Features
On to the private sector – JKH, Hemas and Schaffter company
Working simultaneously with state and private sectors
(Excerpted from the autobiography of Lalith de Mel)
About the time I joined the SLT Board, Ken Balendra, the Chairman of John Keells Holdings, invited me to join the Board of his company. That was the start of my working simultaneously with the private sector and the State sector. Ken was a strong personality and could by himself enforce the disciplines of good governance. He was due to retire and he felt, and I think correctly, that he should leave JKH with a more formal structure to ensure good governance. He appointed three Independent Directors, S. Easparathasan, Franklyn Amerasinghe and myself, and later Tarun Das.
There was a major issue with the management arrangements at JKH. It had a serious ‘Parents-and-Children’ syndrome. The Executive Directors managed their segments of responsibility, like a chief executive. So they became the children managing the business. But they were also in corporate terms the parent responsible to the Board for this segment’s activity. So in effect they reported to themselves for their area of responsibility. So they were both parents and children.
In management terms this was a bad model and has been extensively discussed in the literature. I found a very good book on the subject and insisted that they all read it. The JKH team comprised nice and intelligent people and they were prepared to think positively about change where it was necessary. It was a pleasure working with this group, and they appreciated what I did for them.
They accepted that the business units should have a head reporting to the Directors – a separation of parents from children. The parents would be accountable to the Board. This is the classic management model and I was glad to take JKH down this road.
JKH had an entrepreneurial culture. I think this heritage came from Mark Bostock’s time. Instinct had played a role in selecting acquisitions. Persuading them to adopt hurdle rates and cash-flow paybacks helped to test acquisitions and to dispose of some bad acquisitions. When I was on the Board, the LMS (Lanka Marine Services) acquisition came up for discussion. The financials were good. I had a Shell background in my youth and knew something about petroleum products and bunkers.
I discreetly asked Susantha Ratnayake (who was promoting the acquisition) whether he or JKH knew anything about the bunker business. He said, `No, but Sir, it is not rocket science and we can learn it.’ He had acquired some of the JKH entrepreneurial culture. It was brave of him to persuade the Board to buy a business without knowing the business. They bought it and it was very profitable.
Ken Balendra knew his team better than anybody else and had selected Lintotawela to succeed him. He was a finance man and perhaps Ken thought it best to have a numbers man to preside over his entrepreneurial troops. I did not think he was quite JKH style and thought that Susantha was the driving force in the business. After I left the Board, whenever I met Susantha I told him that he was developing a stoop by carrying the business on his shoulders (he turned a light shade of pink and hated me for saying it). Subsequently Susantha Ratnayake became the very successful Chairman of JKH.
LEAVING JKH
I met Abbas Esufally, I think it was at the Golf Club, and he said Hemas was debating whether to go public (with a listing on the CSE), and he wanted me to help them to decide, and if they went ahead to help them through the process. I agreed to meet them and talk about it as I held the view, and still do, that a private sector economy would survive best if all the big companies went public, so that the wider public could also benefit from their success, and this would create inclusive growth.
Eventually I agreed to help Hemas, and I told JKH about it. Lintotawela was unhappy and I could not be on the JKH Board and the Hemas Board. He saw a conflict of interest because JKH was in Hotels and Serendib had three hotels, one in Sigiriya and one in Waikkal, where JKH had no hotels, and one three-star in Bentota where JKH had the five-star Bentota Beach Hotel. The JKH team tried to persuade me to dump Hemas and stay with them, but I felt I had done my bit for JKH and it was an interesting challenge to take Hemas public.
I resigned from the JKH Board to join Hemas. The JKH Directors continued as friends and still Susantha very kindly invites me for dinner from time to time.
Investing in Serendib and joining Hemas
Even during the dark days of the war, when tourist arrivals were poor, I believed that in the long-term tourism would be our oil well. To get closer to the industry I wanted to make an investment in a hotel company. Through a mutual friend I met Abbas Esufally and with his help bought the shares of a Director of Serendib Hotels, who was retiring. It was a relatively modest investment but it got me to the top three non-corporate individual shareholders and I was invited to join the Board. I also invested in the quoted Serendib subsidiary companies Sigiriya and Dolphin.
This gave me a good and continuous rolling insight of the tourism industry. I had always been interested in tourism as a good industry for developing countries. This close-up picture of the hotel industry was helpful in developing my knowledge. I was happy to be on the Board.
