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Net credit to government from banking system increased by Rs. 212.5 bn in December 2021

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During the period from January to November 2021, government revenue increased to Rs. 1,322.0 bn compared to Rs. 1,259.1 bn recorded in the corresponding period of 2020, and during the same period, overall budget deficit increased to Rs. 1,709.3 bn compared to Rs. 1,576.4, according to Weekly Economic Indicators of the Central Bank of Sri Lanka issued on Friday.

“Net Credit to the Government from the banking system increased by Rs. 212.5 bn in December 2021”, it said.

The report further said:

By 18th February 2022, the All Share Price Index (ASPI) decreased by 2.61 per cent to 12,134.04 points and the S&P SL 20 Index decreased by 1.87 per cent to 4,140.65 points, compared to the index values of last week.

During the year up to 18th February 2022, the Sri Lankan rupee depreciated against the US dollar by 0.8 per cent.

Given the cross currency exchange rate movements, the Sri Lankan rupee depreciated against the pound sterling by 1.6 per cent, the

Euro by 1.3 per cent and the Japanese yen by 0.7 per cent while appreciating against the Indian rupee by 0.01 per cent during this period.

The reserve money decreased compared to the previous week mainly due to the decrease in deposits held by the commercial banks with the Central Bank.

Purchasing Managers’ Indices for both Manufacturing and Services activities expanded in January 2022 as well recording 58.7 and 57.5 index values respectively.

The total outstanding market liquidity was a deficit of Rs. 693.539 bn by end of this week, compared to a deficit of Rs. 617.991 bn by the end of last week.

During the period from January to November 2021, total expenditure and net lending increased to Rs.3,033.4 bn compared to Rs. 2,838.5 bn recorded in the corresponding period of 2020.

During the period from January to November 2021, domestic financing decreased to Rs. 1,812.3 bn compared to Rs. 1,822.8 bn in the corresponding period of 2020.

Foreign financing recorded a net repayment of Rs. 103.1 bn during the period from January to November 2021 compared to a net repayment of Rs. 246.2 bn recorded in the corresponding period of 2020.

Outstanding central government debt increased to Rs. 17,413.7 bn by end November 2021 from Rs. 15,117.2 bn as at end 2020.

Since end 2020, total outstanding domestic debt increased by 20.4 per cent to Rs. 10,914.9 bn, and the rupee value of total outstanding foreign debt increased by 7.4 per cent to Rs. 6,498.8 bn by end November 2021.

During the period under review (12.02.2022 to 18.02.2022), crude oil prices showed a mixed performance. At the beginning of the week, prices increased notably as markets feared that geopolitical tensions between Russia and Ukraine may worsen the already tight status of crude oil supplies. However, prices declined towards the end of the week on prospects of progress on the Iran nuclear deal unlocking more crude supplies. Overall, Brent and WTI prices decreased by US dollars 3.22 per barrel and US dollars 3.34 per barrel respectively, during the period.

Weekly AWPR for the week ending 18th February 2022 increased by 23 bps to 9.09 per cent compared to the previous week.

Broad money (M2b) expanded by 13.2 per cent, on a Y-o-Y basis, in December 2021.

Outstanding credit to public corporations increased by Rs. 3.4 bn in December 2021.

Outstanding credit extended to the private sector increased by Rs. 61.3 bn in December 2021.



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Environmental devastation seen as precipitating economic crisis in Northern Sri Lanka

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Environmentalists and officials on an on-sight tour in Sri Lanka’s North.

As parched soil cracks underfoot and once-thriving fields lie fallow, the farmers of Mannar are living on the frontlines of a crisis that is no longer just environmental — it’s economic. Climate change has tightened its grip on this northern region, and with each failed monsoon and dwindling harvest, the livelihoods of entire communities are evaporating.

The Centre for Environmental Justice (CEJ), along with local stakeholders, has raised urgent concerns over the increasingly hostile conditions faced by farmers in the region. At the heart of the problem are erratic weather patterns — prolonged droughts, unpredictable rainfall, and extreme heat — all of which disrupt the delicate balance required for traditional farming practices.

“The erratic weather patterns triggered by climate change are not only drying up water sources but also pushing already vulnerable farming communities deeper into poverty, Dilena Pathragoda, Executive Director, CEJ told The Island Financial Review.

He added: “The economic consequences are severe — from crop failures to loss of livelihoods — and without timely interventions and climate-resilient strategies, the long-term sustainability of agriculture in regions like Mannar is in jeopardy.”

In 2024 alone, nearly 3,000 acres of paddy land in Mannar District were left uncultivated due to lack of water, according to data from local agrarian offices.

In other words, this represents an estimated loss of over Rs. 225 million in potential harvest income, based on average yields and market prices. Farmers who once cultivated rice, onions and vegetables with predictable seasonal success now face devastating uncertainty.

The failure of rain-fed tanks (reservoirs) and the drying up of canals have made irrigation nearly impossible in some areas. In Nanattan and Musali divisions, water availability dropped by some 60 per cent compared to historical averages. As water becomes scarcer, so do incomes, leading many families to take on debt or abandon agriculture altogether in search of daily-wage labour.

This agricultural downturn is having ripple effects throughout the local economy. In Mannar, where over 60% of households depend directly or indirectly on farming, the collapse of agricultural productivity has led to rising food prices, shrinking local markets, and reduced cash flow for small businesses. Fertilizer vendors, seed suppliers and even transport workers are reporting significant losses.

