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USD 56.5 bn parked overseas: Govt. must deal with errant exporters firmly – Justice Minister

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Wijeyadasa

By Shamindra Ferdinando

Justice Minister Dr. Wijeyadasa Rajapakshe, PC, has said the Foreign Exchange Act No 12 of 2017, enacted during the Yahapalana administration was meant to facilitate the operations of those who exploited the system for their benefit.

The new Act had repealed the Exchange Control Act of 1953, Dr. Rajapakshe said, adding that the Yahapalana  move contributed to the deterioration of the economy. He explained how, as a member of the Yahapalana parliamentary group, he had to abide by the decision to vote for the new Foreign Exchange Act No 12 of 2017.

The Justice Minister said so at a hastily arranged media briefing at his Ministry near Technical Junction on Tuesday, when The Island sought his explanation why the Yahapalana government had repealed the time-tested Exchange Control Act of 1953 and what made him vote for the new law.

Altogether 94 MPs, including Dr. Harsha de Silva and Eran Wickremaratne – two of the strongest critics of the Rajapaksa government – voted for the new law. Eighteen MPs voted against the Bill whereas the rest skipped the vote taken on July 25, 2017.

Referring to official statistics, Dr. Rajapakshe said that export proceeds amounting to a staggering USD 56.5 bn were in offshore accounts and invested overseas. Acknowledging that those funds hadn’t been earned through illegal means, the Justice Minister said that the country suffered due to such valuable foreign exchange not being remitted. According to him, the USD 56.5 bn included approximately USD 3 bn that hadn’t been remitted last year as the country struggled amidst rapid deterioration of the national economy.

The Minister said that the actual figure could be definitely more than this.

Responding to another query raised by The Island, Dr. Rajapakshe said that the situation was so bad the government had to deal with the exporters cautiously as the country was not in a position to upset them under any circumstances. The Minister said that the Central Bank and the Finance Ministry were in the process of addressing this issue and efforts were being made to introduce a new Act.

Former External Affairs Minister Prof. G. L. Peiris on Monday (Oct 30) emphasized the urgent need to take remedial measures in this regard. The rebel SLPP MP said that this could be part of the overall government response to overcome the continuing financial crisis.

President Gotabaya Rajapaksa’s government also caused irrevocable setbacks by doing away with a range of taxes immediately after the last presidential poll on wrong advice. Declaring that the move deprived the Treasury of Rs 600-700 bn, Dr. Rajapakshe said that no one really knew the losses caused by sudden ban on agro chemicals. Perhaps the losses could be much more than the losses suffered due to the abolition of a slew of taxes.

Dr. Rajapakshe recalled punitive measures taken during the Sirimavo Bandaranaike’s administration to deal with foreign exchange frauds.

However, the deterioration of the national economy began in 2006 as the powers that be adopted corrupt and disastrous measures, Dr. Rajapakshe said, pointing out that the situation in the UPFA government compelled him to quit his ministerial portfolio.

Dr. Rajapakshe said that though some tend to question the importance of parliamentary watchdog committees, during his tenure as the Chairman of COPE the country benefited immensely as a result of action taken on COPE reports.

The former President of the Bar Association said that the Supreme Court had reversed the move to sell Lanka Marine Services (LMS) Ltd to John Keells and a controversial deal on Sri Lanka Ports Authority land. The Justice Minister mentioned several other cases, including the saving of the highly profitable Sri Lanka Insurance Corporation (SLIC) from privatization.



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Sri Lanka, India caught in US-Iran ship crisis

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By Shamindra Ferdinando

Iran has sought the Indian intervention, at the highest level, to provide lifesaving support to the crews of empty Iranian vessels stranded just outside Sri Lanka’s 12-nautical mile territorial waters off Galle.

Sources familiar with the issue said that Iran had brought the developing situation to the attention of New Delhi as the crews of almost 20 vessels, included Indian nationals. Sources stressed that the group of vessels that unloaded crude oil a couple of months back were now stranded within Sri Lanka’s Exclusive Economic Zone (EEZ).

The US Navy torpedoed an unarmed Iran frigate, returning from India, on 04 March, 2026, about 19 nautical miles off the Galle coast. The unprovoked attack killed nearly 100 Iranians.

The Iranian Embassy in Colombo has inquired from the Indian High Commission of their response to the situation, sources said. The US has issued a global warning against providing food, water, medicine and other services to the Iranian vessels. The outcome of Iran-India talks on the issue at hand was not known, though sources asserted India may not throw its weight behind Iranian efforts to address the issue.

Responding to The Island queries, sources said both Sri Lanka and India were in a dilemma due to the US warning. India couldn’t ignore the plight of the Indian crew members and the Iranian vessels in its backyard.

The Sri Lankan government remains tight-lipped about the vessels stranded in its EEZ. Our efforts to elicit a response from relevant authorities were in vain. In addition to Indians, there are Bangladeshis among the crew members. Iran has explicitly stated the responsibilities of the countries concerned to provide assistance in terms of international law.

The Iranian position was articulated by its Ambassador to Sri Lanka, Dr.Alireza Delkhosh, recently. In a special statement, Ambassador Delkhosh emphasised that in terms of the Convention on the Law of the Sea (Article 98) as well as SOLAS and SAR

Conventions, Sri Lanka couldn’t refrain from providing the needs of the Iranian vessels stranded in its EEZ.

SLMC leader Rauff Hakeem lambasted the NPP government in Parliament for failing to provide assistance to the Iranian ships. The former Minister alleged that the government was simply carrying out dictates of the US. He strongly criticised the way Foreign Minister Vijitha Herath was handling the issue.

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Namal further remanded

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MP Namal Rajapaksa being brought to the Colombo Magistrate’s Court yesterday. Pic by Nishan S Priyantha

MP Namal Rajapaksa, who is in remand custody over the controversial Airbus deal, was further remanded until October 27 by the Colombo Magistrate’s Court yesterday (13).

Colombo Chief Magistrate Asanga S. Bodaragama made the order after considering submissions by officers of the Commission to Investigate Allegations of Bribery or Corruption and lawyers representing Rajapaksa.

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IMF projects Lankan economic growth to moderate amidst mounting global uncertainties

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Sri Lanka’s economy is expected to sustain its recovery over the next two years, although growth is projected to moderate amid mounting global uncertainties, according to the International Monetary Fund’s (IMF) latest World Economic Outlook.

In its World Economic Outlook 2026: Resilience Under Strain, Urgent Choices, the IMF projects Sri Lanka’s economy to expand by 4% in 2026, slowing to 3.7% in 2027, following estimated growth of 5% in 2025.

Inflation, meanwhile, is forecast to rise to 5.3% in 2026 and 5.4% in 2027, reversing the average deflation rate of 0.5% recorded in 2025.

Unemployment is expected to remain steady at 3.9% throughout the forecast period.

The projections come amid growing pressure on the global economy from the ongoing conflict in the Middle East, elevated energy prices, geopolitical tensions and trade disruptions.

Sri Lanka’s external position is also expected to weaken, with the current account balance projected to shift from a surplus of 1.6% of gross domestic product (GDP) in 2025 to deficits of 0.5% in 2026 and 0.3% in 2027.

The IMF’s outlook points to continued economic expansion in Sri Lanka, but with slower growth, rising inflation and a narrowing external surplus giving way to current account deficits over the forecast period.

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