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Sri Lanka in dilemma over import restrictions removal – Economics don

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Prof. Priyanga Dunusinghe

The government has taken a number of steps to pass the International Monetary Fund (IMF)’s first review of its loan, Prof. Priyanga Dunusinghe, Department of Economics at the Colombo University says.

“The IMF made several recommendations. One of them is increasing the tax revenue of the government. It also wanted the government to make the Central Bank independent and ensure that the state-owned enterprises adhere to cost reflective pricing. The IMF also wanted a strong safety net. Some progress has been made on these fronts,” he said.

Prof. Dunusinghe said the government had already faced tough resistance to those moves.

“Not all goals set by the IMF have been met, but it’s obvious that the government is serious about meeting the targets,” he said.

Prof. Dunusinghe added that Sri Lankans must be proud that the government had repaid the loan taken from Bangladesh in 2022.

However, the decision to remove all import restrictions, apart from those on private vehicles, from October might be premature, he said. There are still restrictions on importing over 600 items, he said.

“We must do a thorough study first to see if we are in a position to do so. I know there is a lot of pressure on the government to lift import restrictions. There is a lot of pressure from the EU. They have opened their markets to us through GSP+, but we have closed our doors to their goods. The IMF is also not a big fan of import restrictions. I personally don’t think we are ready to let go of import restrictions so early,” he said.

“However, we can’t keep import restrictions going on for a long time as well. Sri Lankan products too are being sold to other countries and we need to show reciprocity,” he said.

“Some businesses might import large quantities of items to buffer up stocks. The government must ensure that the rupee is not greatly depreciated. We can control the import of goods through tariffs. We have signed agreements with the World Trade Organization (WTO) that we won’t go beyond certain tariff thresholds. However, there is room for us to operate. We can get rid of import bans, but we can still discourage imports,” he said.

Prof. Dunusinghe also said that politicisation of key institutions was a serious problem for the country as those with political affiliations were not keen on delivering bad news to their political masters.

“Sri Lanka is also talking about giving tax concessions to attract investors. We have tried this since 1977, without much success. We have not addressed what really deters investors, such as policy inconsistencies, corruption, and lack of infrastructure. We just give tax concessions, which are often used by crooks,” he said.



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Advisory for Severe Lightning issued for Galle, Matara, Kaluthara and Rathnapura districts

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Advisory for Severe Lightning Issued by the Natural Hazards Early Warning Centre Issued at 12.30 p.m. 21 March 2026, valid for the period until 11.00 p.m. 21 March 2026

Thundershowers accompanied with severe lightning are likely to occur at some places in the Galle, Matara, Kaluthara and Rathnapura districts after 1.00 p.m.

There may be temporary localized strong winds during thundershowers. General public is kindly requested to take adequate precautions to minimize damages caused by lightning activity.

ACTION REQUIRED:

The Department of Meteorology advises that people should:

 Seek shelter, preferably indoors and never under trees.

 Avoid open areas such as paddy fields, tea plantations and open water bodies during thunderstorms.

 Avoid using wired telephones and connected electric appliances during thunderstorms.

 Avoid using open vehicles, such as bicycles, tractors and boats etc.

 Beware of fallen trees and power lines.

 For emergency assistance contact the local disaster management authorities.

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Sri Lanka says it denied US request to land two aircraft at Mattala airport

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Sri Lanka’s president says his government turned down a request from the United States to land two US combat aircraft at a civilian airport earlier this month.

President Anura Kumara Dissanayake told Sri Lanka’s parliament on Friday that Washington had requested permission for the aircraft to land at Mattala Rajapaksa International Airport in southern Sri Lanka from March 4 to 8.

The request was made on February 26, two days before the US and Israel launched their military offensive against Iran.

“They wanted to bring two warplanes armed with eight antiship missiles from a base in Djibouti”, Dissanayake told lawmakers. “We turned down the request to maintain Sri Lanka’s neutrality”, he added to applause.

The US-Israeli war on Iran has sparked widespread concern globally, as Iranian missile and drone attacks across the wider Middle East have sent energy prices soaring and fuelled fears of a widening conflict.

