Opinion
Why is Singapore dollar strong and SL rupee weak?
by Jayampathy Molligoda
Inflation is too high in Sri Lanka; people are finding it unbearable. How can we control the inflation from further slipping?
Singapore experience and structure of our CBSL:
Singapore has the Monetary Authority Singapore (‘MAS’) as their Central Bank, where in Sri Lanka, we have the Central Bank of Sri Lanka (which is not a body corporate in legal terms) and within the CBSL, they have the ‘Monetary Board’. Basically, the Singapore Central Bank (MAS) has managed to keep the inflation under control even during this period of global economic recession, where most of the other countries have not been able to contain the inflation. The Singapore used the exchange rate to influence inflation, not the other way around.
Our view is that there must be a sound, practical and legal mechanism guaranteeing the independence of the CB whilst making the CBSL accountable and transparent as in the case of MAS. John Exter, the founding Governor of the Central Bank of Ceylon, in his report stated that Governor of the Central Bank should be of unquestioned integrity and responsibility. This is very critical because an independent CB is essential for maintaining price stability, meaning containing inflationary pressure.
As for maintaining the price stability objective, the simplest test is whether CB can continue to resist demands from the government of the day to print money and/or continue to maintain low interest rate regime when a higher interest rate is necessary to maintain price stability. This is because the government of the day would naturally tend to push economic growth rates to run at a faster rate than its capacity limit permits and their desire to incur budget deficits try to secure funds by borrowing from CB. Ours is somewhat politicized.
However, the reality is most of the economic activities will come to a grinding halt if CBSL doesn’t print new money for the government. Besides the suffering of the people on the road, non- repatriation, avoiding sovereign breaches, not letting money market domino effect failure, payment to foreign parties, all of these have to be considered. No salary payments to government servants for a particular month if money printing is stopped.
Why can’t our CB do the same thing as MAS?
Sri Lankan situation is totally different because it has a persistently high ‘twin deficits’ meaning (1) government budget deficits since independence and (2) BOP current account deficit with rest of the world. And CB has been compelled to resort to ‘money printing’ more that the required/ desired level and continue to borrow, thus increasing foreign debt service beyond unsustainable levels.
The real issue has been that our Exports as a % of GDP has come down from closer to 28% in four to five decades to 12% especially since 2014 to date. Now GDP real per capita is coming down. We were boosting US $ 25 billion has increased to US $ 75 billion within 10 years, but it was through services and high spending on infrastructure development without corresponding increases in return on such investments by way of increased exports.
CBSL policy towards curbing inflation:
Since August 21, CB has been trying to control inflation by way of increasing bank interest rates through increasing CB rates and Statutory reserve ratios (tightening the monetary policy accelerated wef March 22, however. this badly affects SMEs – the micro and small and medium enterprises have serious issues in the area of access to financial facilities or in simple terms, borrowing costs are so high that they cannot afford to borrow any more. Depending on whether the marketable – products of these businesses are in the “buyers; market’ or “sellers’ market” they could either survive or eventually collapse- only the ‘rich’ become richer (only in certain sectors) because they are in possession of own surplus money – they earn a substantial amount as interest income at current deposit rates and also have the option of keeping dollars without repatriation as stipulated in the relevant directives issued under Monetary Law Act of 1949. This is despite the rupee exchange rate was allowed to be flexible and floated from Rs 203/ per $ and now it’s Rs 368/.
Further, during the period 2019 till august 2021, the private sector was benefited under low tax rates and low bank interest regime, where they borrowed rupee loans at 4-6 %, otherwise the exporters were compelled to go for $$ packing credit for financing export orders. In my view, our private sector is smarter than the government policy makers and some top officials in the financial/banking sector. It was the private sector who insisted that SL rupee should be floated not even a “managed float currency policy. Are we now getting the export proceeds according to the applicable regulations and if not, does the CB strictly enforce penalties for non- compliance?
