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Editorial

A long way to go: Bragging can wait

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Monday 4th August, 2025

The NPP government is on cloud nine, following a further reduction in the US tariff rate for Sri Lanka from 30% to 20%. President Donald Trump initially fixed it at a staggering 44%! Obviously, the Trump administration did not act out of altruism when it agreed to tariff reductions for Sri Lanka as well as other countries.

What are the specific conditions that the US laid down for a downward revision of its reciprocal tariff for Sri Lanka? Secretary to the Ministry of Finance Dr. Harshana Suriyapperuma has said the NPP government’s anti-corruption drive and efforts to improve the country’s ease of doing business ranking helped obtain the US tariff reduction. This may be true, but surely there are other reasons.

President Trump and his team are known to think after leaping, as it were. They have made a host of humiliating about-turns. It was obvious that the Trump tariffs would yield short-term benefits to the US economy, particularly to some key industries, such as metal, but Washington must have realised subsequently that those gains would come at steep hidden costs.

The intended benefits of the US tariff hikes include, inter alia, the protection of select US industries, and increase in revenue for the federal coffers, trade negotiation leverage, encouraging reshoring and domestic investment, focusing attention on unfair trade practices. However, the cons of the Trump tariffs outweigh the pros thereof, according to economic analysts, and some of them are higher prices, disadvantages to exporters, especially farmers, job losses in industries such as steel, supply chain disruptions and reduced investment and strained global alliances. More importantly, developed countries, such as the UK, have come forward to offer a helping hand to the developing nations adversely affected by the US tariff hikes. This is a disturbing proposition for the US, which is facing challenges to its global dominance from trans-Atlantic rivalries, China’s rise as an economic and military power, and formidable strategic alliances, such as BIRCS, which is reportedly working towards a common currency as an alternative to the US dollar. Thus, one can argue that the US found itself in a situation where it had to reduce its proposed tariffs to safeguard its own interests.

Sri Lanka will now be able to retain the competitiveness of its exports to a considerable extent, given the US tariff rates for its competitors in the region—Bangladesh (20%), India (25%), Pakistan (19%), Vietnam (19%), Thailand (19%) and Cambodia (19%). However, if other countries succeed in obtaining more favourable tariff rates from the US, through trade agreements, etc., Sri Lanka will have its work cut out to remain competitive. Hence, the need for the NPP government to have further negotiations with Washington on tariffs, without resting on its oars.

Most of all, Sri Lanka should realise its increasing vulnerability in global trade and lessen its dependence on a few major export destinations. It should redouble its efforts to diversify its exports and find new markets for them while enabling its exporters to keep their production costs low thereby making their products and services competitive globally. This goal will remain unattainable unless the government takes steps to lower the power tariffs by boosting the generation of electricity from renewable sources, and keep taxes on the export sector at affordable levels.

The latest US tariff reduction is certainly welcome, but there are no grounds for complacency, especially for countries like Sri Lanka, troubled by severe foreign currency woes. The recalibration of global trade in line with the Trump tariffs is bound to deliver shocks and pose new challenges to the developing world. Prudence demands that Sri Lanka brace itself for a possible decrease in its forex inflow. It should therefore make a serious effort to reduce its import bill substantially and increase foreign currency earnings from non-traditional sources such as digital services, etc., instead of imposing heavy taxes thereon. There is a need for some import restrictions as well. It does not make sense to import rice as a solution to the problem of hoarding by large-scale millers or to flood the local market with imported sugar while huge stocks of locally produced sugar are rotting in warehouses. Solar power producers complain of step-motherly treatment from the government. If the thermal power generation is reduced, a great deal of forex currently spent on oil and coal can be saved. A dollar saved is a dollar earned.

In trying to resolve any crisis, it always pays to be prepared for the worst-case scenario. So, the NPP government would do well to anticipate possible adverse effects of the new US tariffs on the Sri Lankan economy, and strategise to mitigate them. There is a long way to go. Bragging can wait.



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Editorial

Bloodied roads

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The Grim Reaper apparently rides shotgun in many vehicles on Sri Lankan roads, where chaos is the norm, with drivers and riders moving like bats out of hell and jaywalkers darting across arterial roads and busy streets in a suicidal rush. The situation takes a turn for the worse during festive seasons, when road users behave as if they had a death wish. This may explain why as many as 44 lives were lost in 42 fatal accidents across the country between April 10 to 15 this year.

Road fatalities average seven to eight a day in Sri Lanka, and an increase therein is to be expected during a festive season. We can only hope that there won’t be any more tragedies like the ones we witnessed at Kotmale and on the Ella-Wellawaya road, in 2025.

