Business

Iran war threatens Sri Lanka’s fragile recovery; SMEs face “Survival Crisis” – Prof. Rohan de Silva

Published

6 months ago

2026/03/20

Prof. Rohan De Silva President, Sri Lanka Chamber of Small & Medium Industries

Sri Lanka’s already fragile economic recovery—still reeling from the aftermath of the 2019 Sri Lanka Easter Bombings, the pandemic, and the 2022 financial collapse—is now under renewed strain as the ongoing Iran war sends shockwaves through global energy, trade, and financial systems, experts warn.

Chartered Interior Architect and economic commentator Prof. Rohan de Silva cautioned that the Iran conflict is not an isolated external shock but a “multiplier crisis” that could severely undermine Sri Lanka’s recovery trajectory—particularly for small and medium enterprises (SMEs), which form the backbone of the economy.

Energy Shock Rekindles Crisis Conditions

At the heart of the emerging pressure is the sharp escalation in global oil prices and supply disruptions linked to instability around the Strait of Hormuz—a critical artery for global energy flows.

“Sri Lanka, which already spends around USD 4 billion annually on fuel imports, is extremely vulnerable to such shocks,” Prof. de Silva said. “Any disruption in supply chains or price spikes will immediately translate into domestic inflation and reduced economic activity.”

The situation, he noted, could force authorities to revisit emergency measures reminiscent of the 2022 crisis, including fuel rationing, restricted working days, and reduced transport services—directly impacting productivity.

Inflation Surge and Currency Pressures

Rising oil prices are expected to trigger a fresh wave of cost-push inflation, affecting transport, food, and essential goods. Increased war-risk insurance and shipping delays are further inflating import costs, placing additional pressure on the Sri Lankan rupee and already strained foreign reserves.

“The real danger is a re-triggering of balance of payments stress,” Prof. de Silva warned. “Higher fuel import bills, combined with potential declines in remittances from the Middle East and weaker export earnings, could destabilize external accounts once again.”

Sri Lanka’s export sectors are also facing mounting challenges. Tea exports to Iran and Gulf markets risk disruption, while apparel shipments are being delayed due to rerouted shipping lanes and rising freight costs.

“Transit times are increasing by up to two weeks in some cases. That erodes competitiveness and reliability—two key pillars for export markets,” Prof. de Silva explained.

Industrial supply chains are similarly under strain, with delays in raw materials and petroleum-based inputs threatening production continuity across sectors.

However, the most severe impact is being felt by SMEs, which Prof. de Silva described as “financially exhausted after enduring repeated shocks since 2019.”

“These businesses have not fully recovered from the Easter attacks, COVID-19 shutdowns, and the 2022 economic collapse. Now, they are facing a fresh crisis that is simultaneously increasing costs and reducing demand,” he said.

Operating expenses—including fuel, electricity, and logistics—have surged sharply, while constrained transport and reduced working days are limiting both customer access and employee attendance.

“This is a classic margin squeeze. For many SMEs, profits are not just shrinking—they are disappearing,” he added.

Compounding the crisis is tightening access to finance. With interest rates remaining elevated to control inflation, banks are becoming increasingly risk-averse, leaving SMEs struggling to secure working capital.

At the same time, declining household purchasing power is dampening demand, particularly in non-essential sectors such as retail, interior design, and construction-related services.

“Consumers are cutting back. SMEs are losing revenue streams. It’s a dangerous cycle,” Prof. de Silva said.

Export-oriented SMEs are also facing order cancellations and payment delays from Middle Eastern buyers, further squeezing foreign exchange inflows.

Employment and Social Pressures Mount

The SME crisis is already spilling over into the labour market. Businesses are reducing staff, cutting working hours, or halting expansion plans altogether.

“If this trend continues, we could see rising unemployment and underemployment, particularly among youth,” Prof. de Silva warned.

He also highlighted the risk of returning migrant workers due to instability in Gulf economies, which could intensify domestic job market pressures.

A Multi-Shock Economy on Edge

Prof. de Silva stressed that Sri Lanka is now grappling with a cumulative “multi-shock cycle”:

2019 Easter attacks → Tourism collapse

COVID-19 pandemic → Prolonged shutdowns

2022 economic crisis → Currency and fuel collapse

Iran war → External energy, trade, and financial shock

“Each crisis has weakened the resilience of SMEs. What we are seeing now is not recovery, but survival,” he said.

Without targeted intervention, Prof. de Silva warned of widespread SME closures, job losses, and a prolonged delay in national economic recovery.

“The Iran war is amplifying every existing vulnerability in Sri Lanka’s economy. SMEs are at the frontline of this crisis—and without immediate policy support, the consequences could be severe and long-lasting,” he cautioned.

By Ifham Nizam

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Business

Dilip de S Wijeyeratne Deputy Chairman

Published

9 mins ago

2026/09/12

Thilina Walpola

Dilip de S Wijeyeratne, Deputy Chairman, Sampath Bank PLC

Sampath Bank PLC announced the appointment of Dilip de S Wijeyeratne as Deputy Chairman, effective 10th September 2026, further strengthening the Bank’s leadership as it advances its strategic priorities and continues to evolve as a purpose-led, technology-enabled financial institution.