Two News items published on 29/07/22:
“Earnings from merchandise exports increased by 20% Y-o-Y to USD 1,208.2 Mn in June 2022 as per data released by Sri Lanka Customs, mainly due to increase in earnings from export of Apparel & Textiles (1/2)”
“World Bank does not plan to offer new financing to Sri Lanka until an adequate macroeconomic policy framework is in place – WB”
Sri Lankan Export industries such as textile and apparel, tea sub sector, minor export crops, etc., should be able to be more competitive in the global market place due to the policy of currency depreciation wef 7 March 22 from Rs 203/- to around Rs 368 (at present), but the associated local costs including the import content of the export value chain and the additional costs due to difficulties in ‘doing business’ under current conditions tend to move up sharply in the near future, thus eroding the cost competitiveness enjoyed by our exporters. As for doing business, one of the most critical current issues has been the shortage of fuel. It is in that context only the importance of making available sufficient FOREX income, be set aside for importation of fuel on a monthly basis, say US$ 300 million, should be viewed. Now that the backlog of LCs being cleared and most of the payments have been made and the incoming $$$ are now being reserved, it is important to set aside a part of export proceeds towards meeting fuel bills on a monthly basis.
Vital information on ‘FOREX’ monitoring not made available yet:
Stemming from the above argument, the CB’s priority number one should be to ensure whether export proceeds in dollars are received within the stipulated timeframes and in accordance with the directives issued under Monetary Law Act of 1949. In fact, the CB mandate by law is ensuring price stability and financial system stability and management of FOREX is the critical success factor here.
In August 21, then Governor Prof WDL appointed a working committee and liaised with customs and started putting in place the EPMS. (As far as direct documentation of export (‘cusdecs’) is concerned, the commercial banks do not receive those docs and what they can monitor is what they actually receive as proceeds only, that’s why this ICT system is needed.)
It seems that export proceeds monitoring system (EPMS) is still not functioning at CB level. Also, CB doesn’t provide the information on actual amounts of foreign exchange proceeds received on a monthly basis.
According to the Governor, CB, only about 20% of the FOREX is getting converted in to the banking system out of US$ 1,000 million export proceeds per month. It is not clear how much has actually received within the ‘180 day rule’ on a monthly basis AND how much converted.
The present Governor, CB is now making an appeal to exporters to remit all export proceeds and convert at least 50% of the proceeds after keeping $$ for ‘eligible expenditure’. It is expedient for the CB to advise the government to set aside (out of monthly export+ direct remittances) at least US$ 300 million per month for petroleum product imports and only the deficit if any, be funded through credit lines. In the meantime, our renewable energy sources must be explored with a view to reducing dependence on diesel and petroleum inputs.
Apparently, the Strategy adopted by the Ministry of Finance on 12 April 22 by pre-emptive debt defaults announcement has created some negative sentiments as well. Fuel imports can only be done through advance payments. LCs cannot be opened without paying an advance as most of our banks are considered untrustworthy customers in the international trading operations.
Light at the end of the tunnel:
We are into a vicious economic cycle. What is really worrisome is that there seems to be no serious process of problem identification by following a more scientific ‘research methodology’. First and foremost, we need to find out what went wrong? Some kind of a truth commission is needed. Our policymakers together with the private sector, the government and Opposition politicians all must get together to find out what went wrong without ‘blame assigning game’. Our policymakers must learn to admit that we don’t know fully the reasons, until a detailed analysis is done. No sustainable solutions can be expected in a situation where we all have full of ‘beliefs’ -some may be true others false, therefore the real facts need to be separated out from mere opinions based on beliefs although belief is the starting point of any intellectual thought process as claimed by world renowned philosopher, Bertrand Russell. No point in blaming politicians only – maybe as national leaders they have failed to provide transformational leadership and inspire other stakeholders to drive the economy. Also, successive governments have not created conducive environment for private sector to do business and improve economic welfare of the people, otherwise, it is the private sector that is managing the economy; at least 70% of the economic activities are undertaken by the private sector. Our private sector is capable of driving the businesses as ‘engine of growth’ for national economic development.
What can the government do under the current circumstances?
The solution is for the government authorities to follow one important process, undertake some research using scientific methods to ascertain why we have failed. It is suggested the government appoint an ‘expert panel’. It should come out with immediate, short and medium- term strategic plan based on a long-term vision. But who is going to appoint this expert panel and who are the members? Ideally, it has to be a Presidential commission.
