo. Trains move more people with less fuel per passenger. They avoid road congestion. They reduce import pressure indirectly by reducing fuel demand. But this requires frequency, rolling stock, signalling upgrades, centralised control, digital systems, and operational seriousness. Sri Lanka cannot talk about saving dollars while tolerating a transport system that pushes citizens into private vehicles.

Hello, please speak the truth

The government’s communication failure is equally serious. Leaders in India and Singapore have been willing to tell citizens that conditions are difficult and that behaviour must adjust. Use public transport. Reduce unnecessary consumption. Work from home where possible. Conserve fuel. Be careful with imports. These are not signs of weakness. They are signs of mature leadership.

In Sri Lanka, the message remains too soft. Officials appear afraid to say plainly that the country is not yet secure. The public is allowed to behave as if recovery means normalcy. Fuel is consumed, imports resume, roads fill, luxury vehicles appear, and private lifestyles continue with little sense of national constraint.

This is irresponsible. Citizens cannot be expected to act prudently if the state refuses to speak honestly. Economic management is not only about interest rates, reserves, and IMF reviews. It is also about shaping expectations. If leaders do not explain the seriousness of the situation early, the market will explain it later through far more painful consequences, such as runaway inflation and shortages of essential goods.

There is also a deeper governance problem. The issue today may not be crude corruption of the old kind. The more immediate danger may be hesitation. The government appears too slow in making necessary decisions. It overthinks. It delays. It waits. It consults. It hesitates. Meanwhile, markets move.

Delay is very expensive

In economics, delay is not neutral. Delay has a price. A decision postponed in May may become a crisis measure in August. A reform avoided today may become a forced adjustment tomorrow. The market does not wait for Cabinet comfort, bureaucratic neatness, or political messaging.

This is where Sri Lanka must learn from Vietnam, which did not become an investment magnet through speeches about development. It made decisions. It signed trade agreements. It improved investor access to land. It aligned policy with competitive advantage. It pushed digitalisation. It treated investment facilitation as practical statecraft, not ceremonial rhetoric.

Sri Lanka remains trapped in procedural delay. Land acquisition takes too long. Export-zone facilitation is too slow. Intellectual property reforms remain incomplete. The Madrid Protocol issue is not a minor technicality. For exporters and investors, brand protection, product security, and legal alignment with global systems matter. A country that cannot protect intellectual property cannot expect higher-value investment to arrive simply because officials request it.

The lesson is blunt: Investors do not reward potential. They reward execution. Sri Lanka has potential. It has always had potential. That is precisely the problem. Potential has become an excuse for underperformance. Vietnam converted potential into policy. Sri Lanka converted potential into discussion.

Disciplined adjustment means telling citizens the truth before the crisis does

If the country responds with another cycle of reassurance, delay, temporary restriction, and vague optimism, then the recovery will remain fragile. If, however, the government uses this moment to speak honestly, manage fuel demand, strengthen public transport, target subsidies, speed up reforms, and treat policy execution as urgent, the rupee’s warning may still be useful.

The choice is not between panic and denial. The choice is between disciplined adjustment and forced adjustment. Disciplined adjustment means telling citizens the truth before the crisis does. It means asking those who can work from home to do so. It means encouraging public transport while improving its quality. It means protecting the poor without subsidising waste. It means recognising that every unnecessary dollar spent today weakens the country’s room for manoeuvre tomorrow.

Forced adjustment is what happens when leaders avoid these choices. Then the exchange rate makes the decision. Prices make the decision. Queues make the decision. Import shortages make the decision. Public anger makes the decision, similar to Aragalaya in 2022. Sri Lanka has already paid once for denial. It should not pay again for hesitation.

The rupee is not only a price. It is a signal of trust. When it weakens, it tells us that markets are uncertain, citizens are unconvinced, and policy has not moved fast enough. The correct response is not to blame exporters, importers, consumers, or global conditions alone. The correct response is to govern. The country does not need another explanation after the damage is done. It needs timely action before the damage spreads.

That is the real message of this moment: the rupee is warning us again. This time, Sri Lanka must listen early.

(The writer, a senior Chartered
Accountant and professional banker,
is a professor at SLIIT, Malabe. Views expressed in this article are personal.)

Features

Will Sri Lanka need an 18th IMF programme?

