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Central Bank expects inflation to “gradually stabilize”

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Sri Lanka’s inflation is anticipated to gradually stabilise around the targeted level of five per cent over the medium term, following a short-lived acceleration of inflation in the near term on account of the recent tax adjustments and supply-side disruptions, the Central Bank of Sri Lanka (CBSL) said in its monetary policy report for February.

In the report, the CBSL said that headline inflation is expected to peak in the third quarter of 2024, mainly on account of the unfavourable base effect stemming from sharp disinflation recorded in the third quarter of 2023.

However, the near-term surge in headline inflation is unlikely to persist due to subdued demand conditions, as the economy is projected to operate below its full capacity for an extended period, the Bank said.

The CBSL observed that the rebound of domestic economic activity witnessed in the third quarter of 2023 is expected to continue, assisting the economy to gradually reach its potential over the medium term with the help of appropriate policies.

It predicted that the gradual relaxation of monetary policy will impact the broader market interest rates, and the resultant normalisation of nominal interest rates, are anticipated to stimulate growth towards its potential level by fostering investments, enhancing consumer spending, and ultimately boosting aggregate demand, thereby alleviating the ongoing contractionary impact on output.

The Central Bank said that they expect a negative trade-weighted foreign output gap to last for around two years, thereby impacting the domestic economy through exports. Improving productivity and addressing growth impediments by minimising structural limitations, such as the weak doing-business environment, remain pivotal to achieving a sustainable growth path and elevating the economy’s potential, it added.



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Heat Index likely to increase up to ‘Caution level’ at some places in the Western, Sabaragamuwa, Southern and North-western provinces and in Monaragala and Mannar districts

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Warm Weather Advisory
Issued by the Natural Hazards Early Warning Centre of the Department of Meteorology at 3.30 p.m. on 12 March 2026, valid for 13 March 2026.

Heat index, the temperature felt on human body is likely to increase up to ‘Caution level’ at some places in Western, Sabaragamuwa, Southern and North-western provinces and in
Monaragala and Mannar districts.

The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.


Effect of the heat index on human body is mentioned in the above table and it is prepared on
the advice of the Ministry of Health and Indigenous Medical Services.

ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated.
Dress: Wear lightweight and white or light-colored clothing.

Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.

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Govt. bends rules, lowers coal standards in favour of errant company: FSP

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Pubudu

The Frontline Socialist Party (FSP) yesterday accused the government of trying to award another tender to the Indian company that supplied low-grade coal to the Norochcholai Power Plant and failed to deliver the stipulated amount of coal according to schedule.

The allegation was made by the Education Secretary of the Progressive Socialist Party, Pubudu Jayagoda, during media briefing at the party office in Nugegoda last afternoon.

Jayagoda said that in September 2025, the government had awarded a tender to the Indian company Trident Chemphar to supply 25 coal shipments for electricity generation in 2026.

In August 2025, it was confirmed that the coal delivered by the company was substandard. The company also failed to supply coal on schedule. Although the first shipment was expected in the second week of December 2025, it arrived at the end of the month. By mid-March, only 12 ships had arrived, and biweekly deliveries have been disrupted, putting Sri Lanka at risk of a severe energy shortage.

On 11 March, the government called a sudden spot tender for five coal shipments. Four companies submitted bids, and they include Trident Chemphar. FSP criticiced awarding the tender to the same discredited company, saying it was unethical and could trigger a major national crisis, as the company had failed to supply quality coal reliably in the past.

Previously, coal quality was strictly measured, with a “Reject Value”. But now to help the errant supplier the term of Reject Value has now been omitted altogether and replaced with a new term ‘Minimum Value’ setting it as the minimum calorific threshold—coal producing less than 5,900 kilocalories per kilogram was rejected, and coal with ash content above 16% was also discarded.

However, the government is now reportedly lowering these standards, accepting substandard coal, and changing tender specifications to accommodate the company.

Jayagoda castigated the latest stunt coming especially at a time when the world faces war and oil shortages. Diesel meant for electricity generation is being diverted to school buses, public transport, and emergency vehicles, leaving households at risk of prolonged blackouts. Even if diesel is imported, electricity tariffs could skyrocket.

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Lanka requests diesel from India

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The Indian Ministry of External Affairs has said it is considering requests for diesel supplies from neighbouring countries, including Sri Lanka, Bangladesh and the Maldives.

Speaking to the Press Trust of India, Ministry Spokesperson Randhir Jaiswal noted that India was a major exporter of refined petroleum products in the region. He confirmed that Bangladesh had formally requested a diesel supply, which is currently under review.

He said that diesel exports to Bangladesh had largely continued since 2017, but any new allocations would take into account India’s refining capacity, domestic demand, and overall fuel availability.

Jaiswal added that similar requests from Sri Lanka and the Maldives were also being considered, with India’s own energy requirements forming a key part of the decision-making process.

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