Serendib was a fairly unstructured business and I endeavoured to help the management develop relevant business processes. I encouraged the management to develop Serendib as a brand and to leverage the Bawa connection.
It was one of Geoffrey Bawa’s early hotels. It had been heavily influenced by 18th century Dutch architecture. The facade viewed from the beach had a remarkable resemblance to the well-preserved Dutch building in Pettah.
The hotel put together a Bawa room to illustrate and leverage the Bawa link. After Srilal Miththapala, the enthusiastic Manager in the early phase, we had Ranil De Silva, a very experienced modern Manager. I was happy to be an active and involved member of the Board, and saw the hotel expanding both physically and in quality and as a shareholder I was pleased that it also was a steady, profitable hotel.
Abbas Esufally, one of the four major shareholders of Hemas Holdings, was Chairman of the Company. He was perceptive of the issues relating to tourism, was a pleasure to work with, and I enjoyed working with him, for many years.
The Minor Group, a big international hotel group with a base in Thailand, had expressed an interest in some form of collaboration. This proved to be a distraction. The Serendib management was heavily involved in building its Anantara property in Kalutara and the Hemas Minor Joint Venture hotel in Tangalle. The joint venture with Minor never happened and Serendib had to consider a life without Minor. This was a new strategic challenge. I did not stand for re-election.
Hemas was owned by four Esufally cousins. Each managed a piece of the business, with freedom to do as they pleased. They had the same cars and same salary and lived down the same road. A high comfort zone.
My role was to explain the process, advantages and consequences of becoming a public company. The big concern was whether the public would buy the shares of a firm in Bristol Street owned by four Borah cousins. I was convinced that a properly-constructed public offering would succeed.
The daunting question for them was whether to remain private in their comfort zone or to release the value by going public and accepting all the restrictions on freedom that came with it. The prospect of becoming billionaires won. But it proved to be a hard struggle to get them to keep their part of the bargain and accept the restrictions on their freedom as a public quoted company. I agreed to come on the Board and lend my name to the public issue and the financial advisers were confident that the issue would be fully subscribed. It was.
Public company
It had three Independent Directors, and I was the Independent Chairman. I tried to perform two roles. To give them the benefit of my management experience and be a mentor to develop the management skills of the company and as Chairman to establish the good governance practices of a public company and create the corporate structures that would help optimize shareholder value.
The first problem
To complacently accept less than the best skills available was not compatible with the obligations of a Chairman, the custodian of the public shareholders’ interests. This created problems. The four family shareholders were all intelligent and educated. In the management structure of any good company, that only gets one to the starting gate. What they all, including Hussein, lacked was good business experience gained by working elsewhere under outstanding managers and a high quality management education.
It was a struggle to get them to accept that they should relinquish the Managing Director type of roles they performed, and to bring in first-class management so as to optimize shareholder value and for them to move to a Non-Executive Chairman type of role.
I can well understand that they would have resented me for pushing them to give up their roles, but probably reluctantly accepted that it was in the best interest of protecting the billions of value they owned in shares. Abbas Esufally was charming and gregarious, looked at it all in a very mature fashion, and took it all in his stride in the interests of developing shareholder value. His only concern was fashioning a useful role when he gave up his executive line job.
The biggest block
Hussein Esufally was the biggest block to creating a proper Board-managed company. Transition from a family firm to public company meant the major roles of managing the business, which were all in Hussein’s hand as the CEO of the family business, had to be vested in the Board headed by the Chairman.
He resented it, but had to accept, for example, that there had to be a Remuneration Committee, an Audit Committee, and that annual plans and investment proposals, etc. had to be approved by the Board. Good governance processes remain cosmetic until you give them teeth, and giving them teeth was not easy.
He saw this as a move of authority from him to me and did not like it, as it affected his ego. His reaction was to endeavour to diminish the image of the Chairman. He did not provide the Chairman with an office or a secretary, let alone a company car or entertainment allowance. When I insisted on an office, he gave me a little cubicle behind a secretary.
This undermined my ability to interact with the senior management as I had no proper venue to meet them and it was not in keeping with the image of a chairman of a public company to ask managers to meet the Chairman in his shoebox! When he had decided that he would be the next chairman, a grand office was created. I was like a shadow hovering relentlessly, pursing the reduction of his powers and creating a proper Board-managed public company.
