Business
CB chief sees negative fallouts from IMF deal
ECONOMYNEXT – Central Bank governor Nivard Cabraal said seeking International Monetary Fund (IMF) help to resolve a debt and forex crisis would lead to currency depreciation and sharply higher interest rates, trimming the public sector and privatization of state enterprises.
However several policy corrections, which are usually in IMF deals are already done, he said.
Sri Lanka has been downgraded to CCC by rating agencies indicating higher risk of default as the country printed money to keep rates in a “monetary stimulus” on top of “fiscal stimulus” and lost foreign reserves as the printed money was exchanged for dollar reserves to maintain the exchange rate.
Ministers of President Gotabaya Rajapaksa’s ruling SLPP coalition has discussed the possibility of the government seeking IMF assistance to resolve the external crisis as it became more difficult to import oil and other goods.
The party had come to power slamming the last administration for going to the IMF, which led to tax hikes.
“If we want, there is no problem going for the IMF. We had gone in 2009. So nobody should think that we hesitate or fear to go,” Cabraal said at a news briefing on Thursday.
“The IMF could tell us to depreciate the rupee, raise the interest rates by 30 percent, 40 percent, 50 percent further, reduce the number of government sector employees, reduce or curtail pension benefits, and sell various state assets.
“These are some conditions they include in their reform agenda.
“Our view is that we do not need that reform agenda at this juncture. Our view is that without going for that, we can pay back our creditors. Though we see some pressure during this time, we know that will ease in the time ahead.”
The last IMF program failed to impose sufficient controls on the central bank giving it enough room to print money under discretionary flexible inflation targeting and triggered a second currency crisis in 2018 within the program leading to an output shock.
It also failed to impose spending controls on the Treasury ‘under so-called revenue based fiscal consolidation’ sans ‘spending based consolidation’ leading to steep rise in government spending and an increase in state sector pension entitlements.
The currency fall which usually comes a under an IMF program leads to a fall in real wages, a consumption fall, higher unemployment and an economic slowdown – the inevitable consequence of monetary and fiscal excesses – which leads to unhappy voters if elections come before growth recovers.
Cabraal, however, said Sri Lanka itself has been already doing what the IMF might prescribe in a policy package.
“The issue is we need to face the debt problem,” Cabraal said. “The main reason for the debt problem is 6.9 billion US dollars had been borrowed as loans via sovereign bonds to this country from 2018 April to 2019 June. Those loans have put a lot of pressure on the country’s debt.”
“So we have decided to do away with that kind of borrowing and reduce them while using some other borrowing methods. That is what we are doing right now. This will be the same advice the IMF will give us. No other advice they will give.”
“Debt restructuring is basically you change from one instrument to another. This has been done with a deep thought and scientific manner. Since we are already doing it, we do not need external help to do that.”
He also said the government has already taken decisions to change maximum retail prices of commodities.
“In some instances, we have removed them which could be told by the IMF.”
The budget for 2022 had already frozen recruitment raised taxes on companies including turnover based taxes and there were no salary hike for state workers except for striking teachers.
However any IMF programme now is likely to require the float of the currency as a prior action to restore foreign exchange markets.
Business
David Pieris Group expands global footprint with investment in Dubai-based Navire Logistics
The David Pieris Group continues to strengthen its international presence with the acquisition of 50% ownership in Navire Logistics Services L.L.C, (www.navirelogistics.com) a reputed logistics company based in Dubai and Oman. This strategic move marks a significant milestone in the Group’s journey towards expanding its operations beyond Sri Lanka and positioning itself in the international markets.
In Sri Lanka, the Group’s logistics arm, D P Logistics (Private) Limited (DPL), has already established itself as a comprehensive logistics solutions provider — covering warehousing, transportation, freight forwarding, project logistics, inland distribution and custom house brokering.
DPL currently ranks among the top ten players in warehousing and 3PL operations and holds one of the largest container fleets amongst the logistics companies in the country. Despite operating in a highly fragmented freight forwarding market, DPL continues to capture a growing share, reinforcing its reputation as one of the very few local companies with expertise across all logistics disciplines.