US President Donald Trump has also been pressuring Washington’s allies to show more support for the war, slamming NATO countries as “cowards” for refusing to help secure the Strait of Hormuz.

Iran has essentially shuttered the critical Gulf waterway  amid the war, forcing leaders around the world to scramble to try to offset the effects on their economies and energy supplies.

Amid the turmoil, many countries have refused to get directly involved in the war while calling for urgent de-escalation.

On Friday, Switzerland announced that it would halt any weapons exports to the US that could be used in military operations against Iran, citing its longstanding policy of neutrality.

“The export of war materiel to countries involved ⁠in the international armed conflict with Iran cannot be authorised for the duration of the conflict”, the Swiss government said.

Sri Lanka’s president also cited his country’s neutrality in the decision to deny the US request to land the two aircraft at Matalla airport earlier this month.

Dissanayake said he had received another request that same day, on February 26, from Iran to seek permission for three naval vessels to make a goodwill visit to Sri Lanka.

“With two requests before us, the decision was clear,” he said, noting that the government denied both to avoid taking sides as signs of escalating conflict emerged.

“Had we said ‘yes’ to Iran, we would have had to say ‘yes’ to the US, as well”, Dissanayake added.

In early March, Sri Lanka’s navy rescued 32 Iranian crew off IRIS Dena after it was torpedoed by a US submarine off the country’s coast, killing at least 84 people.

Days later, Sri Lanka evacuated more than 200 crew members from a second Iranian vessel, IRIS Bushehr, after the ship requested assistance from Colombo.

[Aljazeera]

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President maintains Lanka has been even-handed in dealing with Iran and US

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Sri Lanka refused the request by three Iranian ships to come to Sri Lanka on a goodwill visit and the request by the United States to land two of its fighter jets  in Mattala, President Anura Kumara Dissanayake told Parliament yesterday.

“Sri Lanka maintained neutrality by refusing the two requests by both the US and Iran,” he said.

President Dissanayake provided a clarification on domestic fuel prices in light of rising crude oil prices in the global market and subsequent fuel price increases in other countries, triggered by the ongoing crisis in the Middle East.

The President highlighted that the Ceylon Petroleum Corporation (CPC) currently supplies 57% of the country’s fuel requirements, while the remaining 43% is supplied by the private sector.

He further noted that private sector suppliers have requested pricing that reflects current global market rates for the fuel they import.

Accordingly, the President emphasised that a decisive decision on fuel price adjustments must be reached as expeditiously as possible to ensure the continuity of the national fuel supply.

Addressing the Parliament, the President stated that the current pricing formula dictates that for every one-dollar increase in global oil prices, domestic fuel prices must rise by Rs. 2.

He noted that the primary impact being faced is driven by the surge in global fuel prices rather than the depreciation of the rupee against the US dollar.

The President said that, globally, countries have been compelled to make difficult decisions regarding fuel costs, with price increases ranging from approximately 6% to 50%.

He added that while global prices have risen by as much as 49%, the domestic increase has been limited to 8%.

He further stated that Sri Lanka is currently facing a significant challenge in maintaining fuel supply.

The Ceylon Petroleum Corporation (CPC) accounts for 57% of the country’s fuel supply. He noted that had the CPC been the sole supplier, fluctuations could have been managed by offsetting current losses with future profits.

However, he said the private sector now controls 43% of the market, and their position is that if retail prices do not reflect the current landed cost of fuel, they will cease imports.

He added that, from a business perspective, this is a valid concern, as private companies reportedly incur a loss of approximately USD 55 million per shipment, which he said is unsustainable.

The President emphasised that the contribution of the private sector is essential to maintaining the national fuel supply, but noted that they will only participate if they are able to sell at cost-reflective prices.

He stressed that the issue of fuel pricing must, therefore, be addressed urgently.

He also pointed out that under the existing Act, companies are permitted to increase prices; however, the maximum retail price is determined by the Ceylon Petroleum Corporation.

“Although we have entered into agreements with these private companies, the necessary legislative amendments to the Act have not yet been finalised,” he noted.

Regarding government revenue, the President stated that tax income from fuel currently stands at Rs. 20 billion, compared to Rs. 240 billion generated last year from taxes on diesel.

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