Snakes and ladders
I thought that over the years I had convinced the family that the best method of protecting their wealth was to be a proper public company with an independent chairman and an experienced management team with a good track record managing it.
Steadily over the years we climbed up the ladder, rung by rung. I thought I had convinced them that the two sacred pillars of a good public company were an independent chairman and an excellent and experienced CEO.
When it was time for me to retire, sadly both these pillars were ignored. It was case of whizzing down a snake at the end. Hussein had decided to be Chairman. An end to independent chairmen at Hemas.
The choice for Chief Executive was Enderby. When I was a Director of CDC Plc in the UK, Donald Peck was Managing Director South Asia and Steven Enderby was a member of his private equity team. Steven Enderby had never managed a business as an executive CEO.
CDC was in private equity operations and Enderby could perhaps use his contacts from private equity days to get some funds to buy Hemas in the market and thereby help the share price. Steven is a friendly, charming and intelligent person but had no general management experience to bring to the party. After a long career of success in my endeavours, this is the one big blot of failure.
Fortunately for shareholders, Hemas had some good people, Malinga Arsakularatne had done an excellent job as Head of Finance. There had been many good marketing men in FMCG. If Hemas was prepared to have a CEO with great potential but no previous CEO experience in a big business, the very talented Kasturi Chellaraja Wilson would have been an excellent choice.
In addition to being appointed, there was also something in the air about Steven Enderby wanting to buy a large block of shares at a discount. I don’t know whether this ever happened. I did not want to be a party to the decisions regarding the Chairman and CEO. I said I must retire from the Board before these decisions were made and did so.I did not leave Hemas with the gratitude of the family but I think it was with their resentment.
Trading in bonds
Dinesh Schaffter wanted my help and guidance on developing a conglomerate of businesses he had put together. I said I would have a good look at his business and see whether I could add value. Ksathriya, as it was called, was managed by a small team of highly-paid managers.
I was appalled by what I saw in the numbers. They had made a number of bad acquisitions and were in the throes of making another, a supermarket chain, which had all the signs of another bad acquisition. Ksathriya was kissing distance away from bankruptcy. The task was not growth but restructuring for survival.
The management team was discontinued. Manjula Mathews, Dinesh’s sister, who also had a financial interest, joined the team to salvage what we could from this business which was in dire straits. This was the beginning of a long association with the Schaffters and their businesses. Ksathriya could not be saved as an ongoing business and all commercial operations dwindled down and were wound up.
Dinesh Schaffter was the eternal entrepreneur and his philosophy was ‘if one failed, look for another’. Ksathriya was reborn as Dunamis. Tucked away within it was a piece of relatively neglected business, which was high risk but interesting. The business called First Capital was a licensed bond trader and could trade in Government securities. So I joined First Capital as a mentor, ended up on the Board, and eventually was Chairman.
Trading in Government securities, to put it very simply, was to buy at the Central Bank auctions with money borrowed from the Banks and sell on at a profit but at very thin margins of profit. It was volume that gave one a meaningful profit, but volume meant high debt. It was a difficult business of predicting trends in interest rates and backing the judgment with high-risk trading.
Good governance was paramount. Processes had to be put in place to ensure good governance of trading and good management and they had to be rigorously enforced. The industry was heavily regulated. Compliance was vital as failure could result in losing the license to trade, which would mean the end of the company.
A compliance team was established but it was necessary for the Board to keep this activity under continuous review. The other area to be managed with utmost care was the management of risk and there was a Risk Management Committee. It was compliance to protect the license and risk to protect the shareholders’ money.
There were the other corporate bells and whistles essential in a public company, like a Remuneration Committee and an Audit Committee, and these were established. Around First Capital, there was another conglomerate developing. Wealth management, investment funds and a stockbroking firm. Good processes were established to facilitate their development.
The Schaffters, Manjula and Dinesh, were delightful people to work with, for many reasons. They were both very bright, there was always a chuckle even when contemplating dire circumstances if things went wrong. Never a risk of rumbling egos. If they had any, they never brought them to work. They always appreciated what I did for them. Whenever I met their father, Chandra Schaffter, he never failed to thank me for helping his children.
The thought of retiring from all work was hovering in my mind. A difficult regulatory development provided the exit. Stringent regulations were introduced about related party transactions. In close-knit conglomerates this was a problem and created the need to unravel them and to create new arrangements that complied with the regulations. At the tail-end of my career I had little appetite to take this on, and I had a good solution.