Last year, as many as 2,562 lives were lost in fatal road accidents, according to media reports. On 7 April 2026, Director of the Police Traffic Control and Road Safety Division, SSP Manoj Ranagala, told the media that 676 fatal road accidents had occurred by the beginning of the current month. When the aforesaid 42 accidents and 44 fatalities are added to the official statistics, the picture becomes even gloomier.

Road fatalities jolt the police, politicians, road safety officials and the public into expressing concern and finding ways and means of reducing them only when they receive intense media attention. They sadly end up as mere statistics afterwards, making one wonder whether Sri Lankans have become desensitised to the lives lost in road accidents or adopted a fatalistic attitude towards them. There is no other way one can explain the absence of a well-coordinated national effort to make roads safe. Not that the authorities tasked with ensuring road safety have not done anything all these years. They have worked hard, and their good work is to be appreciated, but why they have failed to achieve their goal needs to be examined, and remedial action taken to save lives.

Road fatality statistics are shocking, but they shed light on only a part of the grave problem, which is far more complex than it looks. A World Bank report, Delivering Road Safety in Sri Lanka; Leadership Priorities and Initiatives to 2030, which we have discussed in a previous editorial comment, has revealed that ‘the high road crash fatality and injury rates on Sri Lanka’s roads undermine the economic growth and progress made over the past decade on reducing poverty and boosting prosperity’. The report says the annual crash deaths per capita in Sri Lanka are twice the average rate in high-income countries and five times that of the best performing countries in the world! Sri Lanka reportedly has the worst road fatality rate among its immediate neighbours in the South Asia region.

Last year, Director of the Colombo National Hospital Orthopaedic Services Department, Dr. Indika Jagoda, rightly called road fatalities a ‘silent epidemic’, which had not received the same public attention as dengue and other such diseases. Road accidents also exert a severe strain on the state-run hospitals, besides claiming lives, and their economic and social costs are enormous. In some cases, the victims of fatal road accidents happen to be the breadwinners of their families. Most of the road accident victims are young, as President of the Sri Lanka Medical Association Dr. Manilka Sumanatilleke has revealed at a recent media briefing.

SSP Ranagala has identified the primary causes of road accidents as poor road conditions, reckless driving, excessive speeding, and driving under the influence of alcohol. He is spot on. There are other causative factors, such as distractions, fatigue, inclement weather conditions, tailgating, improper lane changes, inexperience of drivers, poor eyesight of drivers, unroadworthy vehicles, lack of proper road markings, and time pressure. Much is being spoken these days about poor-quality coal consignments, and rightly so, but not much attention has been paid to the sham training courses conducted by the so-called driving schools and corruption in the process of issuing driving licences. These corrupt practices are also responsible for road accidents.

It is clear from the sheer number of lives lost in traffic accidents and the increasing vulnerability of all road users that we have been only scratching the surface of the problem of road fatalities all these years. The time has come for us to make an all-out effort to make roads safe for everyone.

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Editorial

Curiouser and curiouser

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Saturday 18th April, 2026

Never a dull day in Sri Lanka. CEO of HSBC Georges Elhedery has caused quite a stir here by claiming that Sri Lanka paid as much as USD 286 per barrel of oil, far above the global benchmark prices. He said so during a recent investment forum in Hong Kong. “What worries me is not the headlines,” he is reported to have said, adding that buyers sourcing oil from the Middle East are currently paying between USD 140 and USD 150 per barrel, and the highest amount for oil he has come across is a staggering USD 286 per barrel paid by Sri Lanka.

Elhedery’s remarks galvanised the Opposition into action here, with its propagandists going into overdrive, blaming the government for paying so much for oil, and hinting at a corrupt deal. Chairman of the Ceylon Petroleum Corporation (CPC) D. J. Rajakaruna has denied buying crude oil at USD 286 per barrel.

Addressing the media yesterday, Rajakaruna produced documentary evidence to support his claim, asserting that the HSBC CEO’s statement had been distorted to mislead the public into believing that the CPC had purchased crude oil at USD 286 per barrel. Asked by a journalist whether any kind of oil had been purchased at that price, Rajakaruna answered in the affirmative. He said refined oil was sold on the basis of five-day price averages, and the CPC had no alternative but to pay the amounts determined accordingly. If a shipment of refined oil had arrived between the end of March and early April, the prices would have risen steeply to the levels at issue, and nobody would have been able to do anything about it, Rajakaruna said.

True, the HSBC CEO did not specify that the oil he was referring to was crude. Therefore, it is not fair to compare the prices of crude with those of refined oil purchased at the height of the Iran war. However, the fact remains that according to the HSBC CEO Sri Lanka paid the highest amount for (say refined) oil, and the question is why it opted to pay that much while other countries were paying less.