David Pieris Group also acquired in 2022, Pulsar Shipping Agencies (Pvt.) Limited, the shipping arm of Expolanka Holdings PLC to expand its Logistics & Shipping Cluster into ship agency, husbandry services and marine logistics.
Leveraging this strong domestic foundation, DPL has now extended its capabilities to the international stage through its partnership with Navire Logistics Services L.L.C. The company’s expertise in custom house brokering, freight forwarding, cargo consolidation, warehousing, and transport solutions will be integrated into Navire Logistics’ operations, enhancing service quality and efficiency across the Middle East and South Asia.
The investment also extends to operations in Oman through a fully owned subsidiary, with further expansion plans already underway to establish operations in Saudi Arabia, Thailand, and India — strengthening the Group’s regional logistics network.
HNB PLC has contributed of Rs. 100 million towards the Rebuild Sri Lanka Fund, reinforcing its commitment to national recovery efforts following the devastation caused by Cyclone Ditwah.
“On behalf of HNB, I wish to convey our solidarity with all our fellow Sri Lankans, especially those severely affected by Cyclone Ditwah. As a home-grown institution, our connection to the communities we serve runs deep. Many of our customers and colleagues have been directly or indirectly affected, and we are committed to standing with them during this difficult time and supporting them as they rebuild.”
“HNB’s contribution to the Rebuild Sri Lanka Fund is a sign of our commitment to this collective mission. We recognize that this is going to be a long and challenging process, but we stand ready and committed to support both the immediate and long-term recovery effort,” HNB Managing Director/ CEO, Damith Pallewatte stated.
Complementing its direct financial support to the Fund, HNB has also launched a nationwide disaster relief initiative as the first phase of a broader, coordinated response from the bank.
As part of the program, the Bank donated over 2,500 essential relief and nutrition packages to support displaced families, with the consignments formally handed over to the Sri Lanka Army to ensure structured, transparent, and equitable distribution across the impacted areas of Kandy, Gampaha, Kaduwela, and Hanwella, while separate packages were provided to affected employees to strengthen their personal recovery.
The Commercial Bank of Ceylon has been ranked No 1 in the Business Today Top 40 for 2024–25, reaffirming its position as Sri Lanka’s best-performing bank and one of the country’s top five strongest corporate entities for the 17th consecutive year.
Business Today assigned the Bank an aggregate score of 37.65, placing it at the top of its latest ranking of leading Sri Lankan enterprises.
In its presentation of the rankings, Business Today described Commercial Bank as “a beacon of resilience and renewal after a defining year,” noting that 2024 was shaped by strategic transformation, disciplined execution, and unwavering commitment to long-term sustainable growth. The publication recognised the Bank’s strength across key business lines, its deepened customer focus, and a performance trajectory that reinforced its reputation as Sri Lanka’s most resilient and customer-centric financial institution.
Reflecting on the ranking, Mr Sanath Manatunge, Managing Director/CEO of Commercial Bank said: “Being ranked No 1 in the Business Today Top 40 is a powerful endorsement of the discipline, resilience and purpose with which we steered the Bank through a year of tough conditions and decisive transformation. Our performance in 2024 was defined by navigating turbulence without losing sight of our priorities: strengthening fundamentals, supporting customers, and preparing the institution for long-term growth. This ranking is not merely an award; it is confirmation that our strategy is delivering results and that the Bank is firmly positioned to contribute to national progress with renewed confidence.”
Business Today also highlighted the Bank’s record-breaking financial performance during the year. The magazine quoted Mr Sharhan Muhseen, Chairman of Commercial Bank as saying that the Bank had delivered the highest profits in its history, and attributing this outcome to a disciplined focus on efficiency, digital innovation, and customer-centred transformation. These qualities, the publication stated, enabled the Bank to strengthen its market position and make meaningful contributions to economic recovery.
Among the milestones recognised were an equity capital infusion of Rs. 22.54 billion through a rights issue and the raising of Rs. 20 billion in Tier II capital via a debenture issue.
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