I had brought two excellent finance people on to the Board, Minette Perera and Nishan Fernando. They had both worked in companies where I was Chairman. Minette at Reckitts and Nishan at SLT. They were appointed to a Related Party Transaction Committee. After watching over it for a few months I knew it was in safe hands, and as I had done my bit for the Schaffters over the years I thought it was in good order not to stand for re-election, and brought the curtain down after a 55-year career.
Features
Sri Lanka’s vanishing wetlands put elusive otter under growing threat
The world marked World Otter Day 2026 recently. Conservationists are warning that Sri Lanka’s rapidly disappearing wetlands, polluted waterways and unplanned development are placing increasing pressure on one of the island’s most elusive freshwater predators, the Eurasian otter (Lutra lutra).
The species, locally known as “Diya Balla”, is the only otter found in Sri Lanka and is regarded as a key indicator of healthy freshwater ecosystems. Yet despite its ecological importance, experts say the animal remains poorly studied and largely overlooked in national conservation planning.
Naturalist and conservationist Chaminda Jayasekara, who has spent years documenting otters in Sri Lanka, said the species is facing mounting environmental pressures across the island.
Speaking to The Island, Jayasekara said habitat destruction, chemical pollution, road kills, sand mining, and increasing human disturbance are fragmenting the waterways on which otters depend.
“Otters are extremely sensitive animals. When wetlands are degraded or rivers become polluted, they disappear very quickly. Their survival is directly linked to the health of freshwater ecosystems,” he said.
Jayasekara, who specialised in MSc Environmental Management at the University of Hertfordshire, noted that while the species has been recorded across Sri Lanka’s wet zone, dry zone and coastal wetlands, scientific data on population numbers and distribution remain limited.
According to him, the decline of wetlands has become one of the most serious environmental issues facing Sri Lanka. Marshes, mangroves, irrigation tanks and riverine habitats are increasingly being altered by urban expansion, tourism infrastructure, encroachment and agricultural runoff.
He warns that the loss of these habitats not only threatens otters, but also weakens flood control systems, freshwater security and biodiversity resilience at a time when climate-related disasters are becoming more frequent.
Jayasekara said otters play a vital ecological role by helping maintain balanced fish populations and healthy aquatic ecosystems.
“When otters thrive, it tells us the river system is functioning properly. Their presence is a sign that water quality, fish diversity and habitat conditions remain healthy,” he explained.
One of the best-known locations for otter sightings in Sri Lanka is Aranga Pond, within the Horton Plains National Park, where the species has adapted to the island’s cold montane ecosystem.
However, conservationists stress that even protected areas are not immune to broader environmental degradation occurring outside park boundaries.
Jayasekara’s own work on otters gained prominence through long-term conservation efforts at Jetwing Vil Uyana, where a former degraded chena landscape was restored into a functioning wetland ecosystem.
The restored habitat eventually attracted Eurasian otters, fishing cats, grey slender lorises and numerous wetland bird species.
Over 14 years, Jayasekara carried out field observations, camera trapping and awareness programmes involving hotel staff, surrounding schools and local communities.
“What happened at Vil Uyana clearly showed that habitat restoration works. If degraded ecosystems are given time to recover, wildlife can return naturally,” he said.
He added that wetland restoration should become a central component of Sri Lanka’s environmental policy, particularly as climate change intensifies droughts, floods and biodiversity loss.

Chaminda collecting scat for research purposes in Sigiriya
He says wetlands are among the planet’s most productive ecosystems, functioning as natural water filters and carbon sinks while providing breeding grounds for fish, amphibians and aquatic mammals.
Yet globally, wetlands are disappearing at an alarming rate, and Sri Lanka is no exception.
Conservation groups have repeatedly warned that illegal waste disposal, pesticide contamination and poorly planned infrastructure projects are severely affecting freshwater ecosystems throughout the country.
Jayasekara also highlighted the importance of stronger environmental education and community participation in conservation.
“Awareness is still very limited. Many people living close to wetlands do not realise the ecological importance of otters or the threats they face,” he said.
According to him, involving local communities in conservation monitoring is essential if Sri Lanka hopes to safeguard the species in the long term.
He also pointed to the growing international interest in otter conservation.
In November 2025, Jayasekara represented Sri Lanka at the International Eurasian Otter Conservation Workshop held at Colchester Zoo and organised by the International Otter Survival Fund.