Published

23 hours ago

2026/05/27

Sahan Weerasooriya

The IMF staff and Sri Lankan authorities have reached a staff-level agreement to conclude the combined Fifth and Sixth Reviews of Sri Lanka’s reform programme under the Extended Fund Facility (EFF). If approved by the IMF Executive Board, Sri Lanka will gain access to about US$700 million in financing. While the IMF has acknowledged progress in reserves, growth, and revenue performance, it has also warned that Sri Lanka remains exposed to external shocks, including the Middle East conflict and the aftermath of Cyclone Ditwah.

This mixed picture of progress and vulnerability gives added significance to the recent warning by economist Dr. Ganeshan Wignaraja. Speaking on 4 May 2026 at a discussion held at the Regional Centre for Strategic Studies (RCSS) in Colombo, titled “A Global Economy in the Shadow of the Middle East War: Implications for Sri Lanka’s Debt Recovery,” he cautioned that Sri Lanka may once again have to consider the possibility of seeking further IMF assistance if current vulnerabilities are not addressed with urgency.

Dr. Wignaraja pointed out that although Sri Lanka’s current IMF programme is scheduled to conclude in 2027, the country will once again face major external debt repayment obligations beginning in 2028. At the same time, global economic instability, Middle Eastern conflicts, rising fuel prices, and climate-related disruptions could place Sri Lanka’s fragile recovery under renewed pressure.

This is not merely an ordinary economic observation. It is a serious warning about the deep structural weaknesses that have shaped Sri Lanka’s economy for decades. In fact, turning to the IMF is not new for Sri Lanka. Since 1965, the country has entered into 17 IMF programmes, placing Sri Lanka among the nations that have relied most frequently on IMF assistance.

This recurring dependence is not simply the result of temporary financial shortages. It reflects deeper structural problems: weak productive capacity, insufficient export growth, poor fiscal discipline, and an economic model excessively dependent on borrowing. When a country repeatedly requires IMF support, it raises fundamental questions about the sustainability and resilience of its economic system.

According to Table 1.16, “Outstanding External Debt Position,” in the Central Bank of Sri Lanka’s Annual Economic Review 2025, Sri Lanka’s total external debt position at the end of 2025 was reported at USD 54.8 billion at market value and USD 56.2 billion at face value. Of this amount, the government’s external debt stood at approximately USD 36.7 billion at face value. In 2022, Sri Lanka suspended external debt repayments for the first time in its history, after which debt restructuring began under the IMF-supported programme. Although this provided short-term stability, many of the country’s core economic vulnerabilities remain unresolved.For example, Sri Lanka’s export earnings remain relatively low compared to GDP. Countries such as Vietnam, Bangladesh, and Thailand have transformed themselves into export-driven manufacturing economies, while Sri Lanka continues to depend heavily on tourism, worker remittances, and external borrowing for foreign exchange earnings.

Although tourism revenues and remittances improved somewhat during 2024 and 2025, these are not sufficiently stable foundations for long-term economic sustainability. External shocks such as Middle Eastern conflicts, fluctuations in global fuel prices, international market downturns, and climate-related disasters could disrupt these income sources at any time.

Dr. Wignaraja also emphasised that climate change itself may become a major factor affecting Sri Lanka’s future debt sustainability. Floods, droughts, and declining agricultural productivity increase food import costs and place further pressure on foreign exchange reserves, thereby worsening the country’s economic vulnerabilities.

At the same time, IMF programmes carry significant social costs. Since 2023, tax increases, electricity tariff revisions, reductions in government spending, and state-sector reforms have imposed severe pressures on ordinary citizens. The middle class has weakened considerably, poverty levels have risen, and many small and medium-sized enterprises have struggled to survive rising operational costs. Youth unemployment and migration aspirations have also intensified during this period.

Nevertheless, it must also be acknowledged that recovering from the 2022 crisis without IMF support would have been extremely difficult. The IMF not only provides financial assistance but also offers a framework of credibility that enables countries to secure support from institutions such as the World Bank, the Asian Development Bank, and other international lenders. In Sri Lanka’s case, the IMF programme helped restore a degree of investor confidence and international credibility.

However, the deeper problem lies elsewhere. Sri Lanka has repeatedly used IMF programmes as temporary crisis-management tools rather than as opportunities for genuine economic transformation. The 2024 review of the current IMF-supported Extended Fund Facility again highlighted several specific reform commitments that Sri Lanka was expected to continue. These included strengthening revenue mobilisation and tax administration, advancing public financial management and debt management reforms, maintaining cost-reflective fuel and electricity pricing to reduce fiscal risks from state-owned enterprises, improving governance and restructuring of state-owned enterprises and state-owned banks, and implementing stronger anti-corruption and governance reforms. The IMF also emphasized the need to protect vulnerable groups through better-targeted social safety nets while continuing fiscal consolidation.