Treasury does not have any money at all and when CPC is held up with no payment to banks. That is why our economists have been advocating stringent fiscal measures be enforced by the government so that the government expenditure could be drastically reduced. Most of the state- owned enterprises (SOEs) need to be restructured by liberalising the sectors and put in place a more transparent system to look for ‘PPP projects’ to drive economic activities using under- performed state assets. However, these measures need to be taken after a due process of obtaining the final recommendations of the Presidential commission.
Social unrest, achieving political stability and economic revival:
What we have discussed up to now pertains to our economic problems, but we have major issues in socio-political arena. We need to admit that there are a number of genuine grievances coming out from the ordinary people and also a mass uprising against corruption and mismanagement of the governments, although no concrete evidence is forthcoming to justify these claims, that’s why the truth commission findings are important. On the other hand, there is this conspiracy theory that some unexplained, hidden and most powerful forces operating outside Sri Lanka are at work -may be trying to weaken the “STATE” and portray Sri Lanka as a failed state as articulated by the Head of SIS at a high- level meeting chaired by the President Ranil Wickremesinghe. Surely, there must be some valid reasons for the government under President, GR to adopt a ‘soft’ policy. We don’t know the ‘real things’ yet.
We have been hearing as a slogan that political stability is a prerequisite for achieving much needed economic growth and revival. However, the writer is of the view that in today’s context, it should be other way around. If the government of the day cannot provide basic needs of the people, at least fuel without people waiting in long queues, it will not be possible to restore political stability, and social unrest could further accelerate. That’s why some kind of economic revival is needed to fulfil ‘basic needs’ of the people to restore some kind of ‘political stability’. Otherwise this so-called ‘political stability’ becomes a mere superficial phrase.
In the meantime, it is the responsibility of the government of the day to uphold the constitutional provisions to the letter and spirit as stipulated in the Constitution of the Democratic Socialist Republic of Sri Lanka.
The authorities need to respect the different views of the people without resorting to suppress people’s non-violent socio-political movements, whilst maintaining law and order to safeguard the peoples’ sovereign rights guaranteed under our Constitution.
Opinion
Ranwala crash: Govt. lays bare its true face
The NPP government is apparently sinking into a pit dug by the one of its members, ‘Dr’ Asoka Ranwala; perhaps a golden pit (Ran Wala) staying true to his name! Some may accuse me of being unpatriotic by criticising a government facing the uphill task of rebuilding the country after an unprecedented catastrophe. Whilst respecting their sentiment, I cannot help but point out that it is the totally unwarranted actions of the government that is earning much warranted criticism, as well stated in the editorial “Smell of Power” (The Island, 15 December). Cartoonist Jeffrey, in his brilliance, has gone a step further by depicting Asoka Ranwala as a giant tsunami wave rushing to engulf the tiny NPP house in the shore, AKD is trying to protect. (The Island, 18 December).
The fact that Asoka Ranwala is very important to the JVP, for whatever reason, became evident when he was elected the Speaker of Parliament despite his lack of any parliamentary experience. When questions were raised about his doctorate in Parliament, Ranwala fiercely defended his position, ably supported by fellow MPs. When the Opposition kept on piling pressure, producing evidence to the contrary, Ranwala stepped aside, claiming that he had misplaced the certificate but would stage a comeback, once found. A year has passed and he is yet to procure a copy of the certificate, or even a confirmatory letter from the Japanese university!
The fact that AKD did not ask Ranwala to give up his parliamentary seat, a decision he may well be regretting now following recent events, shows that either AKD is not a strong leader who can be trusted to translate his words to action or that Ranwala is too important to be got rid of. In fact, AKD should have put his foot down, as it was revealed that Ranwala was a hypocrite, even if not a liar. Ranwala led the campaign to dismantle the private medical school set up by Dr Neville Fernando, which was earning foreign exchange for the country by recruiting foreign students, in addition to saving the outflow of funds for educating Sri Lankan medical graduates abroad. He headed the organisation of parents of state medical students, claiming that they would be adversely affected, and some of the photographs of the protests he led refer to him as Professor Ranwala! Whilst leading the battle against private medical education, Ranwala claims to have obtained his PhD from a private university in Japan. Is this not the height of hypocrisy?