The workshop brought together nearly 100 researchers, conservationists and wildlife experts from 33 countries to discuss emerging threats facing Eurasian otter populations.
Jayasekara presented Sri Lanka’s experience under the theme Rewilding Through Hospitality, focusing on how habitat restoration and sustainable tourism practices at Vil Uyana contributed to otter conservation.
“The international response was extremely encouraging. Many delegates were surprised that a tourism property in Sri Lanka had quietly carried out wetland conservation work for more than a decade,” he said.
Discussions at the workshop also examined wider environmental concerns including river pollution, declining fish stocks, illegal killings and habitat fragmentation affecting otter populations across Europe and Asia.
New conservation technologies such as AI-assisted wildlife tracking and environmental DNA surveys were also highlighted as emerging tools for monitoring elusive species.
Jayasekara said Sri Lanka urgently requires more scientific surveys, stronger environmental law enforcement and greater investment in freshwater conservation research.
He warned that unless wetlands and waterways are protected, several lesser-known freshwater species could face severe decline in the coming decades.
Environmentalists say otter conservation should not be viewed in isolation but as part of a broader effort to protect entire freshwater ecosystems that millions of Sri Lankans depend on for drinking water, irrigation and livelihoods.
He further noted that healthy wetlands also strengthen climate resilience by absorbing floodwaters, reducing soil erosion and supporting groundwater recharge.
As Sri Lanka experiences increasingly erratic weather patterns linked to climate change, conservationists argue that protecting wetlands is becoming both an ecological and economic necessity.
Jayasekara believes Sri Lanka still has an opportunity to become a regional example in balancing tourism, biodiversity conservation and habitat restoration.
“The otter teaches us an important lesson,” he said. “If rivers are protected and wetlands are respected, nature has an incredible ability to recover.”
This year’s observance of World Otter Day 2026 is, therefore, serving not only as a celebration of one of the world’s most charismatic mammals, but also as a reminder of the urgent need to conserve the fragile freshwater ecosystems upon which both wildlife and human communities ultimately depend.

Eurasian otter
By Ifham Nizam
Features
Malaiyaha Tamil people: Healing the Oldest Wound of Independence
In their Vesak messages this year, President Anura Kumara Dissanayake and Prime Minister Harini Amarasuriya highlighted the values of reconciliation, coexistence and justice as essential to Sri Lanka’s future. President Dissanayake emphasised that Buddhism’s teachings remain deeply relevant to contemporary society and described Vesak as a symbol of “mutual understanding, unity and coexistence among all communities” and of reconciliation itself. Prime Minister Amarasuriya similarly called for the building of a society in which justice is assured to all irrespective of caste, race or religion. These messages were not merely religious aspirations, they were a direct challenge to the most serious failures in Sri Lanka’s post-independence history. These include the three-decade-long war, its human rights violations and the inability to implement a political solution.
These have been and continue to be the challenges that have prevented Sri Lanka from reaching its full potential. Added to this have been the persistence of social and economic inequalities that continue to marginalise communities at the bottom of the social hierarchy. One of the most enduring examples of such injustice is the experience of the Malaiyaha Tamil community. The scale of the original exclusion is worth understanding clearly. According to the 1946 Census, the Malaiyaha Tamil community numbered approximately 780,600 persons and constituted 11.73 percent of the country’s population making them the second largest ethnic community, larger than the Sri Lankan Tamil community who numbered 733,700 or 11.02 percent of the population at the time
The denial of citizenship and voting rights to the Malaiyaha Tamil community was the first major injustice inflicted on an ethnic minority in post-independence Sri Lanka. The consequences were devastating and long-lasting. A community that had contributed enormously to the country’s economy through its labour on the plantations was excluded from political participation and denied basic rights. This was a political and moral failure that cast a long shadow over the country’s post-independence history. Responsibility for that injustice needs to be shared widely. Political leaders across ethnic lines failed to resist it. The result was the marginalisation of a community whose contribution to national prosperity far exceeded the recognition it received. Today, nearly eight decades later, Sri Lanka has an opportunity to correct that historic wrong but only if economic reform is matched by genuine social inclusion.
