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Fitch’s decision to downgrade Sri Lanka shows nothing but recklessness : CBSL

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Fitch was constantly updated on imminent foreign exchange inflows
Earnings from merchandise exports recorded an all time high in October 2021
Indices of the Colombo Stock Exchange reached historical highs
Prospects for workers’ remittances are bright
Fitch appears to have completely ignored the standby SWAP facility with PBOC of around USD 1.5 billion

Fitch Ratings in a rather hasty move, downgraded Sri Lanka’s international sovereign rating on 17 December 2021, demonstrating its failure to recognise the positive developments taking place in Sri Lanka, in an environment in which the entire world is grappling with multiple waves of the COVID-19 pandemic, the Central Bank of Sri Lanka says.

Issuing a press release the Bank further says:

This action resembles the recent unwarranted downgrade by Moody’s Investors Service a few

days prior to the announcement of the National Budget 2022. The sense of urgency on the part of an internationally recognised rating agency to downgrade Sri Lanka is inconceivable, particularly considering the fact that Fitch was being constantly updated by Sri Lankan authorities on the latest developments in all sectors of the economy and imminent foreign exchange inflows.

In particular, despite the lockdown measures that had to be introduced in the third quarter of 2021, the real economy averted a deep contraction during the quarter,

signalling Sri Lanka’s adaptability to the new normal. Real GDP, in fact, expanded by 4.4 per cent (year-on-year) during January-September 2021, reaffirming the strong possibility of above 4 per cent growth in 2021. High frequency data on activity point towards a strong recovery of the economy surpassing the pre-pandemic level. The Manufacturing Purchasing Managers’ Index reached 61.9 in November 2021, the highest reading for a month of November on record, and way above the pre-pandemic level of activity.

Indices of the Colombo Stock Exchange reached historical highs, with a large number of Initial Public Offerings taking place in 2021. Credit extended to the

private sector expanded by over Rs. 685 billion in the ten months to October 2021, compared to about Rs. 260 billion in the same period last year.

The trade deficit continued to decline from May 2021 on a month-on-month basis, supported by record high export earnings. Earnings from merchandise exports

recorded an all time high in October 2021, and preliminary information indicates that

earnings have exceeded this record level in November 2021. With the exchange rate remaining stable since April 2021, excepting a few speculation-driven deviations, the conversion of export proceeds and other foreign exchange earnings has also improved

substantially in recent weeks. An exponential growth in tourist arrivals is observed on a monthly basis, indicating an early reversal of the annual foreign exchange revenue loss of around US dollars 5 billion in the period ahead.

The prospects for workers’ remittances are bright, with the resumption of worker migration, increased demand for Sri Lankan workers particularly from the Middle East and efforts to facilitate worker remittances through formal channels through an attractive incentive package. With such measures, the external current account

balance is expected to be maintained at growth supporting levels, thereby accommodating equity capital to the financial account through direct investment to

the identified projects in the Colombo Port City and Industrial Zones, in addition to the expected monetisation of non strategic and underutilized assets.

These developments and the rapid vaccination drive, which is being rolled out nationally, would help realise the potential of the economy over the near to medium term.

Fitch has also failed to recognise the fiscal reforms introduced through the National Budget 2022. With the introduction of new tax measures, upgraded tax administration systems, and the revival of the economy, the year 2022 is expected to deliver a substantial increase in Government revenue. Increasing the retirement age of public sector employees and measures to enhance the viability of state owned business

enterprises are notable reforms, and issuing quarterly warrants for Government institutions instead of annual warrants are expected to instill financial discipline in the

utilisation of the allocations, thereby cushioning the expenditure side. Such revenue and expenditure side measures would pave the way for a reduction in the fiscal deficit and financing needs of the Government, contributing to a sustainable debt level.

