Features

Harmonising CBSL’s pragmatism with long-term structural freedom

Published

2 months ago

2026/06/15

Beyond the Forex Crossfire:

“The emergency measures of today have a way of becoming the permanent institutional arrangements of tomorrow, unless we actively dismantle them.” — Friedrich Hayek (Nobel Prize-winning Economist & Author of ‘The Road to Serfdom’)

Introduction: The Anatomy of a Dual Narrative

Parliament recently witnessed a fierce macroeconomic clash over the Central Bank of Sri Lanka’s (CBSL) latest Extraordinary Gazette, which accelerated the mandatory conversion of residual export proceeds by the 10th day of the following month. Main Opposition MP Dr. Harsha de Silva vehemently challenged the rationale, questioning whether Sri Lanka was declaring a psychological return to the “crisis era” of 2022–2024.

Almost instantly, the financial markets responded: the Sri Lankan Rupee (LKR) strengthened sharply against the US Dollar, bouncing back to roughly Rs. 330. To the average observer, this creates a profound paradox. How can a policy be criticised as “draconian” and “anti-business” yet yield immediate, positive numerical results? The answer lies in a deep analytical blind spot that dominates public perception. My view is that the public is being forced to choose between two valid, yet seemingly contradictory, economic realities. In short, this article introduces a clear theoretical framework—”Macro-Structuralism vs. Micro-Pragmatism”—to establish new economic knowledge and elevate the conversation above routine political mudslinging.

The Public Blind Spot: Why the Majority Misunderstands the Debate

The fundamental reason the wider public struggles to comprehend this debate is that macroeconomic communication in Sri Lanka is routinely reduced to binary political theater. One side celebrates a strengthening rupee as an absolute victory; the other side decries capital controls as an absolute failure.

In reality, the public fails to recognise that the CBSL and its critics are looking at two different halves of the exact same coin:

· The CBSL operates in the immediate present, focusing on micro-market mechanics to prevent speculative currency hoarding.

· The Opposition focuses on the future, prioritising structural reputation, investor predictability, and international market signals.

Without an analytical framework that links these two perspectives, the public views the issue as a mere partisan disagreement, rather than a sophisticated technical trade-off between short-term stabilisation and long-term economic development.

Micro-Pragmatism: The Financial Justification for CBSL’s Directive

From a technical central banking perspective, the CBSL’s intervention was not only justified but textually necessary. As expectations of rising dollar demand grew—fuelled by discussions surrounding vehicle import liberalisations—exporters began acting as rational corporate agents. Anticipating a potential depreciation of the rupee, they held onto their foreign currency cushions.

This behaviour, while commercially logical for individual firms, triggers a collective crisis: it starves the domestic market of dollar liquidity, creating an artificial shortage that forces the rupee down. When “moral suasion”—informal requests and agreements with commercial banks—fails to change corporate behaviour, the Central Bank must utilise its statutory power. By implementing a strict legal timeline, the CBSL shattered the speculative loop, forced hoarded liquidity back into the banking system, and protected the domestic economy from an inflationary currency shock.

Macro-Structuralism: The Core of the Opposition’s Critique

Conversely, Dr. Harsha de Silva’s critique carries significant weight when viewed through the lens of long-term investment attraction. His argument is built on Macro-Structuralism: the idea that a nation’s regulatory reputation dictates its future growth trajectory.

In my view, forced conversion rules are indisputably crisis-management tools. When an economy enters a normalisation phase, continuing to deploy emergency administrative mandates signals to the global capital market that the domestic financial ecosystem remains fragile and unpredictable. If exporters feel their residual profits are subject to abrupt state appropriation, it introduces policy risk. The long-term danger is (i) capital flight (ii) businesses may under-invoice exports, (iii) delay legal repatriation, or shift their corporate headquarters to hyper-predictable regional hubs like Dubai or Singapore, structurally reducing Sri Lanka’s long-term foreign exchange inflows.

Global Precedents: Compulsion vs. Liberalisation

To understand where Sri Lanka stands, we must look at how the rest of the world navigates this delicate balance (See Table 1):

The global lesson is unambiguous: While administrative compulsion can serve as a temporary emergency buffer—a practice tolerated by the IMF during economic stabilisation phases—no nation has ever achieved sustainable, high-growth status by continuously dictating how private enterprises manage their residual revenue.