Longstanding Grievances
The NPP government has repeatedly acknowledged the need to address the longstanding grievances of the Malaiyaha Tamil people. In its election manifesto, the NPP pledged to improve living conditions in plantation areas, strengthen land and housing rights, ensure equal access to education and public services, and integrate plantation communities more fully into national development. The NPP’s Nuwara Eliya Declaration of 2023 similarly recognised that the plantation community had suffered generations of exclusion and promised measures to address disparities in housing, land ownership, infrastructure, education and economic opportunity. The need for such action is plain to see. While citizenship issues have largely been resolved over time, the socio-economic consequences of decades of exclusion remain deeply entrenched and continue to shape daily life in plantation communities. A conference organised by the Institute of Social Development to mark International Tea Day on May 21 at the BMICH brought out this and many other salient issues. Headed by P Muthulingam the organisation has advocated for the rights of the Malaiyaha Tamil people for the past 35 years to be equal citizens who enjoy social and economic justice.
The central problem facing many plantation workers is the low level of income they receive. Daily wages remain among the lowest in the country relative to the difficulty and intensity of the work. Plantation labour continues to depend heavily on methods that have changed little over generations. Productivity remains low compared to competing tea-producing countries — not because workers lack capability, but because sustained investment in their welfare, skills and economic mobility has been withheld. Workers consequently remain trapped in a cycle of low wages and limited economic mobility. Their housing situation compounds these difficulties. Many plantation families continue to live in housing owned either by plantation companies or the state. Lack of secure ownership limits their ability to accumulate assets, access credit or make independent decisions regarding their future. When Cyclone Ditwah damaged plantation housing, it exposed the inability of those living in that housing to access state compensation as they did not own the housing in which they lived.
The problems extend beyond the central highlands. Plantation workers living in private estates and smallholdings in other parts of the country face similar challenges. A recent Amnesty International report documented serious abuses affecting Malaiyaha Tamil workers in private tea estates in the Southern Province. These include wage withholding, debt dependency, restrictions on movement and intimidation and practices the report argued correspond to internationally recognised indicators of forced labour. These findings are not peripheral. They reveal that the structural exclusion of the Malaiyaha Tamil community is not a relic of the past but an active, ongoing condition. Economic vulnerability and social marginalisation continue to leave many plantation workers without effective protection or access to justice. It is against this backdrop that the government’s recent plantation reform initiative assumes special significance.
Second Phase
The government has announced the second phase of a programme to make underutilised plantation lands and assets available for investment. The objective is to transform underperforming assets into productive enterprises capable of generating employment, attracting investment and revitalising regional economies. The programme seeks to modernise the plantation sector, improve productivity and create new opportunities in tourism, renewable energy and export-oriented industries. These objectives are necessary and welcome. However, economic reform alone will not be sufficient and Sri Lanka’s own history provides the warning. Previous rounds of plantation modernisation pursued productivity gains without addressing the structural disempowerment of the people at the centre of the industry. The result was investment that generated wealth without distributing it. The workers who produced the wealth were once again treated as labour inputs rather than as beneficiaries. If the current reform follows the same logic, it risks reproducing the same failure.
For reform to succeed, plantation workers must be recognised not merely as a labour force but as stakeholders with rights, aspirations and a legitimate claim to share in the benefits of development. Housing ownership, secure land tenure, quality education, vocational training and entrepreneurship need to be built into the reform process from the outset. The government’s commitments to the Malaiyaha Tamil community therefore need to be incorporated into every stage of the reform process. On the contentious question of land, the government should consider establishing an independent national land commission. Such a body should include respected government officials, professionals and representatives from all ethnic and religious communities. It should review land policy comprehensively, develop transparent principles for allocation and use, ensure fairness in decision making and provide a trusted mechanism for resolving disputes. A credible land commission would help build public confidence that land reforms are being undertaken in the national interest rather than for the benefit of particular groups.
The correction of historic injustices should not be viewed as a concession to one community. It should be understood as an investment in national unity, because societies do not become stronger by maintaining the exclusion of those they have wronged. On the contrary, they become stronger by ending it. The first great injustice committed against an ethnic minority after independence cannot be undone. But its consequences can be addressed, and doing so would strengthen reconciliation, enhance social cohesion and bring Sri Lanka closer to the vision of a country in which all communities live with equal dignity and equal hope. This is what the Vesak messages of the President and Prime Minister promised. The plantation reform now underway is the moment to make good on that promise not in words alone, but in sustained policy that endures beyond any single government and reaches the people who have waited longest for it.