More specifically, the 2024 programme review required stronger anti-corruption measures in revenue-collecting agencies such as Inland Revenue, Customs, and Excise; greater transparency in public procurement and tax exemptions; publication and implementation of governance reform action plans; stronger oversight of public assets; and reforms to improve the governance of state-owned banks. These were not merely technical conditions. They were meant to address the institutional weaknesses that have repeatedly pushed Sri Lanka back into external financing crises.

Yet Sri Lanka has historically struggled to fully implement such reforms. Tax administration, state-owned enterprise restructuring, public financial management, anti-corruption measures, and cost-reflective pricing have often been delayed, diluted, or weakened due to political resistance, weak institutions, and short-term policy decisions. As a result, IMF programmes have brought temporary stability, but not always lasting structural change. After almost every IMF programme, the country gradually returned to old habits: excessive government spending, politically driven populism, inefficient state-owned enterprises, and debt-financed development.

Therefore, the real issue is not simply whether Sri Lanka will enter an 18th IMF programme. The more important question is whether the country is capable of building an economy that no longer requires repeated IMF intervention.

Achieving this requires more than slogans or short-term political promises. It demands a clear and disciplined national economic strategy. Government expenditure must be prioritized carefully. Loss-making state-owned enterprises should be freed from political interference and placed under professional management. The tax system must broaden the revenue base fairly while encouraging investment and reducing tax evasion.

At the same time, Sri Lanka must transform itself into an export-oriented productive economy. Agriculture, manufacturing, tourism, information technology, port services, education services, and healthcare services should all be strategically developed as foreign exchange earning sectors. Investors do not seek tax concessions alone; they require policy consistency, legal stability, efficient approval processes, and an environment free from corruption.

True reform does not mean continuously burdening citizens with higher taxes and reduced living standards. Genuine reform means creating a more efficient state, reducing waste and corruption, increasing productivity, and expanding income-generating opportunities for ordinary people. Whether under an IMF programme or outside one, Sri Lanka urgently needs this kind of national economic discipline.

Ultimately, the IMF is not a symbol of economic success. It is an emergency support mechanism used during periods of crisis. The national objective should not be to secure yet another IMF programme, but to build an economy strong enough to function without repeated external rescue packages.

Otherwise, today’s question — “Will Sri Lanka need an 18th IMF programme?” — may eventually become “When will the 19th programme begin?”

That is not the future Sri Lanka should aspire to. The country does not need an economy that survives by repeatedly seeking external assistance. It needs a mature national economy that produces, exports, innovates, earns global confidence, and builds its future through its own strength and productivity.

by Professor Ranjith Bandara, PhD (Qld.,)

Features

From stabilisation to transformation without delay

Published

2 days ago

2026/05/26

Sahan Weerasooriya

At a symposium on reconciliation organised by the National Peace Council last week, more than 250 religious clergy, civic activists and political representatives from different communities gathered to discuss the country’s future. Speaking at the event, Minister Bimal Rathnayake explained the government’s approach to national reconciliation. He said the government viewed the country’s recovery in terms of a three stage process. The first stage was stabilisation, the second was development and the third was transformation. Reconciliation, he implied, would come in that final stage. The participation of Opposition Leader Sajith Premadasa at the same symposium, and the constructive nature of his comments, strengthens that hope.

When the present NPP government took office in 2024, the country was emerging from one of the gravest crises in its post Independence history. The economic collapse of 2022 had led to shortages of fuel, food, medicines and electricity. Inflation soared, foreign reserves disappeared and long queues became part of daily life. The political upheaval that followed culminated in the resignation of former President Gotabaya Rajapaksa after mass public protests under the banner of the Aragalaya movement. The country was then governed by a leadership that spoke the language of reform and reconciliation but was widely perceived as lacking a direct popular mandate.

Sri Lanka’s past experience suggests that stabilisation and transformation cannot be treated as entirely separate stages. Postponing reconciliation until some future moment risks repeating the failures of the past. If transformation is endlessly delayed until a supposedly perfect moment arrives, there will always be new crises and new reasons for postponement. Minister Rathnayake’s contention that the government’s immediate priority has necessarily been stabilisation flows from the government’s awareness of the precarious situation the country is. Over the past two years, the government has succeeded to a significant extent in restoring economic and political stability. Inflation has reduced, shortages have ended and public institutions have regained a degree of functionality.