The domestic market has responded positively to expected path of fiscal consolidation, and interest rates have stabilised, following an initial overshooting, at market clearing levels. The Central Bank’s holdings of Government securities have also declined notably as a result of improved subscription at primary market auctions and active open market operations. Contrary to Fitch’s unfounded claims on increased probability of a default event over the coming months, the measures undertaken by the Government and the Central

Bank to secure support from friendly nations in the region are nearing fruition, thereby offsetting pressures on the balance of payments in the period ahead. The Six- Month Road Map for Ensuring Macroeconomic and Financial System Stability clearly articulated the expected cashflows by December 2021 and by March 2021, and the Government and the Central Bank remain confident that these inflows will materialise, and the end-2021 level of Gross Official Reserves will remain above US dollars 3 billion. Fitch appears to have completely ignored the standby SWAP facility with the People’s Bank of China of around US dollars 1.5 billion, of which the drawal is imminent.

The credit lines and other inflows expected following high-level meetings in India and the Middle Eastern and other regional economies are also not given due consideration by Fitch in arriving at this decision.

The fact that Fitch Ratings decided to downgrade Sri Lanka without waiting until the first test date of 31 December 2021 shows nothing but recklessness, which could only hurt investors if decisions are made based on this downgrade. It must also be noted that the Government has given a clear assurance that Sri Lanka will honour all debt obligations in the period ahead, and Sri Lanka has not delayed a single payment even under severe stresses that were caused by the COVID-19 pandemic over the past two years.

Therefore, all stakeholders of the economy, including international investment partners, are requested not to be dissuaded by this unjustified rating action, but instead, work with Sri Lanka to surf the turbulent tides, which are expected to settle in the next few days. A detailed press release on the progress of expected foreign inflows as envisaged in the Six-Month Road Map will be published this week.

-Central Bank



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Birthday gift turned lifeline: US-based young environmentalist steps up for Sri Lanka

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Birthday becomes an act of compassion; Daham and Consul General Charith Yattegoda (R)

For Daham Perera, a December birthday celebration this year became something far more meaningful than cake, candles or gatherings with friends. Instead, it turned into a deeply personal act of solidarity with a country he calls his motherland.

Perera, a young environmental enthusiast based in Los Angeles, says his bond with Sri Lanka remains unbroken despite living thousands of miles away. “Although I live in America, my parents and all my relatives live in beautiful Sri Lanka. That connection is something I carry with me every day, he said.

Having visited Sri Lanka in August, Perera spent weeks traveling across the island, reconnecting with relatives and visiting historical and environmentally significant sites. “I saw the true beauty of Sri Lanka – its people, its biodiversity, and its rich heritage. Those memories are among the most beautiful in my life, he recalled.

That joy, however, was short-lived. Soon after his return, the devastating Ditwah cyclone struck the island, leaving a trail of destruction. Homes were damaged, livelihoods disrupted and families displaced. “When I saw images of my friends losing their homes, books soaked in mud, clothes ruined by floodwaters, I felt a pain I cannot put into words, Perera said.

As an environmentalist, the damage to Sri Lanka’s fragile ecosystems troubled him deeply. “Sri Lanka’s biodiversity is priceless. When disasters like this strike, it is not just people who suffer, but forests, wildlife and entire ecosystems that take years to recover, he noted.

With his birthday falling on December 9, Perera made an unconventional decision. “Normally, my father and I celebrate our birthdays by going to the temple and spending time with friends. But this year, celebrating didn’t feel right when my people were suffering, he explained. “I kept asking myself—what can I do, even from afar?”

The answer was simple but powerful. Perera chose to donate all the money he had saved for his birthday celebrations, along with additional contributions from his family, towards relief efforts in Sri Lanka. “Economic support at times like this is critical. Even a small contribution can help a family rebuild, restart a livelihood, or regain dignity, he said.

The donation was formally handed over to Sri Lanka’s Consul General in Los Angeles, Charith Yattegoda, at the Consulate premises. For Perera, the gesture carried deep emotional significance. “If I can replace my personal happiness with smiles on the faces of people back home, that is the most beautiful birthday I could ever celebrate, he reflected.