by Jehan Perera
Features
IMF relief is not economic recovery: Sri Lanka’s real test begins now
The IMF’s latest decision to release approximately US$695 million to Sri Lanka provides an important measure of financial relief, but it should not be mistaken for full economic recovery. While the approval reflects progress in stabilisation, fiscal discipline, and reform implementation, the country still faces deep structural weaknesses, social pressures, and external risks. The real test begins now: whether Sri Lanka can convert this temporary breathing space into lasting reform, productive growth, stronger institutions, and national resilience. This moment should not be used for political celebration, but for serious national reflection and responsible action. Sri Lanka must now resolve to support a clear policy direction, a practical reform programme, and a long-term national development path — not merely an individual, a party, or a political camp.
1. IMF Relief: A Necessary Step, but Not a Final Solution
The IMF Executive Board recently completed the combined Fifth and Sixth Reviews under Sri Lanka’s Extended Fund Facility, allowing the country immediate access to SDR 508 million, approximately US$695 million. This decision represents an important step in Sri Lanka’s ongoing economic recovery process following the severe crisis that led to sovereign debt default, shortages of essential goods, high inflation, and the collapse of foreign reserves in 2022.
However, this decision must be understood with great sensitivity. IMF relief is not the same as full economic recovery. It gives Sri Lanka temporary breathing space, helps rebuild a certain level of international confidence, and supports the continuation of the reform programme. However, this relief is not a magic solution that can automatically resolve the country’s deep-rooted economic problems. Fundamental challenges such as the debt burden, weak productive capacity, low export earnings, poor public revenue performance, weak fiscal management, excessive dependence on imports, corruption, and inefficient state-owned enterprises still remain unresolved. Addressing these challenges requires domestic reforms, disciplined policies, stronger production and export capacity, and a long-term national development programme. Therefore, the IMF decision should not be treated as a political victory or as proof of complete economic success. Rather, it should be seen as a reminder that Sri Lanka still has a long and difficult journey ahead.
2. Sri Lanka’s Progress Recognised by the IMF and Its Limits
The IMF’s approval indicates that Sri Lanka has made progress in several important areas. Inflation has been brought under control compared to the extreme levels experienced during the crisis. Foreign reserves have improved, the exchange rate has shown greater stability, and fiscal management has become more disciplined. The government has also continued to implement reforms in taxation, public finance, energy pricing, and debt restructuring.
According to the IMF assessment, performance under the programme has generally been strong. Several quantitative performance targets have been met, while many structural benchmarks have either been achieved or implemented with some delay. This shows that Sri Lanka has remained broadly committed to the reform path agreed under the IMF-supported programme.
Yet this progress remains fragile. Stability achieved through external support must now be converted into genuine economic strength.
3. Conditions and Responsibilities Attached to the IMF Programme
IMF support does not come merely as financial relief; it comes with a set of important reform conditions and responsibilities that Sri Lanka must fulfil. Key among them are maintaining fiscal discipline, improving government revenue, continuing cost-reflective pricing for fuel and electricity, strengthening public financial management, restructuring state-owned enterprises, protecting institutional independence, and preventing the accumulation of new external payment arrears.
The main objective of these conditions is to restore macroeconomic stability, strengthen fiscal credibility, and rebuild international confidence in Sri Lanka. However, these reforms also carry social and political consequences. Higher taxes, market-based utility pricing, and strict expenditure controls can place a heavy burden on ordinary citizens, especially low-income families, small businesses, pensioners, and salaried workers. Therefore, in implementing reforms, economic discipline alone is not enough. Fairness, transparency, and social sensitivity towards vulnerable groups must also be treated as essential priorities.
4.The Impact of IMF Conditions on People and the Economy
One major social consequence of the IMF programme is the increased pressure it can place on household incomes and living standards. When electricity, fuel, and other essential services are priced on a cost-recovery basis, people may have to face a higher cost of living. Although such reforms are necessary to reduce the losses of state-owned enterprises and maintain fiscal discipline, they can weaken the purchasing power of ordinary citizens if strong social protection programmes are not in place.
Another important consequence is the pressure placed on the operating costs and stability of small and medium-sized enterprises. Higher taxes, increased utility costs, fuel and electricity expenses, and the rising cost of borrowing can affect business survival, job creation, and new investment decisions. If reforms are implemented without sufficient attention to production, exports, and small businesses, the country may achieve short-term fiscal stability, but long-term economic growth could remain weak.