The Liquidity Jam: Connecting the SVAT and Conversion Debates

This tension is not new; it mirrors the previous parliamentary friction regarding the abolition of the Simplified Value Added Tax (SVAT). Under pressure from the IMF to eliminate revenue leakages and tax evasion, the government dismantled SVAT. Dr. de Silva vigorously opposed this move at the time—a stance critics labelled as mere populism.

However, I think that the structural link between the SVAT debate and the current export conversion mandate is undeniable. By abolishing SVAT, the state forced exporters to pay taxes on inputs upfront and wait indefinitely for bureaucratic refunds, locking up their domestic liquidity. Now, by tightening the conversion rule, the state is simultaneously restricting its foreign-currency liquidity. When a government squeezes a country’s primary engine of growth—its exporters—from both the domestic tax and foreign-exchange sides, it risks stalling the very development initiatives it aims to protect.

The Balanced Blueprint: Creating a Scaffolding Transition

The path to true, sustainable economic growth requires transitioning from regulatory coercion to institutional stability. The CBSL’s strict conversion directive should not be viewed as a permanent feature of Sri Lanka’s economic policy, but rather as temporary stabilising scaffolding.

To balance immediate financial safety with long-term investor confidence, I think that the state must implement a benchmark-driven policy framework:

· Conditional Sunset Clauses: The CBSL should formally tie the expiration of the mandatory 30-day conversion rule to clear, objective macroeconomic milestones—such as reaching six months of import reserve cover. This transforms a “draconian rule” into a predictable, transparent transitional mechanism.

· Automated VAT Refund Bridges: To alleviate the cash-flow pressure caused by the removal of SVAT, the Ministry of Finance must implement an automated, digital tax-refund system that guarantees input refunds to compliant exporters within 14 days. If the state demands its dollars quickly, it must return its tax cash flows just as rapidly.

· Incentive-Driven Retention (Moving from Force to Reward): Instead of using legal mandates to force dollar conversion, the financial system should use market rewards. Commercial banks must design competitive, inflation-adjusted, rupee-denominated investment products specifically tailored for exporters. To a business, money behaves like water—it flows where it is treated best. If the Central Bank manages the domestic currency competently so it holds its value, and commercial banks offer attractive, high-yielding rupee accounts that beat inflation, market players will choose to convert their dollars voluntarily to maximize their profits. When the rupee becomes a lucrative asset to hold, draconian administrative mandates naturally become obsolete.

Summary

The ongoing debate in Parliament over the Central Bank of Sri Lanka’s (CBSL) sudden tightening of export proceeds conversion rules highlights a fundamental tension in national policy. While the main Opposition, represented by Dr. Harsha de Silva, warns that forced residual conversions mark a return to “crisis-era” draconian dictates that deter investors, the CBSL’s actions have curbed exchange-rate speculation and stabilised the rupee. This article argues that the general public is trapped in an unnecessary dichotomy because political discourse fails to separate Micro-Pragmatic FX liquidity management from Macro-Structural economic signalling. In my view, by transitioning from regulatory compulsion to institutionalised trust, Sri Lanka can balance short-term currency stability with long-term, export-led growth. This is our aspiration.

Conclusion: Trust as the Ultimate Economic Currency

Ultimately, a country cannot build a competitive, export-led economy on a foundation of legal mandates and constant regulatory interventions. While the Central Bank fulfilled its immediate duty by intervening to break a speculative cycle and defend the rupee, the Opposition’s warnings about investor psychology are valid.

True economic modernisation requires recognising that short-term micro-pragmatism and long-term macro-structuralism are not mutually exclusive. By converting the current restrictive mandates into a transparent, transitional framework supported by aggressive tax digitization, Sri Lanka can move beyond reactionary crisis management. In my view, the ultimate goal of national economic planning must be to cultivate an environment in which local and international capital remains in the country, not because a Gazette mandates it, but because institutional trust demands it.

(The writer, among many, served as the Special Advisor to the Office of the President of Namibia, from 2006 to 2012, and was a Senior Consultant with the UNDP for 20 years. He was a Senior Economist with the Central Bank of Sri Lanka (1972-1993). He can be reached via asoka.seneviratne@gmail.com)

By Prof. Asoka S. Seneviratne

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Features

Complexities in global politics deepen as economic pressures intensify

Published

23 hours ago

2026/08/27

Sahan Weerasooriya

UK Prime Minister Andy Burnham meets Ukrainian President Volodymyr Zelensky in Kyiv. (BBC)

The present offer by the UK to strengthen Ukraine’s defense capabilities in the missile technology field in particular comes as ‘a stitch in time’ and the initiative is also likely to be appreciated considerably by democratic opinion world wide for the possible morale-boosting effect it would have on Ukraine. Besides continuous arms support, the conviction that the world’s frontline democracies are behind it would prove a huge plus in Ukraine’s eyes in its grinding fightback against the Russian invasion.