He describes the letter of appreciation he received in return as his most treasured gift. “That thank-you letter is not just paper. It is a reminder that loving your country means standing by it in its darkest moments. It will always remain one of the most meaningful keepsakes of my life, Perera said.

Perera hopes his story will inspire other young Sri Lankans living overseas to stay connected and give back. “Distance should never weaken our responsibility. Supporting Sri Lanka—its people, its economy, and its environment—is something we can all do, no matter where we live, he added.

In turning a birthday into an act of compassion, Daham Perera has offered a quiet but powerful reminder: sometimes, the greatest gifts are the ones we give away.

By Ifham Nizam

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John Keells Foundation partners Sri Lanka Police in combatting violence against women and children

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As part of its ongoing commitment to combat violence against women and children towards empowering a healthy and progressive nation, John Keells Foundation (JKF) continues to empower law enforcement agencies through Project WAVE (Working Against Violence through Education) – its flagship of over ten years – to combat gender-based violence and child abuse.

These activities include a strategic collaboration through which JKF supported the Sri Lanka Police to enhance their response to crimes involving women and children through the sponsorship of a global cutting-edge investigative software for use in the Cyber Investigation Unit (CIU) at the Bureau for the Prevention and Investigation of Abuse of Children and Women (BPIACW). The software enables officers to analyse and connect data efficiently, strengthening their ability to investigate and prevent online exploitation and related offences. BPIACW reported that the new platform had directly contributed to a significant and measurable improvement in their investigative capacity, recording the rescue of 22 children, the arrest of 21 suspects, and the filing of 111 cases in courts within the first year of its deployment.

Speaking on the partnership with JKF, Deputy Inspector General of Police – Ratnapura, and Former DIG – Children & Women Abuse Prevention 8 Investigation Range, Renuka Jayasundara said, “We extend our sincere gratitude to JKF for your steadfast partnership and for serving as a cornerstone of our efforts to strengthen child protection services through Project WAVE. Your contribution is making a tangible and quantifiable difference as evidenced by the growing numbers of successful investigations and legal referrals.”

Beyond technological support, JKF has also conducted a series of Train-the-Trainer (ToT) programmes, to improve the ability of officers to respond to GBV and CP in a sensitive and effective manner. The sixth such ToT was conducted from 24th to 26th of September 2025 for the benefit of nominated officers of the Homagama, Kaduwela and Maharagama police divisions. To date, 162 officers across 60 police stations have been impacted.

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SLANZBC appreciative of help from Australia and New Zealand

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Chandana Amaradasa; ‘appreciative of assistance’

The Sri Lanka Australia–New Zealand Business Council (SLANZBC) has extended its profound gratitude to both the Australian and New Zealand governments for the generous and timely assistance provided to Sri Lanka during the recent flood devastation.

Chandana Amaradasa, SLANZBC president, noted that both governments donated one million dollars each, in their respective currencies, at a critical moment for Sri Lanka — support that will play a significant role in helping communities rebuild their livelihoods.

The government of New Zealand has pledged NZ$1 million to support humanitarian relief efforts in Sri Lanka following Cyclone Ditwah.

This assistance will be channeled through an international

humanitarian partner to strengthen ongoing rescue and relief operations.

Similarly, the Australian government announced on November 30, 2025 that it will provide AUD 1 million in humanitarian aid to bolster Sri Lanka’s response to Cyclone Ditwah.

These compassionate and timely gestures, Amaradasa said, once again demonstrate the unwavering commitment of both countries to stand beside the Sri Lankan people in times of crisis. He also recalled that

Australia and New Zealand have consistently supported Sri Lanka, stepping forward during previous national emergencies as well.

Today’s humanitarian assistance further reaffirms the depth of these longstanding relationships and the true spirit of friendship that binds the nations — a bond built on mutual respect, shared values and enduring goodwill.

“Our association deeply appreciates this kind and meaningful support and remains committed to fostering even closer ties between the people of Sri Lanka, New Zealand, and Australia, he added.

By Hiran H Senewiratne

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