There is also a political risk that cannot be ignored. If people feel that the burden of reform is not being shared fairly, reform fatigue and public frustration may emerge. If ordinary citizens are expected to make sacrifices while corruption, waste, and political privileges continue, public confidence in the reform process will decline. Therefore, for IMF-supported reforms to succeed, fairness, transparency, and social sensitivity must be firmly ensured alongside economic discipline.
5. The Real Test Before Sri Lanka
Sri Lanka’s real test begins now. Beyond temporary financial relief, the country must now prove that it can build a strong economy that generates income and can withstand external shocks. Therefore, our objective should not be limited to securing the next IMF tranche. While an IMF tranche may provide short-term breathing space, it does not guarantee long-term economic independence or stability. The real objective should be to create an economy that does not have to return to the IMF repeatedly during every crisis, but can stand on its own productive strength, export earnings, and fiscal discipline.
This requires fiscal discipline. However, discipline alone is not enough; economic growth is also necessary. Taxation is necessary. But increasing taxes alone is not a solution; production, investment, and exports must also be expanded. Debt restructuring is necessary. But beyond reducing the debt burden, Sri Lanka must also build an economic foundation that does not depend excessively on borrowing in the future. Sacrifices may be asked of the people. But for those sacrifices to be fair, accountability, transparency, and exemplary conduct from leaders are also essential.
Economic recovery cannot be sustained in the long term through financial assistance alone. Such support can provide breathing space during a crisis, but a country is rebuilt on the strength of its own institutions, productive capacity, export competitiveness, and public trust. Therefore, what Sri Lanka needs today is strong institutions, income-generating industries, a broader export base, food security, energy security, and a system of governance that people can trust.
6. Policy Priorities for Sustainable Recovery
Sri Lanka must now move from crisis management to national transformation. First, fiscal discipline should continue, but it must be fair. Revenue mobilisation should not rely only on increasing taxes on the same groups of people. The tax base must be broadened, tax administration must be improved, and tax evasion must be reduced.
Second, social protection must be strengthened. The most vulnerable groups should be protected through well-targeted assistance. Reforms will be more acceptable if people feel that the poor, elderly, disabled, and low-income families are not abandoned.
Third, state-owned enterprise reform should be carried out with transparency and public accountability. The objective should not merely be privatisation, but efficiency, professionalism, financial discipline, and better service delivery.
Fourth, Sri Lanka must prioritise export-led growth. The country cannot build a stable future by depending mainly on borrowing, remittances, and consumption. Agriculture, tourism, manufacturing, IT services, logistics, education, and value-added exports must become central pillars of national development.
Fifth, governance reform is essential. Without reducing corruption, political interference, wasteful expenditure, and weak implementation, no IMF programme can create lasting recovery. Economic reform and governance reform must move together.
7. From Temporary Relief to Lasting Recovery
The IMF decision gives Sri Lanka an important opportunity. It provides the country with space to strengthen economic stability, rebuild international confidence, and move forward with essential reforms. However, it is not a guarantee of success. It is only a step that gives the country some breathing space. It is now Sri Lanka’s responsibility to use that space wisely, with discipline and accountability to the people.
The country must now decide whether it will continue the old cycle of crises, debt, temporary relief, and political blame, or whether it will build a new national programme based on discipline, productive capacity, fairness, and accountability.
At this moment, true success cannot be measured by the amount of money received. It must be measured by whether Sri Lanka can build an economy that produces more, exports more, saves more, is governed better, and protects its people more effectively. The real victory is not receiving IMF relief, but building a strong national economy that will not depend excessively on such relief in the future.
Public Appeal: Let Us Choose a Programme, Not a Personality
This US$695 million will not solve every problem in our country. It may provide temporary financial relief and support the continuation of reforms, but it cannot replace the hard work required to build a productive, disciplined, inclusive, and self-reliant economy.
Therefore, this is the right time for all Sri Lankans to rise above narrow political loyalties and support a clear policy direction, a practical reform programme, and a long-term national development agenda — not merely an individual, a party, or a political camp. What Sri Lanka needs today is not the victory of a personality, but the victory of a responsible national programme that can restore confidence, protect the vulnerable, promote production, strengthen exports, ensure accountability, and secure a better future for the next generation. The question before us is simple but decisive: are we ready to make that choice?
by Prof. Ranjith Bandara,
PhD (Qld.,)
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