Business

Treasury surplus austerity for farmers a dangerous gamble, warns analyst

Published

2 months ago

2026/07/13

Farmers spread fresh paddy along a Medawachchiya roadside, on June 3. They are caught in a financial vise between a dominant private milling oligopoly and an under-resourced Paddy Marketing Board (Pic by Nishan S. Priyantha)

An economic analyst speaking to The Island Financial Review on the condition of anonymity, questioned the government’s structural priorities, calling the decision to purchase only two percent of the national buffer stock a glaring policy disconnect that leaves struggling paddy farmers vulnerable to a heavily consolidated private milling cartel.

The critique comes as the state celebrates an unprecedented domestic fiscal turnaround, registering massive budget surpluses and actively paying down its public debts. Yet, despite this robust fiscal space, the state’s direct intervention in the rural agricultural market remains profoundly meagre.

“When the government boasts an overwhelmingly strong fiscal position, it is entirely incomprehensible why it refuses to allocate sufficient capital to aggressively purchase paddy directly from the producers. The current allocation strategy artificially limits the state’s market-stabilising power, effectively abandoning debt-burdened farmers to the pricing whims of large-scale private millers who dominate the post-harvest supply chain,” he said.

This contentious market dynamic unfolds just as the Paddy Marketing Board (PMB) prepares to activate its Yala season procurement machinery. PMB Chairman Manjula Pinnalanda announced that state purchasing would commence today across early-harvesting zones including the Ampara and Ruhuna regions, alongside parts of the Mullaitivu and Trincomalee Districts in the Northern and Eastern Provinces. Operations across remaining cultivation areas are scheduled to launch on July 20.

The government has established baseline guaranteed rates for the harvest, fixing prices at Rs. 120 per kilogram for Nadu, Rs. 130 per kilogram for Samba, and Rs. 140 per kilogram for Keeri Samba. To facilitate the rollout, the Treasury has disbursed a direct cash allocation of Rs. 6 billion to the PMB, supplemented by a secondary Rs. 10 billion concessionary pledge loan scheme channeled through state banks to assist small and medium-scale mill owners and eligible co-operatives.

However, the analyst pointed out that while the set prices look reasonable on paper, the state’s limited capital allocation severely restricts its actual buying capacity. Because the PMB absorbs only 2% of the national yield, the official floor price will fail to act as a safety net, leaving a vast majority of smallholder farmers unable to access state granaries and will be forced to sell their crop to private commercial buyers below production costs.

“The tight-fisted approach to agricultural procurement stands in stark contrast to the stellar macroeconomic numbers flashing across the Central Bank’s latest reports. During the first five months of 2026, Sri Lanka’s domestic fiscal consolidation reached historic heights, driven by a 30.6 percent surge in government revenue and grants to Rs. 2,536.9 billion. Tax revenues alone ballooned to Rs. 2,323.7 billion, fueled by rigid enforcement and an expanded collection matrix. With the commercial bank middle rate settling at Rs. 335.90 per USD. For the farming community, this currency slide has manifested as an immediate escalation in the cost of fertiliser and pesticides. Although the wider economy maintains a degree of stability via strong workers’ remittances and healthy gross official reserves of US dollar 6,450 million, the microeconomic reality in the fields remains tense,” he said.

The analyst warned that treating the agricultural sector with fiscal austerity while the Treasury sits on a surplus is a dangerous gamble.

By Sanath Nanayakkare

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Business

India-Sri Lanka Foundation’s 41st meeting signals a new era of integration

Published

7 hours ago

2026/09/2

Sahan Weerasooriya

High Commissioners Santosh Jha and Mahishini Colonne chaired the 41st India-Sri Lanka Foundation meeting in New Delhi, highlighting ongoing bilateral cooperation across cultural, economic, and infrastructure sectors.

By Sanath Nanayakkare

On the surface, the 41st Board Meeting of the India-Sri Lanka Foundation (ISLF) in New Delhi on August 28, 2026, was structured as a routine diplomatic engagement. Co-chaired by Indian High Commissioner Santosh Jha and Sri Lankan High Commissioner Mahishini Colonne, the session formally approved a standard slate of cultural and educational projects.

However, looking closer at the broader macroeconomic and geopolitical landscape, the meeting underscored a much deeper structural alignment between the two nations. Against a backdrop of ongoing economic recovery, bilateral discussions increasingly touch upon critical areas of regional integration, investment, and infrastructure.