The recent road traffic accident he was involved in would have been inconsequential had Ranwala been decent enough to leave his parliamentary seat or, at least, being humble enough to offer an apology for his exaggerated academic qualifications. After all, he is not the only person to have been caught in the act of embellishing a CV. As far as the road traffic accident is concerned, too, it may not be his entire responsibility. Considering the chaotic traffic, in and around Colombo, coupled with awful driving standards dictated by lack of patience and consideration, it is a surprise that more accidents do not happen in Sri Lanka. Following the accident, may be to exonerate from the first count, a campaign was launched by NPP supporters stating that a man should be judged on his achievements, not qualifications, further implying that he does not have the certificate because he got it in a different name!
What went wrong was not the accident, but the way it was handled. Onlookers claim that Ranwala was smelling of alcohol but there is no proof yet. He could have admitted it even if he had taken any alcohol, which many do and continue to drive in Sri Lanka. After all, the Secretary to the Ministry overseeing the Police was able to get the charge dropped after causing multiple accidents while driving under the influence of liquor! He, with another former police officer, sensing the way the wind was blowing formed a retired police collective to support the NPP and were adequately rewarded by being given top jobs, despite a cloud hanging over them of neglect of duty during the Easter Sunday attacks. This naïve political act brought the integrity of the police into question. The way the police behaved after Ranwala’s accident confirmed the fears in the minds of right-thinking Sri Lankans.
In the euphoria of the success of a party promising a new dawn, unfortunately, many political commentators kept silent but it is becoming pretty obvious that most are awaking to the reality of a false dawn. It could not have come at a worse time for the NPP: in spite of the initial failures to act on the warnings regarding the devastating effects of Ditwah, the government was making good progress in sorting problems out, when Ranwala met with an accident.
The excuses given by the police for not doing a breathalyser test, or blood alcohol levels, promptly, are simply pathetic. Half-life of alcohol is around 4-5 hours and unless Ranwala was dead drunk, it is extremely unlikely any significant amounts of alcohol would be detected in a blood sample taken after 24 hours. Maybe the knowledge of this that made government Spokesmen to claim boldly that proper action would be taken irrespective of the position held. Now that the Government Analyst has not found any alcohol in the blood, no action is needed! Instead, the government seems to have got the IGP to investigate the police. Would any police officers suffer for doing a favour to the government? That is the million-dollar question!
Unfortunately, all this woke up a sleeping giant; a problem that the government hoped would be solved by the passage of time. If the government is hoping that the dishonesty of one of its prominent members would be forgotten with the passage of time, it will be in for a rude shock. When questioned by journalists repeated, the Cabinet spokesman had to say action would be taken if the claim of the doctorate was false. However, he added that the party has not decided what that action would be! What about the promise to rid Parliament of crooks?
It is now clear that the NPP government is not any different from the predecessors and that Sri Lankan voters are forced to contend with yet another false dawn!
by Dr Upul Wijayawardhana ✍️
Opinion
Ceylon pot tea: redefining value, sustainability and future of global tea
The international tea industry is experiencing one of the most difficult periods in its history. Producers worldwide are caught in a paradox: tea must be made “cheaper than water” to stay competitive, yet this very race to the bottom erodes profitability, weakens supply chains, and drives away the most talented professionals whose expertise is essential for innovation. At the heart of this crisis lies the structure of commodity tea pricing. Although the auction system has served the world for over a century, it has clear limitations. It rewards volume rather than innovation, penalises differentiation, and leaves little room for value-added product development.
Sri Lanka, one of the world’s finest tea origins, feels this pressure more intensely than most. The industry’s traditional reliance on auctions prevents it from accessing the full premium that its authentic climate, terroir, and craftsmanship deserve. The solution is not to dismantle auctions—because they maintain transparency and global trust—but to evolve beyond them. For tea to thrive again, Ceylon Tea must enter the product market, where brand value, wellness benefits, and consumer experience define price—not weight.
Sri Lanka’s Unique Comparative Advantage
Sri Lanka possesses both competitive and comparative advantage unmatched by any other tea-producing nation. One of the least-discussed scientific advantages is its low gravitational pull, enabling the tea plant to circulate nutrients differently and produce a uniquely delicate, flavour-rich leaf. This natural phenomenon, combined with diverse microclimates, gives Sri Lankan tea extraordinary antioxidant density, rich polyphenols, and a full sensory profile representative of the land and its people.
