Connect with us

Features

The Central Bank

Published

on

CHAPTER 13

(Excerpted from N.U. JAYAWARDENA The first five decades)

(Continued from last week)

Department of Economic Research

One of the two departments that had been expressly provided for in the Monetary Law Act was the Department of Economic Research (the other was the Department of Banking Supervision).( The Exter Report stated that the functions of the Exchange Control Department which were presently functioning under the Treasury, were “better left to the determination of the Monetary Board,” however added that, “in other countries (which have an exchange control department), central banks ordinarily do the bulk of the work of operating the exchange control” (see Exter Report, p. 21). According to the Exter Report, the department had been “given special recognition in the… law in order to emphasise its importance:”

While there may be a tendency in highly developed countries to attach too much importance to economic research, the opposite is more likely to be true in underdeveloped countries… It may not be too much to say that the solid achievements of the Central Bank in years to come will depend as much upon the successful development of this department as upon anything else. (Exter Report, p.18)

Intellectuals such as the lawyer and historian, Colvin R. de Silva, echoed these sentiments and commended the Research Department as an “excellent” feature of the bill:

The express provisions for the creation of a Department of Economic Research is something to be welcomed without reserve. In our country, we have always suffered from the absence of authoritative statistics, from the absence of proper, relevant, day-to-day information for the economic studies relevant to current developments. (Hansard, 24 Nov. 1949, p.832)

In later years, the Department of Economic Research – which was close to NU’s heart – played a central role in fulfilling the mandate of the Bank. The department was, he wrote: empowered to train… personnel… within and without the Bank, to equip itself with a team of highly competent talent in economics, statistics, sociology and other behavioural sciences, so that it would develop into a forceful engine of original thought, of reflection and knowledge, of communication and advice on the economic and social aspects of community life. (N.U. Jayawardena, message on the 25th anniversary of the Central Bank)

The Economic Research Department became the most prestigious department of the Bank, where many of the best and the brightest officers began their careers. Under Section 26 of the Monetary Law Act, the Director of this department was statutorily empowered to require any person to furnish information he deemed necessary for “the proper discharge of the functions and responsibilities of the Central Bank.” The first director of this important post was B.B. Das Gupta. Several new graduates in Economics from the University were recruited; and NU, during his period at the Central Bank, took a great interest in the Department of Economic Research, encouraging its young staff members to acquire further qualifications (Eramudugolla, 2004, p.18-19).

Scholarships for Higher Education

At the time, few Sri Lankans did research or postgraduate studies at local or foreign universities. The Central Bank was the only government institution other than the University to offer scholarships for postgraduate education abroad in Economics. In fact, provision for this was set out in Section 27 of the Monetary Law Act:

The Central Bank shall promote and sponsor training of technical personnel in the subjects of money, banking, statistics, finance, and other economic subjects… (and) is hereby authorized to defray the costs of study abroad of employees of the bank who are of proved merit. (emphasis added)

Family photo

According to former Central Bank Governor A.S. Jayawardena (personal communication, 2006), this was one of the main incentives for some to join the Bank. Several staff economists (including some future Governors of the Bank) benefited from this scheme. They included A.S. Jayawardena, H.N.S. Karunatillake, G. Usvattearatchi, W. Rasaputra, M.R.P. Salgado, S.B.D. de Silva, W.M. Tilekeratne, J.B. Kelegama, P.B. Karandawela and P. Wignaraja.

The Research Library

Access to the latest books on economic theory and socio-economic subjects, as well as to statistics, reports and journals, was vital for the effective functioning of the Department of Economic Research. A research library therefore was set up under this department. NU, the perennial student of economics and lover of books, by all accounts took an active interest in helping build up its collection. An economist working at the Central Bank at the time recalls that NU was always questioning the staff about the latest publications in economics. For instance, when NU heard about Ragnar Nurkse’s book, Problems of Capital Formation in Underdeveloped Countries, he ordered five copies for the Central Bank Library; and when a staff member was about to leave for studies in Australia, NU asked him to send Douglas Copeland’s book on the Australian economy, Inflation and other Essays for the Library (S.B.D. de Silva, 2007, personal communication).

By its 25th anniversary, the Central Bank Library had managed to amass in its collection approximately 24,000 books, including a “unique collection of unpublished reports from government institutions and rare books on Sri Lanka” (A.S. Jayawardena, personal communication, 2006), as well as “a considerable number of periodicals and reports in economics and related subjects,” and a large number of books gifted by the World Bank in 1964 (Central Bank of Ceylon, c.1975, p.37). Tragically, the LTTE suicide bomb attack on the Central Bank in January 1996, which resulted in the deaths of 41 Bank employees – including several members of the library staff – also destroyed much of the library’s valuable collection, which up until that time had been “a major repository of works on the social sciences” (R.K. de Silva, 1998, p.239).

