Business
Stopping subsidies, refraining from funding SOEs seen as essential for economic recovery
By Hiran H. Senewiratne
The main elements of any market-based financial system are to restore confidence in it by correcting current imbalances, reducing the vulnerabilities of the financial system to further shocks and implementing finance and economic reforms. However, it is most crucial that the government stops providing subsidies and refrains from funding state-owned enterprises, former Acting Governor of the Reserve Bank of New Zealand Prof. Grant Spencer said.
“Apart from that other key elements would be to remove short-term emergency restrictions and improve the long- term economic performance of Sri Lanka, Prof. Spencer said during a special lecture titled, “Key Elements of a Market-based Financial System”, conducted on November 1, at the Central Bank of Sri Lanka auditorium.
Prof. Spencer added: ‘At this juncture a simplified and uniform tax system is important by targeting the most needy segments in the country, which system is now being slowly and steadily implemented by the Sri Lankan government as a recommendation of the IMF.
‘It is necessary to put public sector finances on a sustainable footing, while restructuring the external debt. An independent Central Bank is a prerequisite. This is needed for improving the resilience of the banking system. Because the Central Bank must earn trust and confidence from the government and financial markets.
‘To put public sector finances on a sustainable footing, it is required to reform the tax base, particularly for direct income taxes, thereby simplifying the tax rules by removing exemptions.
‘Moreover, it is important to stop subsidies and cheap loans to favoured sectors, restrict growth in government spending with targeted assistance to the most needy and set clear and achievable fiscal objectives.
‘International creditors must agree to a haircut and lengthened debt maturities, whilst clearing the way for the IMF programme with money going to current uses rather than repayment of existing loans.
‘There is a need to commit to an independent accountable Central Bank. To this end, it is essential to pass the new Central Bank Act which will help to ensure price and financial stability over the long- term.
‘An Independent CBSL with government agency functions removed, will help to ensure that public finances remain in balance.
‘It is essential for vulnerable banks to bolster their balance sheets potentially through mergers and the Central Bank needs to prepare contingency plans for potential banking sector stress.
‘Correcting the fiscal imbalance, stabilizing the external debt, creating an independent CBSL and ensuring resilience of the banking system will help to restore international and domestic confidence in Sri Lanka’s future.
‘It is important to reduce the risk premium in Sri Lanka’s interest rates and exchange rate, encourage a recovery of remittances and return of capital into the country and encourage the re-opening of capital markets.’
Business
GDP data reaffirms persistent asymmetry of Sri Lanka’s provincial economy
Western Province maintains its dominant position, accounting for 42.4% of nominal GDP
The 2024 provincial GDP data reaffirms the profound and enduring structural asymmetry in Sri Lanka’s economic geography. The Western Province continues to function as the nation’s overwhelming economic core, while the second and third runners-up, the North Western and Central Provinces respectively, operate on a markedly different scale and sectoral foundation.
The Western Province maintains its dominant position, accounting for 42.4% of the country’s nominal GDP. This preeminence is rooted in its commanding role across the high-value Services and Industry sectors, where it contributes 44.5% and 47.6% of national output, respectively. Its economy is distinctively modern, with a scant 2.3% reliance on agriculture and over 98% of its output derived from industry and services. This concentration of finance, trade, administration, and manufacturing creates an unmatched gravitational pull for investment and talent.
In stark contrast, the combined economic share of the North Western (11.5%) and Central (10.7%) Provinces is just over half that of the Western Province alone. Their paths to relevance are fundamentally different. The North Western Province has solidified its role as the nation’s agricultural heartland, contributing a full 20.0% of national agricultural activity. It also holds a significant, though secondary, position in industry at 12.0%. Its internal economic composition is more balanced across sectors than the west, with a notable reliance on industry (29.1% of its own GDP) alongside agriculture.
The Central Province, meanwhile, presents a more services-oriented profile among the runners-up, contributing 10.7% to the national services total. It also holds important shares in agriculture (13.9%) and industry (9.6%). Internally, its economy mirrors the national structure most closely among major provinces, with services constituting about 63% of its output. This suggests a diversified regional economy centered on urban hubs like Kandy, but one that lacks the concentrated high-end service power of Colombo.
The comparative analysis reveals a clear hierarchy. The Western Province is the integrated, metropolitan driver of the modern economy. The North Western Province serves as a vital agro-industrial base, and the Central Province as a diversified regional center. Despite a noted increase in the combined share of the other provinces, the gap remains vast. The economic landscape is thus characterized not by convergence, but by a persistent and specialized asymmetry, where the runners-up support the national economy through different, but essential, sectoral strengths, all while operating in the long shadow of the western province.
by Sanath Nanayakkare
Business
Sri Lanka Insurance supports 1,000 families in flood-affected areas
Sri Lanka Insurance Life and Sri Lanka Insurance General, in collaboration with the National Disaster Relief Services Centre (NDRSC), extended vital assistance to 1,000 families affected by the recent ‘Ditwah’ cyclone. The relief initiative was carried out in two phases on 30th November and 2nd December 2025, reflecting the company’s continued commitment to supporting communities in times of distress.
Dry ration packs were distributed through the NDRSC to the Maharagama Urban Council and the Divulapitiya Pradeshiya Sabha, ensuring that aid reached the most affected households swiftly and efficiently. Both distribution programmes were held with the participation of local authorities and the management teams of SLIC Life and SLIC General, further strengthening the company’s close partnership with the communities it serves.
Speaking on the initiative, Chairman of Sri Lanka Insurance, Nusith Kumaaratunga, stated; “Sri Lanka Insurance has always placed community wellbeing at the heart of its purpose. In difficult times such as these, it is our responsibility to stand with the families who have been affected and offer meaningful support. This relief effort reflects our ongoing commitment to uplift communities and reinforces our role as a trusted national insurer focused on protection, care, and compassion.”
In addition to the relief programme, Sri Lanka Insurance has implemented extended operating hours at selected SLIC General branches in the affected areas to ensure uninterrupted service. Claims, customer care teams, and branch staff are working beyond regular hours to provide prompt assistance to policyholders impacted by the severe weather conditions.
Sri Lanka Insurance remains dedicated to safeguarding its customers and supporting communities across the nation, reaffirming its longstanding promise of protection, stability, and service excellence.
Business
Jaffna Hindu College wins regional AIA Healthiest Schools award
Jaffna Hindu College was named as one of the winners at the regional award ceremony of the prestigious AIA Healthiest Schools Competition, a flagship initiative by AIA Group aimed at promoting healthier habits among students across Asia-Pacific region through innovative school-based projects. The competition, which drew a record number of entries from eight regional markets, recognises schools that implement innovative and impactful initiatives in the areas of healthy eating, active living, mental wellbeing, and sustainability. Jaffna Hindu College stood out in the Active Lifestyles Award Category for its creative and community-focused project that introduced a bicycle rental system, ensuring greater access to physical activity for all students and encouraging healthier lifestyles across the region.
The winners of AIA Healthiest Schools programme were honoured at a vibrant regional awards ceremony in Da Nang, Vietnam, where the prize money was awarded to the respective schools to support the ongoing health and wellbeing initiatives.
The Cycling Club was introduced to make physical activity accessible and enjoyable for all students. The club introduced a bicycle rental system, managed via a custom software platform, ensuring equitable access regardless of financial background. Students participated in a cycle parade and three themed challenges focused on endurance, speed, and teamwork. The initiative quickly became popular, engaging over 100 students and receiving enthusiastic support from teachers, parents, and local businesses. Experienced cyclists from the community volunteered as coaches, while cycling organisations provided safety training and route planning.
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