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Real question is not whether SL should go to IMF or not: Verité Research

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‘ Sri Lanka makes the mistake of letting IMF write a plan for the country’

by Sanath Nanayakkare

The real question is not whether Sri Lanka should go to the IMF or not. What is important is going to the IMF with confidence after having analysed the fiscal situation, with a convincing plan, Executive Director of Verité Research Dr. Nishan de Mel said in Colombo recently.

He made this remark at a CEOs Forum hosted by CA Sri Lanka to provide clarity on the current debt situation, whilst also helping the business community gain a better understanding on the government’s strategy and way forward to navigate through the ongoing situation.

State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal, was the guest speaker and the panel session brought together eminent speakers comprising of Governor of the Central Bank of Sri Lanka Professor W. D. Lakshman, Chairman of the Ceylon Chamber of Commerce Vish Govindasamy, [Executive Director of Verité Research (Pvt) Ltd Dr. Nishan de Mel], and Managing Director of Fitch Rating Agency Maninda Wickramasinghe.

Dr. Nishan de Mel further said: “For instance, when you go to a bank with a business idea to take out a loan, the bank says, ‘give me your plan’. But if you get the credit officer to write the plan for you it won’t be appropriate. The mistake Sri Lanka makes is letting the IMF write that plan for the country because the country doesn’t have one. The crux of the matter is; the credit officer shouldn’t write the plan. The country should present the plan and convince the credit officer that the plan has the potential to work out – a plan backed by an analysis that can win the confidence of the lender. That’s the structured way to obtain an IMF facility for Sri Lanka. I do hope that we can take that path.”

“The Central Bank may have a different approach to analyzsng the situation – I think publishing that analysis would be very valid because that is a test of some scrutiny and others would be able to look at it – that is a way to give confidence. I completely accept that there is no one way to analyse the situation and determine the approaches we can take, but it is important to make the chosen approach public.”

“The government and the Central Bank of Sri Lanka (CBSL) are on the right path with regard to reducing the ratio of foreign debt to domestic debt, but the greater reliance placed on domestic financing too quickly would be like running a marathon too fast as it could burn out the accelerated shift.”

“On the other hand, we might not have the option of being too slow on this aspect as rating agencies are downgrading and the markets are observing. Amid this we have to build confidence. These are very concerning which is why I say it is not too late for Sri Lanka to realign its strategy to get out of the problem and to keep its debt sustainable while making sure we won’t run into a liquidity crisis.”

“Verité’s own analysis shows that there are four steps that can make debt repayment more sustainable and a fifth step to avoid a reserve crisis which people are worried about.”

“Number 1; the interest rates on local debt can be no higher than inflation which I think we have probably achieved. The Central Bank has had a larger tolerance for inflation and it will end up in 6.5% range, and interest rates on local debt have been brought down which is an important part of the function. I t will take some time for all the government debt to reflect that lower rate, but that in reality is the right path. However, it’s a cost to society because inflation is costly in terms of real returns from your bank balances or investments.”

“Secondly, interest rates on foreign denominated loans can’t be higher than GDP growth There also Sri Lanka is well placed because even though we talk about having a large amount of commercial debt, the history of concessional debt is so high that our weighted average interest rate on foreign denominated debt is still only 3.9%, and going forward with a growth of about 4%, we can maintain that. Being able to maintain the interest on that percentage rate for foreign denominated loans is favourable for Sri Lanka.”

“Then there are two other conditions that Sri Lanka needs to do more about. One is the primary deficit- that is the deficit after paying interest- which should be less than 60% of GDP growth – that means if the GDP growth is 5%, primary deficit can’t be more than 3%. If we are expecting a lower GDP growth this time; say a growth of 3.3%, then the primary deficit can’t be more than 3%. So we really have to control that and bring it down. And it is very important to report those numbers correctly to give the markets that confidence. This still allows for a budget deficit in the high single digits because our total interest on debt is over 6% of GDP. This is not drastic, but it says that deficit has to be in the mid single digits. If we want to maintain the deficit, we need to be able to manage the upper single digits with a doable plan.”

The fourth is that depreciation of the currency can be no higher than inflation, and that brings us to the fifth step because currency depreciation today is not based on the fundamental mismatch in global crisis vs Sri Lankan crisis. From 2015 to 2019, one of the major important adjustments made was, to bring it to what you call the real exchange rate. Sri Lanka’s exchange rate until 2015 was significantly over valued. Even though depreciation hurt, the adjustment brought stability. That was an important alignment. That alignment is still sort of in place but today because of the uncertainty about the reserves, you see a speculative exchange rate- and that simply puts pressure on depreciation.”, he said.

 

 



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Fertilizer shortages threaten to wither Sri Lanka’s plantation sector output

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A tea plantation in Sri Lanka. (File photo)

The Planters’ Association of Ceylon (PA), the apex body of Sri Lanka’s plantation industry, expressed growing concern over rising prices and limited availability of fertilizer amid the escalation of the crisis in the Middle East.

With the closure of the Strait of Hormuz, shipping traffic through the region is reported to have dropped by 90%. Given that an estimated one-third of global trade in raw materials for production of fertilizer flows through the Strait, these interruptions are already disrupting fertilizer supply chains around the world.

After Russia, Egypt and Saudi Arabia, Iran is the fourth-largest global supplier of urea, the most widely used fertilizer ingredient.

Given the dire implications on domestic agricultural production, the PA commended the Government’s primary focus on safeguarding national food security, and welcomed the fertilizer subsidy for additional crops being increased up to Rs. 18,000. Such measures are part of a broader effort to support the agricultural sector during this period of volatility.