However, this advantage is undermined by weaknesses in basic agronomy. Most estates do not use soil augers, and soil sampling is often inconsistent or unscientific. This leads to overuse of artificial fertilizer, underinvestment in regenerative practices, and weak soil organic matter (SOM). Without scientific soil management, even a world-class tea origin can lose its competitive edge. Encouragingly, discussions are already underway with the Assistant Indian High Commissioner in Kandy to explore sourcing 3,000 scientifically engineered soil augers for Sri Lanka’s perennial agriculture sector—a transformative step toward soil intelligence and sustainable input management.
Improving SOM, moderating fertilizer misuse, and systematically diagnosing soil nutrient deficiencies represent true sustainability—not cosmetic commitments. Plantation agriculture, which supports over one million Sri Lankan livelihoods, depends on this shift.
The Real Economic Challenge: Price per Kilogram
The most urgent sustainability problem is not climate change or labour cost—it is the low price per kilogram Sri Lanka receives for its tea. Nearly 20% of the tea leaf becomes “refuse tea”, a stigmatized fraction that still contains antioxidants and valuable nutrients but fetches a low price at auctions. The system inherently undervalues almost a fifth of the raw material.
A rational solution is to market the entire tea leaf without discrimination, transforming every component—tender leaf, mature leaf, fiber, and fines—into a premium product with a minimum retail value of USD 15 per kilogram. Achieving this requires product innovation, not further cost reduction.
Ceylon Pot Tea: A Transformative Opportunity
Ceylon Pot Tea emerges as a comprehensive solution capable of addressing long-standing structural issues in Sri Lanka’s tea industry. Unlike traditional tea grades, Pot Tea compresses the entire fired dhool into a high-value cube, similar to the global success of soup cubes. Every part of the leaf is represented, unlocking maximum biochemical utilisation and offering consumers a fuller taste profile with richer aroma, deeper colour, and higher antioxidant content.
Pot Tea is perfectly aligned with the health and wellness market, one of the fastest-growing global consumer segments. As an Herbal Medicinal Beverage (HMB), it captures the complete phytonutritional matrix of the tea leaf, including polyphenols, catechins, and climate-influenced compounds unique to Ceylon. The product also offers storytelling power: every cube reflects the terroir, the gentle fingers that plucked the leaf, and the mystical nature of tea grown in a land with unusually low gravitational intensity.
Already, international partners—particularly in Russia—and domestic innovators have expressed enthusiasm. Pot Tea aligns closely with the policy direction set by the Hon. Samantha Vidyarathne and the NPP Government, especially the national goal of achieving 400 million Kgs of national annual production per year by unlocking new value chains and premium product categories.
Why Immediate Government Intervention Is Necessary
For Sri Lanka to fully benefit from Ceylon Pot Tea and other modernized value chains, the government must urgently introduce:
1. Minimum Yield Benchmarks per hectare (3-year targets) for all perennial crops, informed by scientific investment appraisals.
2. A classification shift from “plantations” to land-based investment enterprises, recognising the capital-intensive, long-term nature of tea cultivation.
3. Incentives for soil testing, soil auger adoption, and SOM improvement programs.
4. Support for value-added tea manufacturing and export diversification.
These steps would create an enabling environment for Pot Tea to scale rapidly and position Sri Lanka as the world’s leading innovator in tea-based wellness products.
Way Forward: Positioning Ceylon Pot Tea for Global Leadership
The path ahead requires a coordinated national and industry-level effort. Sri Lanka must shift from simply producing tea to designing tea experiences. Ceylon Pot Tea can lead this transformation if:
1. Branding and Certification Are Strengthened
CCT (Ceylon Certified Tea) standards must be universally adopted to guarantee purity, origin authenticity, and ethical production practices.
2. Research, Soil Science & Agronomy Are Modernized
With scientific soil audits, optimized fertigation, and regenerative agriculture, Sri Lanka can unlock higher yields and stronger biochemical profiles in its leaf.
3. A Global Wellness Narrative Is Created
Position Pot Tea as a nutritional, therapeutic, anti-aging, and calming beverage suited for the modern lifestyle.
4. Export Market Activation Begins Immediately
Pilot shipments, influencer partnerships, and cross-border digital campaigns should begin with Russia, the Middle East, Japan, and premium EU markets.