Among the key areas attracting attention are post-civil war reconciliation efforts and administrative milestones in the Northern Province.

Discussions in diplomatic circles continue to focus on the progressive release of state-held lands back to civilian inhabitants, alongside the anticipated finalization of provincial council elections to support local governance frameworks.

In the economic sphere, commercial integration remains a central theme as Sri Lanka stabilizes its foreign exchange reserves.

Recent financial dialogues in Colombo were seen exploring mechanisms such as transacting in Indian Rupees (INR), aligning with wider regional efforts to facilitate bilateral trade settlements and mitigate foreign currency pressures. Financial institutions, including the State Bank of India, continue to support these bilateral trade facilitation mechanisms.

Cooperation in the energy sector is also progressing through key joint ventures aimed at harnessing renewable resources. Proposals such as the 200MW solar power project in Sampur, developed via a partnership between NTPC and the Ceylon Electricity Board, highlight ongoing efforts to diversify national power generation. Discussions concerning cross-border grid interconnections further reflect strategies to enhance regional energy security and optimize renewable capacity.

At the same time, ongoing reviews of project tariffs – such as those involving renewable initiatives by firms like Adani Green Energy – demonstrate the government’s focus on balancing capital investments with domestic economic interests.

As the ISLF marks decades of supporting bilateral cultural exchanges through hundreds of initiatives, the overarching partnership between New Delhi and Colombo continues to evolve. Navigating these complex frameworks of trade, energy, and development remains essential as Sri Lanka charts its economic future within the South Asian region.

Business

Sysco LABS named one of Sri Lanka’s Most Outstanding Women-Friendly Workplaces for 2026

Published

7 hours ago

2026/09/2

Sahan Weerasooriya

At the far left and far right, respectively: Ruchini Weerawardena, Senior Manager – Talent Management and Development, and Tashiya Jayatilaka, Team Lead – People Operations accepting the award on behalf of Sysco LABS.

Sysco LABS, the Global Innovation Center of Sysco, has been named one of Sri Lanka’s Most Outstanding Women-Friendly Workplaces at the Women-Friendly Workplace Awards 2026, marking its highest recognition at the awards to date.

The recognition represents an important milestone in Sysco LABS’ ongoing journey to build a workplace where women are supported not only to enter and participate in the technology industry, but to develop, progress and build meaningful long-term careers.

Held recently, the 2026 awards organized by Satynmag continued a six-year journey of recognizing and encouraging organizations to move beyond intention towards meaningful and measurable progress for women at work. This year’s awards placed particular emphasis on a defining question for women-friendly workplaces: beyond representation, how far are women able to go?

This win also reflects a progression in the company’s recognition journey at the Women Friendly Workplaces Awards. Following an “Honorable Mention” in the 2023 edition of the ceremony while winning a special award for “Best Women in STEM Project” in 2025, 2026 marks the first time Sysco LABS has been recognized as one of Sri Lanka’s Most Outstanding Women-Friendly Workplaces.

Business

CCPI-based headline inflation accelerates in August 2026

Published

7 hours ago

2026/09/2

Sahan Weerasooriya

The Colombo Consumer Price Index (CCPI, 2021=100) based headline inflation (year-on-year, Y-o-Y) increased to 8.0% in August 2026 from 7.3% in July 2026, primarily due to the statistical base effect in food inflation. Meanwhile, food inflation (Y-o-Y) increased to 8.5% in August 2026 from 6.3% in July 2026, contributing mainly to the increase in headline inflation, while non-food inflation (Y-o-Y) decelerated to 7.7% in August 2026 from 7.8% in July 2026.

On a month-on-month basis, the CCPI increased by 0.28% in August 2026. This increase was mainly driven by the food category, which contributed 0.20 percentage point, largely owing to the increase in prices of Milk Powder, while the non-food category contributed a marginal 0.07 percentage point.

Meanwhile, core inflation (Y-o-Y) accelerated to 5.1% in August 2026 from 4.4% in July 2026.

According to the inflation projections made at the monetary policy round in July 2026, headline inflation is expected to remain above the target of 5% in the near term, before easing and stabilising around the target over the medium term, supported by appropriate policy measures. These projections are conditional, among other assumptions, on the expectation that the effects of the tensions in the Middle East and their spillovers will be temporary and gradually dissipate.