Wijeyeratne brings extensive experience across banking, finance, risk management and compliance, investment banking and treasury, complemented by a strong understanding of corporate governance, strategic planning and financial markets. His breadth of experience and forward-looking perspective will support Sampath Bank’s focus on translating purpose and strategy into sustainable growth, while advancing data-driven decision-making and the intelligent application of artificial intelligence across the organisation.

Wijeyeratne’s association with Sampath Bank spans nearly eight years. He joined the Bank as a Non-Independent, Non-Executive Director in November 2018 and was appointed an Independent Director in August 2019. He subsequently served as Senior Independent Director from May 2022 and continued as an Independent, Non-Executive Director from June 2026. He currently serves as Chairman of the Board Audit Committee and contributes to the Bank’s Sustainability, Human Resources and Remuneration, Treasury, Strategic Planning, Nominations and Governance, and Related Party Transactions Review committees.

A senior finance and banking professional and principal consultant,Wijeyeratne provides advisory services to organisations across the Middle East, Sri Lanka and Australia. His professional career includes senior roles with HSBC Group in Bahrain, where he held responsibility for finance and operations, global markets and treasury, corporate treasury sales and asset and liability management. He subsequently moved into entrepreneurship and advisory services, providing financial and strategic consultancy to private and public sector organisations.

In addition to his responsibilities at Sampath Bank, Wijeyeratne serves as Senior Independent Director of Singer (Sri Lanka) PLC and Hayleys Fibre PLC, and as an Independent, Non-Executive Director of Janashakthi Insurance PLC. His extensive governance experience across these institutions has provided him with broad exposure to financial oversight, risk, strategy and corporate governance.

Wijeyeratne is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka, a Fellow Member of the Chartered Institute of Management Accountants, UK, and a Graduate Member of the Australian Institute of Company Directors. His combination of financial expertise, governance experience and strategic insight positions him to make a significant contribution to Sampath Bank’s continued growth and transformation.

Business

KOKO and Ceylinco Insurance introduce Sri Lanka’s first medical insurance offering

Published

9 mins ago

2026/09/12

Thilina Walpola

KOKO, Sri Lanka’s leading Buy Now, Pay Later (BNPL) platform, has partnered with Ceylinco General Insurance to introduce Sri Lanka’s first customised medical insurance offering designed exclusively around the needs of KOKO customers.

The partnership marks a first for Sri Lanka’s fintech and insurance sectors, bringing together Ceylinco General Insurance’s decades of expertise in health insurance with KOKO’s understanding of its customer community to create a medical protection solution built specifically for the digital lifestyle and financial needs of KOKO users.

Unlike a standard health insurance product adapted for a partner platform, this offering has been developed as a customised value package for KOKO customers, focusing on accessibility, affordability and ease of activation within the digital journey they already use. The policy provides medical insurance cover of up to USD 40,000, offering meaningful protection against hospitalisation, treatment costs and major medical expenses.

Business

National Credit Guarantee Institution Limited issues milestone 2,000th Credit Guarantee to Commercial Bank

Published

9 mins ago

2026/09/12

Thilina Walpola

Dr Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, Chathuranga Abeysinghe MP, Deputy Minister of Industry and Entrepreneurship Development, representatives of NCGIL and S. Ganeshan, Deputy General Manager – Personal Banking at Commercial Bank at the presentation of the 2000th NCGIL guarantee to Commercial Bank

The Commercial Bank of Ceylon has reinforced its market leadership under the National Credit Guarantee Scheme, having disbursed the highest total loan amount among all participating financial institutions.

The milestone was celebrated with the National Credit Guarantee Institution Limited (NCGIL) issuing its 2,000th guarantee to Commercial Bank, in recognition of the Bank’s dominant contribution to the scheme.

Commercial Bank’s participation in the national framework encompasses broad support for micro, small and medium enterprises (MSMEs) across the island, including dedicated focus on women-led businesses through the ‘Liya Shakthi’ scheme launched by NCGIL. With approximately 600 guarantees, nearly a third of all facilities extended under National Credit Guarantee Scheme, Commercial Bank has disbursed loans totalling Rs. 2.97 billion, underscoring its leadership in supporting micro, small and medium enterprises.

Commenting on the milestone,S. Ganeshan, Deputy General Manager – Personal Banking at Commercial Bank said: “Reaching this milestone within such a short period, highlights both the strength of the national framework and the resilience and potential of entrepreneurs across Sri Lanka. As a Bank, we are deeply committed to expanding access to finance through innovative partnerships and tailored solutions that go beyond traditional lending. Our focus is not only on providing capital, but also on enabling sustainable growth for SMEs through advisory support, capacity building and financial inclusion initiatives that create lasting economic impact.”