Rewarding Merit

Some of the administrative and personnel policies instituted in the early years of the Central Bank continued to benefit many of its officers down the years. One of the policies of the Bank, which was unheard of in the public service at the time, was a merit-based increment and promotion system – rather than the traditional system based solely on seniority. The system worked in favour of Economics graduates who had acquired postgraduate degrees (Eramudugolla, pp.97-98). A graduate in Grade 1 usually took eight years to attain Grade 2, but could reach it in five years with a postgraduate degree. This system, while being an incentive to further studies, led to some criticisms from those who relied on seniority (ibid, p.98).

However, NU valued hard work and achievement, and believed these should be recognized and adequately rewarded. He would apply this principle to his employees throughout his later career in the private sector as well. He did not have time for those who relied on position rather than contribution – and he had experience of such persons throughout his time in the public service.

The Bank’s salary increment system also worked in such a way that an employee could receive more than one time the annual salary increment based on merit. A well-thought-out confidential evaluation system was created based on the one used by the Bank of New Zealand. (Correspondence and material from this period show that NU solicited advice from the Governor of the Bank of New Zealand regarding this area and received the evaluation forms and other materials used there for this purpose.) It is said that the economist Dr. Gamani Corea held the record for the largest number of increments in one year. This system helped the Bank to retain outstanding people by pushing their wages to near market wages (A.S. Jayawardena, personal communication, 2006).

During his period as Deputy Governor, NU drew up a succinct but thorough handbook outlining the operations, functions and philosophy of the Bank. This document was referred to by many in the bank as “The Bible.” A.S. Jayawardena relates how he found the original copy of this manuscript in the Governor’s Office. The document, in NU’s neat handwriting, lucidly laid out the philosophy and scope of the Central Bank. ( In a paper written by NU in 1999 (Central Banking

as Catalyst of Economic Growth), he seems to make mention of this document when he states that the important function of the Central Bank as a “catalyst of

growth” had been laid out in: a document in long-hand covering some 16 pages, in which as Deputy Governor of the Central Bank I had expressed my views, after discussion with the incumbent Governor, John Exter, on what was then an emerging novel theme of ‘Central Banking’ as instrument of economic development. In the paper, NU had lamented that, although 48 years had passed, this function had yet to be instituted in the Central Bank.) A.S. recounts how it was at this moment that he realized the breadth of NU’s vision and his deep understanding of central banking (ibid).

Socializing with the Exters

Exter stepped down as Governor in July 1953, barely three years into his term, to return to the US. He left to take up a position in the World Bank, but one year later he returned to the Federal Reserve Bank of New York, where he was promoted to the position of Vice-President (Money Changer, 2000). During their stay in Sri Lanka, Exter and his wife Marion maintained an active social life and made many friends. Their American informality was said to be refreshing and surprising. NU’s daughter Neiliya recalls the Exters as being “fun-loving,” and, although Exter was only two years younger than NU, she says that the Exters “seemed much younger than my parents.” Neiliya also recalls taking trips to Gal Oya with the Exters, her parents and other friends. After their stay in Sri Lanka, the Exters did occasionally return to Sri Lanka over the years and remained friends with NU and his family.

NU Succeeds Exter

When it became clear that Exter would be returning to the US, there were many who lobbied to be his successor. According to Stanley Wickramaratne (2002), there was “much behind the scene activity” by many contenders, and “many aspirants eyed this coveted position, while others in the public service canvassed against Mr. Jayawardena.”There was a “heavily charged atmosphere of speculation and suspense.” However, NU was, without question, the most suitable successor, and Exter recommended that he be appointed to succeed him.

Thus in July 1953, at the age of 45, NU became the first Sri Lankan Governor of the Central Bank. According to Wickramaratne:

NU at an international conference

[Among] the numerous messages of congratulations Mr. Jayawardena received it was amusingly ironical to find…letters of expression of faith and good wishes from those very high personalities who openly canvassed against Mr. Jayawardena’s nomination.

This was the crowning achievement of years of determination, hard work, and sacrifice by NU. His salary as Governor was Rs. 36,000 per annum, with an official house and car, and driver as well as an entertainment allowance. NU recalled that, when the first currency notes signed by him were issued, he sent a 50-rupee note, which bore his signature, to his father – the astonishing sequel many decades later to his childhood fantasy that one day he might achieve this ambition. Sadly, by this time NU’s parents were ailing, and both would die later that year. When his father Diyonis was hospitalized in Colombo in 1953, NU and his wife Gertrude once visited him formally dressed, on their way from a banquet they had attended. According to NU’s niece Chandrani, on seeing his son, NU’s father was delighted and exclaimed, “You look like a prince!” (personal communication, 2007). Diyonis’ funeral was attended by the Governor of the Bank of England, C.F. Cobbold, who was in Colombo at the time for a conference.