While continued US support for Ukraine could not be considered ‘a given’ any more, British Prime Minister Andy Burnham’s words during a recent visit to Kyiv that the UK would stand by Ukraine ‘for as long as it takes’ is the kind of assurance that Ukraine needs at present. For, the conflict in Ukraine is essentially a war of liberation conducted by the latter against an invader and deeply at issue here is the upholding of International Law and its foundational concepts, such as national sovereignty and a nation’s right to political self-determination. The world of democracy is of the firm view that the latter ideals cannot be compromised, come what may.

The UK has its work cut out in this connection. It would find it difficult to convince the Trump administration that it should staunchly stand by Ukraine but it could campaign vigorously with the rest of the West and the EU fold in particular to unflaggingly support the embattled and over-run country.

Ukraine has shown an impressive adeptness in using drone technology in particular against her enemy and has even manufactured her own hardware in this respect but using the relevant blueprints handed over by the UK for the manufacture of more sophisticated cruise missiles, for instance, may prove financially difficult, going forward. It is left to be seen whether the UK and the rest of the West who are with Ukraine will continue to be with her, considering their own rising financial constraints.

The latter impediments could only multiply in the future. Oil, gas and energy prices are on the rise and the latter costs are glaringly reflected in kitchens and meal tables the world over. As we go along consumer discontent would steadily intensify and governments, East and West, would need to figure out with considerable rigour and foresight how such disaffection could be ably managed. Failing which, in most democratic societies, the chances are that publics would be out on the streets demanding that their grievances be redressed forthwith.

These rising concerns are reflected in a recent move by some EU governments to consider imposing what is described as ‘a windfall tax’ on the profits specified major oil companies operating within their shores have made in the wake of the US-Israel war on Iran. The rationale apparently is to use such tax earnings to cushion the rising cost of living of their publics and bolster the respective countries’ social expenditure.

In a recent letter to the president of the EU Council the EU governments referred to said, among other things, while drawing attention to the ‘discontent that is growing over the rising cost of living’: ‘A common approach’ is needed that ‘ensures those who profit from the crisis contribute their share to reducing the burden on the general population.’ Meanwhile, Oxfam with reference to the above development is on record as calling for a ‘permanent windfall tax of at least 50% on profits exceeding a 10% return on investment.’

Such are the rising economic pressures on the majority of Western governments. The question to be posed is how consistent they would be in their assistance to Ukraine if they decide consensually to stand by her. The soaring cost of living in the West compels the conclusion that there could be no guarantee that Western assistance to Ukraine, particularly in the defense and security fields, would be of a longstanding kind.

Of particular concern would be the fact that the weapons systems on offer from the UK to Ukraine could be increasingly costly to manufacture going forward. Besides they would need to be manufactured and put into action without delay.

However, these considerations should in no way deflect Ukraine’s supporters from the principled policy stance of defending her to the extent possible. Because at issue is the defense of International Law and the democratic system of government from their enemies; fascism and authoritarian rule.

While during World Wars 1 and 2 the US was with the major democracies of the West, this time around with regard to Ukraine, the US has chosen to be at cross-purposes with them. For instance, in relation to tariff matters and defense expenditure, in the NATO context, the US is pursuing a hard line which puts it at polar opposites with the West. Thus it is no longer possible to talk unreservedly of a ‘Western democratic alliance’. Put plainly, the cause of democratic development has been weakened.

A measure of relief for the supporters of Ukraine in the West could come by way of the upcoming mid-term polls in the US. If the Democratic Party fares well in them the pressure would be on the Trump administration to defer to opposition opinion at home, accommodate the best interests of Ukraine in its West European policy and perhaps even work towards a diplomatic solution to the Ukraine crisis in cooperation with Russia. Accordingly, the Democratic Party would need to put the Trump administration on the defensive, so to speak.

Until such time Ukraine’s Western supporters have no choice but to remain committed to it, ensure its steadfast defense against the invasion and work judiciously towards keeping the economic pressures at home in check.

Interestingly, at the present juncture in international politics the US could be said to be more weak than strong. For example, it has to some extent been militarily humbled by Iran; so much so it is resorting to economic means to keep Iran in check.