Rajakaruna says the CPC was desperate to replenish the country’s oil stocks to prevent an energy crisis and had to buy oil at higher prices. His argument sounds tenable. However, other developing countries faced the same problem, and why didn’t they pay as much as USD 286 per barrel of refined oil? Did the supplier set a higher price for the oil arbitrarily, earned unconscionable profits at the expense of the Sri Lankan public, and shared the ill-gotten gains with someone in authority? Anything is possible in this country. What would be the situation if the JVP/NPP were in the Opposition today?

The CPC has passed its legacy debts on to the public in the form of a loss-recovery levy on fuel, amounting to Rs. 50 a litre, and therefore the public has a right to know why the CPC paid as much as USD 238 for refined oil per barrel while other countries were paying less for oil.

An investigation must be conducted to ascertain whether the CPC paid more for some oil shipments that could have been obtained at lower prices, and whether anyone cut a corrupt deal and lined his pockets. It must also be found out what the global prices of refined oil were when the CPC opted to pay USD 238 per barrel.

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Editorial

Sailing between Scylla and Charybdis

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Friday 17th April, 2026

Chinese Foreign Minister Wang Yi is reported to have told his Iranian counterpart, Abbas Araghchi, in a telephone conversation, that reopening the Strait of Hormuz is a unanimous demand from the international community. He has stressed that Iran’s sovereignty, security, and legitimate rights should be respected as a littoral state of the Strait of Hormuz, but the freedom of navigation and safety through the strait should be ensured. One cannot but agree with the Chinese Foreign Minister.

A prolonged closure of the Hormuz Strait will only aggravate global economic woes and therefore be counterproductive. Tehran has a lot to gain on the diplomatic front; even some staunch allies of the US have taken exception to US-Israeli military aggression against Iran. It ought to take the shifting dynamics of the conflict into consideration and change its strategy accordingly.

The Chinese Foreign Minister has rightly noted that the current situation has reached a critical juncture between war and peace and the window of peace is opening. Iran must seize this opportunity. Araghchi has informed Wang Yi that his country is willing to continue to seek a rational and realistic solution through peaceful negotiations. It is hoped that the fragile ceasefire will be extended, and Pakistan will be able to bring the warring sides to the negotiating table again and help work out a compromise formula.

The US has imposed a naval blockade on Iran, targeting ships that enter or leave the Iranian ports, especially though the Hormuz Strait, through which about 20% of world oil supply passes. It has already turned back several ships that sought to enter Iran. Ironically, the US is doing what it has condemned Iran for—restricting international navigation through the Hormuz Strait. With its naval blockade, Washington is likely to incur more international opprobrium. It still has no way of forcing Iran to allow all ships to sail through the strategic chokepoint freely. However, the US naval blockade is likely to have a crippling impact on Iranian oil exports. With both Iran and the US using the Strait of Hormuz as a strategic lever, the countries that have nothing to do with the conflict have to sail between Scylla and Charybdis in the Gulf region.

Some experts are of the view that the China-Iran railway will help mitigate the impact of the US naval blockade and counter Washington’s efforts to isolate China and Iran, but this option could give rise to unforeseen logical and geopolitical issues.

About one-third of global seaborne trade in fertiliser reportedly passes through the Strait of Hormuz. The Gulf countries are key producers of nitrogen fertilisers. They also manufacture about 20% of phosphate fertilisers and 25% of global Sulphur. Urea prices have increased by 25% in the US, and the American Farm Bureau Federation has written to President Donald Trump, warning that production shocks will threaten national food security. The situation is far worse in the developing world. Sri Lanka is running out of its fertiliser stocks, and farmers are up in arms. Máximo Torero, the Chief Economist of the Food and Agriculture Organization of the United Nations, has warned that the ongoing disruption to the Strait of Hormuz trade corridor has triggered “one of the most severe shocks to global commodity flows in recent years, with significant implications for food security, agricultural production, and global markets”.

Meanwhile, Sri Lanka is playing politics with its national energy conservation strategy amidst a global crisis while all other countries are strictly enforcing regulations in place to curtail fuel consumption. The suspension of the QR-based fuel quota system on account of the traditional New Year celebrations must have led to a huge increase in fuel consumption for non-essential purposes, as evident from the record revenue from the expressways. What should have been done was to increase the fuel quota instead of suspending the rationing system so that the public would be compelled to consume fuel sparingly during the festive season. The West Asian conflict is far from over, and the crisis management strategies must not be compromised.

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