Guaranteed Changes

On the other hand, the country’s development continues to face challenges due to adverse global conditions, including disruptions caused by conflict in the Middle East and extreme weather events that have affected tourism, trade and the cost of living. The danger is that reconciliation may be indefinitely postponed in the name of stabilisation. This danger can be reduced if the government works proactively with the opposition and civil society to commence practical measures of transformation now rather than later. The participation of Opposition Leader Sajith Premadasa at the symposium, and the constructive nature of his comments, has strengthened the sense that bipartisan engagement on reconciliation may now be possible.

The urgency of transformation came through strongly in the presentations made by representatives of the Sri Lanka Tamil and Malaiyaha Tamil communities. ITAK parliamentarian S.Shritharan spoke of the frustration caused by unresolved post war issues in the north and east. He referred to disputes regarding land occupied during the war years, including controversies linked to Buddhist temples and state sponsored settlement activity in areas claimed by local communities. He also pointed to the continuing large scale presence of the security forces in the north and east nearly two decades after the end of the war. These grievances have remained central to Tamil political discourse since the end of the armed conflict in 2009. Families displaced by war continue to seek the return of ancestral lands. Civil society organisations in the north have repeatedly called for greater civilian control over local administration and a reduction in military involvement in civilian life.

Academic research and practical work on the ground have shown that reconciliation cannot be separated from questions of dignity, equality and justice. Former minister Mano Ganesan, leader of the Democratic People’s Front, focused on the longstanding problems faced by the Malaiyaha Tamil community. He spoke passionately about continuing housing shortages, landlessness and economic marginalisation, issues that have persisted since Independence. He also highlighted the devastating impact of recent extreme weather events on estate communities that remain socially and economically vulnerable. The condition of the Malaiyaha Tamil community remains one of the enduring social justice issues in Sri Lanka.

After Independence in 1948, a large proportion of them were denied citizenship and voting rights through legislation that rendered them stateless. Though citizenship rights were eventually restored, the social and economic consequences of exclusion continue to be felt generations later.

Many families still lack secure housing and land ownership despite their immense contribution to the country’s plantation economy. Minister Rathnayake’s responses to both these concerns were politically significant. He argued that recent political developments, including the declining influence of narrow ethnic politics across communities, indicated a major shift in public attitudes. According to him, the political ground has changed in ways that make it increasingly difficult for politicians who rely primarily on ethnic division and communal insecurity to retain public support.

Inter-Connected

There is evidence to support the assessment about the changing political grounding which sees future prospects in the resolution of long standing problems. . The economic collapse of 2022 affected all communities alike and generated a new politics centred on governance, anti corruption, accountability and economic justice. The Aragalaya protests brought together Sinhalese, Tamils and Muslims in a common demand for political change. Although ethnic grievances have not disappeared, the crisis created space for a broader understanding that the country’s future depends on cooperation rather than division. Opposition Leader Premadasa’s comments at the symposium reflected this changing political climate. He emphasised that national reconciliation could not be separated from economic justice and the need to address disparities between regions and social classes.v He also mentioned the need for civil society organisations to take this message to the community. This wider understanding of reconciliation is important because ethnic inequality and economic inequality have often reinforced each other in Sri Lanka’s history.

Academic studies have identified the denial of citizenship rights after Independence as a historic injustice that set back the Malaiyaha community for decades. The challenge now is to ensure that transformation becomes part of the stabilisation and development process itself. Practical first steps are both possible and necessary. The release of civilian lands still under state control, greater devolution of administrative authority, reduction of military involvement in civilian affairs, language equality in public administration and accelerated housing and land ownership programmes in the plantation sector are all measures that can begin immediately without waiting for a final stage of transformation.

The government’s recent commitment that provincial council elections will finally be held this year is therefore significant. These elections have been repeatedly postponed by successive governments. Holding them would not solve the ethnic conflict by itself. But it would signal a willingness to restore democratic institutions and share power in a meaningful way.

Sri Lanka has repeatedly postponed difficult reforms in the hope that a more convenient political moment would eventually arrive. But opportunities are invariably created and fought for instead of being provided as a gift by a benevolent government.

The present moment, shaped by the economic crisis and public demand for accountable government, offers a rare opportunity to move simultaneously towards stability, development and reconciliation. Provincial council elections can be the first meaningful step. But they must not be the last.

by Jehan Perera