In keeping with this strategy, the US has launched ‘a new big wave of anti-Iran economic sanctions’ at the time of writing, aimed at cutting Iran away from all its major income sources. Some of these relate to digital assets, technology, gold, aviation and shipping. The hoped for result is the complete severance of Iran from the US dollar system.

However, while the UK and EU have no choice but to adhere to their policy of backing Ukraine, going forward they would need to dialogue more closely with the US and ensure that it cooperates with them on outstanding questions, such as Ukraine and the strengthening of democracy. The well being of the world is served when the latter aim is pursued.

Features

“Envisioning Sri Lanka: Beyond Recovery”

Published

23 hours ago

2026/08/27

Sahan Weerasooriya

Prime Minister Dr. Harini Amarasuriya opening the event

OPA 39th Annual Conference calls for Sri Lanka to move Beyond Recovery towards Sustainable Transformation

The Orgnisation of Professional Associations (OPA) successfully concluded its 39th Annual Conference, held recently at the Cinnamon Grand Colombo, under the theme “Envisioning Sri Lanka: Beyond Recovery”.

Held under the patronage of Jayantha Gallehewa, President of the OPA, with the leadership and guidance of Tisara De Silva, President-Elect and Chairman of the 39th Annual Conference, the Conference brought together leading professionals, academics, business leaders and representatives of the public and private sectors to deliberate on Sri Lanka’s next phase of national development.

The Inaugural Session, on August 2026, was graced by Prime Minister Dr. Harini Amarasuriya, as the Chief Guest; Andrew Patrick, British High Commissioner to Sri Lanka, as the Guest of Honour; and Murtaza Jafferjee, Chairman of the Advocata Institute, Sri Lanka, as the Keynote Speaker.

In her address, Prime Minister Dr. Harini Amarasuriya emphasised that overcoming the economic crisis alone should not be Sri Lanka’s ultimate objective, stressing that recovery must serve as the foundation for a broader economic and institutional transformation necessary for sustainable national progress. Reflecting on the difficult period experienced by the country, the Prime Minister noted that Sri Lanka had faced significant economic, social and institutional challenges, which had weakened public confidence and created uncertainty about the country’s future.

She stressed that “recovery only provides the foundation” and that Sri Lanka can move forward sustainably only by using that foundation to bring about meaningful transformation.

The Prime Minister observed that the theme of the OPA’s 39th Annual Conference, “Envisioning Sri Lanka: Beyond Recovery,” aptly encapsulated these national aspirations. She emphasised that Sri Lanka’s objective should not merely be to return to the conditions that existed before the crisis, but to forge a stronger national foundation characterised by robust institutions, a resilient economy, high-quality public services and an enabling environment in which every citizen has the opportunity to thrive.

She further underscored that Sri Lanka’s future development cannot be secured through economic growth and physical development alone. She emphasised that the effective mobilisation of the country’s knowledge, skills and professional expertise, is equally essential to achieving sustainable and inclusive national progress

The Technical Sessions held on 12 August 2026 brought together 19 distinguished experts and professionals representing academia, industry, banking and finance, public health, technology, management and business leadership. Their diverse expertise provided a multidisciplinary platform to examine the critical challenges, emerging opportunities and strategic choices that will shape Sri Lanka’s next phase of development, with particular emphasis on economic transformation, institutional strengthening, digitalisation, private-sector growth, human capital and sustainable development.

The deliberations were structured around four principal sub-themes: “Resilient Recovery and Sustainable Economic Development”; “Future Readiness: Innovation & Transformation”; “Policy for Impact: Advancing Equity, Sustainable Living, and National Well-Being”; and “Leadership, Governance and National Responsibility.”

Across these thematic areas, the sessions explored the structural reforms, institutional requirements and policy choices necessary to move Sri Lanka beyond economic stabilisation towards a more productive, competitive, resilient and inclusive economy. The discussions brought together diverse professional perspectives, enabling participants to examine national priorities through economic, technological, industrial, financial, social and governance lenses.

Particular emphasis was placed on the need to move beyond the diagnosis of problems towards pragmatic, evidence-based and implementable solutions. The deliberations recognised that sustainable national progress requires not only sound policies, but also effective institutions, professional competence, innovation, responsible leadership and the capacity to translate policy into tangible outcomes.

The sessions further underscored the importance of collaboration across sectors, recognising that Sri Lanka’s complex development challenges cannot be addressed in isolation. Stronger engagement among Government, private sector, professional associations, academia and civil society was identified as essential to fostering a coherent national response and ensuring that professional knowledge and expertise are effectively translated into policy and action.