“Some farmers have seen their seasonal incomes drop from Rs. 200,000 to under Rs. 50,000, noted one local agriculture officer. “Many are defaulting on informal loans and are now relying on relief aid to survive.”

Economists warn that this trend, if unchecked, could contribute to broader socio-economic instability. Rural depopulation, youth migration, and heightened inequality are already being observed in vulnerable districts. Women, in particular, face added burdens as household food security becomes more precarious and access to clean water requires greater physical labor.

Despite these challenges, experts insist that solutions are within reach. Climate-resilient farming techniques — such as drip irrigation, drought-tolerant crops, and community-managed water systems — have shown promise in pilot projects across other dry zones. However, scaling these up requires political will, coordinated planning, and substantial investment.

Environmental advocates also call for a shift in national agricultural policy. “Rather than pouring money into outdated infrastructure or monoculture subsidies, Sri Lanka must pivot towards sustainable, adaptive farming models, said Pathragoda. “This includes better support for farmers’ education, access to technology, and integrated land and water management.”

Civil society groups, including CEJ, are urging both the government and international donors to treat the Mannar crisis as a wake-up call. Climate finance mechanisms, they argue, must be made accessible to grassroots communities, not just large-scale development firms. Moreover, climate justice must take center stage — recognizing that those suffering most have contributed least to the global emissions causing these disruptions.

As Sri Lanka navigates an uncertain economic recovery, ensuring food security and rural resilience is more than an environmental imperative — it’s a matter of national stability, Pathragoda stressed.

By Ifham Nizam

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CSE and NCE partner to empower Sri Lankan exporters

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The Colombo Stock Exchange (CSE) and the National Chamber of Exporters of Sri Lanka (NCE) entered into a strategic partnership to support Sri Lankan exporters by enhancing their access to capital market opportunities and broadening visibility for their businesses.

The partnership agreement was signed by Shiham Marikar, Secretary General / CEO, The National Chamber of Exporters of Sri Lanka, and Ms. Vindhya Jayasekera, Chief Executive Officer Designate, CSE. The signing ceremony was attended by Ms. Dilini Gamlathge, Assistant Director, Member Services/Operations, The National Chamber of Exporters of Sri Lanka; Ms. Punyamali Saparamadu, SVP Commercial, CSE; Ms. Himashi Wickramasinghe, Manager, Commercial, CSE; Ms. Shivandini Liyanage, SVP, Legal, Enforcement and Compliance, CSE; and Kanishka Gunawardana, Manager, Enforcement and Compliance, CSE.

This partnership with the CSE will provide NCE members—both experienced exporters and aspiring ones—with access to vital capital market knowledge and services to support their business expansion efforts.

This collaboration aims to offer exporters tools and resources to strengthen their market presence and growth potential. It also creates a platform for SMEs within the export sector to consider listing on the Colombo Stock Exchange, particularly through the Empower Board—dedicated to facilitating capital raising for small and medium-sized businesses.

Through this partnership, CSE will also gain direct access to a network of established exporters, enhancing the reach of capital market education, awareness-building, and strategic financing solutions among key players in Sri Lanka’s export economy.

The collaboration will further enable opportunities for joint forums, knowledge-sharing sessions, and networking events, providing exporters with guidance on alternative avenues for capital generation and highlighting the benefits of corporate good governance and transparency through listing.

This partnership adds credibility to the CSE and NCE’s shared efforts and signals trustworthiness to potential stakeholders, offering significant advantages for fostering growth, strategic opportunities, and long-term development within Sri Lanka’s export sector.

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A case for a visa-free tourism regime in SL

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Nihal Perera: “Visa-free travel needed.”

Sri Lanka should not have any restrictions for tourist arrivals and a visa-free regime is the need of the hour to woo more visitors, said travel and aviation expert Nihal C.B. Perera.

The founder of a family-owned company in Sri Lanka, Sparklink Travels, Perera said that Sri Lanka should offer the same ‘Visa Free facility’ initiated by Singapore and now successfully implemented by Thailand.

A former Ceylon Tourist Board, Development and Publicity Director, he said that during his time, they leased or gave several unused state land areas to build hotels. “But we told the investors that the construction has to start in six months, and this happened.”

One such venture was the opening of the Pegasus Reef Hotel at Wattala.

Perera also initiated the creation of special tourism zones in Bentota, Hikkaduwa and several other areas.

After a nearly 15-year stint at the Tourist Board, he formed his own travel company, Sparklink Travels, in 1979 with just 4 employees. “With the rapid expansion of business, and being recognized as an IATA-accredited travel agency, we increased our employee strength and moved into our own four-storey building in Bambalapitiya. We also opened a branch in Australia, he said.

“After the COVID pandemic, we also negotiated with airlines and refunded all passenger tickets purchased and cancelled due to COVID-19, Perera explained.

He recalled the days when people were issued small booklet-type air tickets and how his staff had to visit the airline offices to collect them. Perera added: “The online has changed these and I think this is a time-saving move.

“Unlike two decades ago, online and payment gateways have enabled people to book their own air tickets from home and we too have changed our strategies to find new businesses.”

Today, Sparklink Travels continues with his son Praki Perera, heading the company’s operations in Sri Lanka and Australia.

Their dedication ensures that the company remains a premier provider of air travel, cruises and tours, with professional services tailored to enhance the true essence of travel.

Perera, who has been a pioneering force in Sri Lanka’s tourism sector, was also honored as a ‘Tourism Legend’ at the annual industry awards.

By Hiran H. Senewiratne

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