5. Producers Are Incentivised to Convert Dhools to Cubes
This ensures minimal waste, improved margins, and equitable value distribution across the supply chain.
Conclusion: A New Dawn for Ceylon Tea
Ceylon Pot Tea offers Sri Lanka a rare chance to pivot from a commodity-driven past to a premium, wellness-oriented, high-margin future. It aligns economic sustainability with environmental responsibility. It empowers estate communities with modern agronomy. And most importantly, it transforms every gram of the tea leaf into value—finally rewarding the land, the planter, and the plucker.
If implemented with vision and urgency, Ceylon Pot Tea will not only revitalise an industry under immense pressure but also secure Sri Lanka’s place as the world’s most innovative and scientifically grounded tea nation.
By. Dammike Kobbekaduwe
(www.vivonta.lk & www.planters.lk) ✍️
Opinion
Lakshman Balasuriya – simply a top-class human being
It is with deep sorrow that I share the passing of one of my dearests and most trusted friends of many years, Lakshman Balasuriya. He left us on Sunday morning, and with him went a part of my own life. The emptiness he leaves behind is immense, and I struggle to find words that can carry its weight.
Lakshman was not simply a friend. He was a brother to me. We shared a bond built on mutual respect, quiet understanding, and unwavering trust. These things are rare in life, and for that reason they are precious beyond measure. I try to remind myself that I was privileged to spend the final hours of his life with him, but even that thought cannot soften the ache of his sudden and significant absence.
Not too long ago, our families were on holiday together. Lakshman and Janine returned to Sri Lanka early. The rest of the holiday felt a bit empty without Lakshman’s daily presence. I cannot fathom how different life itself will be from now on.
He was gentle and a giant in every sense of the word. A deeply civilized man, refined in taste, gracious in manner, and extraordinarily humble. His humility was second to none, and yet it was never a weakness. It was strength, expressed through kindness, warmth, and dignity. He carried himself with quiet class and had a way of making everyone around him feel at ease.
Lakshman had a very dry, almost deadpan, sense of humor. It was the kind of humor that would catch you off guard, delivered with too straight a face to be certain he was joking, but it could lighten the darkest of conversations. He had a disdain for negativity of any kind. He preferred to look forward, to see possibilities rather than obstacles.
He was exceptionally meticulous and had a particular gift for identifying talent. Once he hired someone, he made sure they were cared for in unimaginable ways. He provided every resource needed for success, and then, with complete trust, granted them independence and autonomy. His staff were not simply employees to him. They were family. He took immense pride in them, and his forward-thinking optimism created an environment of extraordinary positivity and a passion to deliver results and do the right thing.
Lakshman was also a proud family man. He spoke often, and with great pride, about his children, grandchildren, nephews, and nieces. His joy in their achievements was boundless. He was a proud father, grandfather, and uncle, and his devotion to his family reflected the same loyalty he extended to his colleagues and friends.
Whether it was family, staff, or anyone he deemed deserving, Lakshman stood by them unconditionally in times of crisis. He would not let go until victory was secured. That was his way. He was a uniquely kind soul through and through.
Our bond was close. Whenever I arrived in Sri Lanka, it became an unspoken ritual that we would meet at least twice. The first would be on the day of my arrival, and then again on the day I left. It was our custom, and one I cherished deeply. We met regularly, and we spoke almost daily. He was simply a top-class human being. We were friends. We were brothers. His passing has devastated me.
Today I understood fully the true meaning of the phrase ‘priyehi vippaogo dukkho’ — (ප්රියෙහි විප්පයෝගෝ දුක්ඛෝපෝ) ‘separation from those who are beloved is sorrowful.’
My thoughts and prayers are with Janine, Amanthi, and Keshav during this time of profound loss. Lakshman leaves behind indelible memories, as well as a legacy of decency, loyalty, and quiet strength. All of us who were fortunate to know him will hold that legacy close to our hearts.
If Lakshman’s life could leave us with just one lesson, that lesson would be this. True greatness is not measured in titles or possessions, but in the way one treats others: with humility, with loyalty, with kindness that does not falter in times of crisis. Lakshman showed us that to stand by someone, to believe in them, and to lift them up when they falter, is the highest of callings, and it was a calling he never failed to honour.
Rest well, my dear friend.
Krishantha Prasad Cooray
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