Collectively, the Technical Sessions provided a substantive platform for knowledge exchange, critical reflection and forward-looking dialogue, reinforcing the OPA’s commitment to bringing the country’s professional expertise to bear on the task of building a resilient, innovative, equitable and prosperous Sri Lanka.

The OPA expressed its sincere appreciation to Prime Minister Dr. Harini Amarasuriya, the Chief Guest; Andrew Patrick, British High Commissioner to Sri Lanka and Guest of Honour; and Murtaza Jafferjee, Chairman of the Advocata Institute, Sri Lanka and Keynote Speaker, for their distinguished contributions to the Conference.

Much of what the 39th Annual Conference achieved would not have been possible without the leadership, commitment and generous contributions of Jayantha Gallehewa, President of the OPA; Tisara De Silva, President-Elect and Chairman of the 39th Annual Conference; Eng. Ravi Rupasinghe, General Secretary; Dharshana Wijemanne, Treasurer; Bhanu Wijayaratne, Convener & the Chairman of the Session Planning Committee of the 39th Annual Conference Committee, Past Presidents and Office Bearers; Presidents and representatives of Member Associations; members of the Executive Councils and General Forum; and the distinguished Session Chairmen, Resource Persons and professionals who shared their time, expertise and insights in pursuit of the Conference’s shared vision. The OPA remains immensely grateful to all those whose collective contributions enriched the 39th Annual Conference and strengthened its role as a meaningful platform for professional exchange, informed dialogue and national reflection.

Features

Nostalgia for Lankans in Toronto …

Published

23 hours ago

2026/08/27

Sahan Weerasooriya

‘Avurudu Musical Show 2027,’ a uniquely styled musical Avurudu celebration … Ceymphony Band style.

For Sri Lankans living 14,000 kilometres from home, the sound of home has never felt closer — and that’s thanks to one man and his band.

Since stepping into the spotlight, Gamini Hemalal and the Ceymphony Band have turned into the heartbeat of the Sri Lankan community in Toronto.

Their mission is simple: bring the music, bring the memories, bring the people together. And it’s working.

What turned out to be the talk-of-the-town was their intimate musical evening with Sri Lanka’s legendary crooner Sohan Weerasinghe.

Sohan Weerasinghe: Had
everyone on their feet at the
Angus Glen Golf Club, in
Toronto, Canada

It was a ‘full house’ long before the big date. Tickets vanished within days — demand was that overwhelming.

According to those who were there, it was a truly amazing evening. The hall was packed, the energy electric. Sohan didn’t just sing — he owned the stage.

With his velvet vocals, his charm, and that signature style, he had everyone on their feet. The ladies, especially, couldn’t get enough. No wonder they call him “The Ladies’ Man!”

One attendee summed it up perfectly:

“We had so much fun. It is truly a blessing to have our kids around us, enjoying these beautiful moments together. Thank you, Gamini Hemalal, for such a wonderful evening, with an amazing crowd and an incredible atmosphere. Your hard work and dedication truly made it a special night.

“We also need to say a big thank you to the Ceymphony Band for delivering such an outstanding performance. You all were absolutely amazing! Our entire family had a fantastic time, and we truly enjoyed every moment.

Ceymphony Band: Extremely popular in the scene in Toronto

“Wishing you all continued success. Keep up the amazing work, we can’t wait for the next.”

And the next is already on the cards: ‘Halloween Pissu Baila Party 2026,’ on Friday, 30th October, at the famous Angus Glen Golf Club.

Gamini promises a crazy night of baila, music, dancing and Halloween vibes with the Ceymphony Band. Action runs from 8:00 PM to 12:00 midnight, with plenty of prizes to be won.

Gamini Hemalal: Amazing work for the Sri Lankan community,
in Toronto, Canada

Gamini is also putting together a special event, connected with the 2027 Avurudu celebrations — ‘Avurudu Musical Show 2027,’ a uniquely styled musical Avurudu celebration … Ceymphony Band style.

It’s scheduled to be held on Saturday, 10th April, 2027, also at the Angus Glen Golf Club.

Through music, Gamini Hemalal and Ceymphony are doing what diaspora bands do best — they’re shrinking the distance between two worlds.

One baila beat at a time, one full house at a time, they’re making sure that even in Canada, Sri Lankans feel like home.

Yes, there is plenty of action, indeed, for the Sri Lankan community in Toronto, Canada.