Work and Discipline

As Governor, NU proved to be a strict disciplinarian and a hard taskmaster. He imposed on the staff all the office discipline and experience that he had absorbed in his years in government departments, when he interacted with eminent British and local civil servants. But he also followed a harsh regime himself, working very long hours. Edmund Eramudugolla, a former Deputy Governor of the Central Bank who had worked under NU as a junior official, said NU was not only “hard working,” but also did not conform to usual working hours. “Work appeared to be the driving force in his life.” He further recounts his personal experience with NU:

Many were the occasions he sent for me after I had left office for the day to my home in Lunava… to discuss sections of the MLA (Monetary Law Act)… It didn’t seem to matter to NUJ that it was very late in the day… In NUJ’s enthusiasm for work, he appeared to have no notion of time or space! (Eramudugolla, 2004, p.19)

Annual Report of the Central Bank of Ceylon

Stanley Wickramaratne also describes NU as: a workaholic to the very extreme; he extracted from his assistants and subordinates maximum work output irrespective of whether it was day or night, a weekend or a public holiday. In short, for him the clock stood still.

There are many amusing anecdotes about NU’s capacity for working round the clock, including one recounted by the writer Nalin Fernando from NU’s later days. It was 6 p.m. on Budget day and he had asked NU for a comment on the Budget. Nalin had been told to meet him at his office at one o’clock. When Nalin explained that his deadline was noon, NU replied “not 1 p.m., but one in the morning.” As Fernando wrote: “I paused… rather bewildered, then gathered my wits and told him it would be quite convenient and a pleasure for me to see him at that bewitching hour” (Ceylon Daily News, 30 March 2002). On the occasion of his 80th birthday, NU was recorded as saying: “I love to work – it gives me joy and happiness” (Mid-week Mirror, 25 Feb. 1998).

More Travels and Negotiations Abroad

During the year 1952, as Deputy Governor, NU had been involved with many international meetings abroad. He spent part of January and February in the UK to assist in the preparatory meeting for the annual Commonwealth Finance Ministers Meeting and attended the meeting, which was held over two months that summer. NU travelled again to the UK in early November for the preparatory meeting for the next Commonwealth Finance Ministers’ Conference, and stayed on for the event that took place later that month. During his stay in London, he also assisted Oliver Goonetilleke, who was then Minister of Agriculture and Food, to negotiate the release of sterling balances for food supplies.

As Governor, NU continued to have a busy travel schedule, negotiating a World Bank loan, attending the second and third annual International Monetary Fund (IMF) meetings in Washington DC in 1953 and 1954, negotiating a sterling loan in the UK, and attending the 1954 Commonwealth Finance Ministers’ Conference in Australia. He attended the latter meeting with Oliver Goonetilleke, who had succeeded J.R. Jayewardene as Finance Minister.

NU’s colleagues, Douglas Gunasekera, K. Williams, Tissa Chandrasoma, Edmund Cooray and Herbert Tennekoon, often formed part of the negotiating team on these trips, and as a result spent a lot of time together, both at work and socially. NU’s daughter Neiliya recalls being told how many members of this group shared the common experience on these trips abroad of being disturbed in the middle of the night by a knock on their door, only to discover

NU outside their hotel room, eager to discuss an idea or solution to a work problem that had just struck him

The Impending Fall

While NU’s contribution and legacy to the Central Bank were long lasting, NU’s term as Governor would soon be cut short. He had earlier experienced some disappointments, but this would be his first hard fall in life. NU was by nature a person in a hurry – his agile mind constantly ticking away, with many ideas brewing at once. He had a strong physical constitution and possessed a quick intellect. He required little sleep and had an energy level that made it hard for others to keep up with him – physically or mentally, and when he had an idea, he would pursue it relentlessly. On the other hand, he could be impetuous and impatient. Nor was he politically astute. This particular combination of traits and circumstances would lead him not only to great heights, but also at times into trouble. At the peak of his career, the dark clouds of a gathering storm were looming. (N.U. Jayawardena, 1950, p. 11)

By Kumari Jayawardena and Jennifer Moragoda ✍️



Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Features

Sri Lanka’s vanishing wetlands put elusive otter under growing threat

Published

on

International Eurasian Otter Workshop-Colchester, United Kingdom

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

Continue Reading

Features

Malaiyaha Tamil people: Healing the Oldest Wound of Independence

Published

on

Hands of a Maliayaha tea estate worker

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

Continue Reading

Features

IMF relief is not economic recovery: Sri Lanka’s real test begins now

Published

on

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.,)

Continue Reading

Trending