However, the PA cautioned that the implications of another fertilizer crisis extend well beyond direct agricultural impact. Importantly, the next two to four months will have a significant impact on the annual crop yields of the industry. The Association warned that these dynamics could significantly affect balance of payments, inflation, and purchasing power for critical resources like fuel.

The current fertilizer crisis echoes the challenges faced during the 2021 ban, which caused a calamity in the plantation sector. Even after the ban was lifted, it took four years to recover, and just as progress was being made, the current fertilizer issue has emerged.

The PA also highlighted the stress on Regional Plantation Companies (RPCs) and smallholders in particular, noting that the industry was already under significant pressure as result of rising cost of production.

Moreover, the PA noted that only a limited number of companies are authorized to distribute fertilizer, and the PA calls on the government to mitigate these challenges.

Throughout the COVID-19 pandemic, the plantation sector played a crucial role in generating foreign exchange to support the economy, and it is essential that the industry continues to contribute to macroeconomic stability during this crisis.

In a recent news article senior Professor Buddhi Marambe from the University of Peradeniya noted that with paddy cultivation alone needing approximately 98,800 metric tonnes for the Yala season, current stocks cover only about 60% of the total national requirement.

The PA also emphasized the entire plantation industry’s vital role in upholding the economy, particularly in generating foreign exchange via export revenue, and in supporting rural livelihoods.

According to an analysis published on 15 March 2026 by the FAO Chief Economist’s Office, the Gulf region accounts for roughly 30 to 35% of global urea exports, supply chains that have been severely disrupted since the conflict began.

The study found that the farming systems most exposed are those combining high fertiliser application rates with significant dependence on Gulf supply chains, a profile that applies across South Asia, East Africa and parts of Latin America. The FAO analysis projects global fertiliser prices averaging 15 to 20% higher across the first half of 2026 if the disruptions persist, with yield consequences materialising in harvests later in the year and into 2027.(PA)

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Women workers speak out for fair pay, safety and dignity

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Women workers with Rev.Sr. Noel Christine Fernando pledge that they will continue their struggle for a decent wage, better working conditions, safety of workers, healthcare facilities and for a limit to extensive working hours, from the government and employers.

Women workers who gathered at the Shramabimani Centre in Seeduwa to mark World Women’s Day on March 29 demanded a living wage that matches the rising cost of living, decent working conditions, safety of workers, better healthcare facilities and limiting the extensive working hours, from the government and employers.

Free Trade Zone (FTZ) workers urged the lawmakers and their employers to understand the silent tears shed amid the sound of machines.

“We face frequent humiliation and insults within and outside work which a woman cannot bear but we go through them to feed our children, parents and other dependents in our homes, said Shriani Fernando, an employee of a garment factory at the Katunayake FTZ.

Many such sad stories were narrated on the appalling living and working conditions of female workers who have left behind their families, kith and kin to keep the wolf from the door.

“There is no privacy in a ten by ten room shared with other workers who have to walk back to their rooms late night through lonely streets, said Indrani Weerasinghe, a mother who has to feed five mouths with the little wage she earns as a factory employee.

Female workers who are compelled to leave the safety of their homes at a very tender age to support the family fall prey to men seeking opportunities to satisfy their carnal desires.

The predator could either be the employer, landlord, a friend, the partner or a sympathizer with ulterior motives.

“While walking back to our rooms men ask us whether they could give us a lift. When we refuse the offer they pass disgusting remarks, a young worker said.

Speech and hearing impaired workers said that they too are capable of doing any work as others.

They said we have eyes, a good brain, hands and feet to work. We need to be treated like all others instead of attracting verbal sympathies.

Many workers who are victims of sexual exploitation and harassment keep silent to safeguard their jobs.

“We know the outcome if we speak against the unfair treatment by our bosses. If we lose our jobs who will feed our children, said Susumali Dissanayake, a mother of four employed at a garment factory in Gampaha.

What is saddening and gruesome is the act of some workers compensating the low wage or income by offering themselves to fulfill the insatiable sexual appetite of certain men.

Women garment workers in FTZs face severe exploitation, including 16-hour workdays, unachievable production targets, sexual harassment, and hazardous conditions. Many endure poverty, wage theft, and lack of basic facilities, often resulting in Urinary Tract Infections (UTIs) due to poor sanitation and limited bathroom access

Landless female workers in the Gampaha District urged the present authorities to bring an end to their homeless state by fulfilling a fundamental right to live in a house of their own in a decent way.

“The manner in which we are treated sometimes by our landlords is similar to being a slave. Shifting houses each year or two is nothing short of being refugees who have no status and dignity, said A.Shridevi from Walana, Katunayaka.

“We have been living like gypsies moving from one house to another without a permanent address for a long time. What we ask from the government is to give us the title deeds to the houses we are in now so that we have some status and respect, said Shandani Fernando, a member of the Association of Homeless Families in Gampaha.

Unpleasant language

“When we fail to pay the rent by one day we hear so unpleasant language from the landlords and some of us have broken family relations due to misunderstanding while sharing the same house with the siblings, she said.

Rev.Sr Noel Christine Fernando, a prominent rights activist who leads the Sramabimani Kendraya (or Shramabimani Centre) in Seeduwa, a rights group focusing on worker solidarity, particularly within the free trade zones said the battle to secure the rights of workers will go on whichever government is in power.

“It was never a smooth sailing for the Sharmaabimani centre since its start in 1994. However, it waded through high tides, rough waters and stood through thick and thin to be what it is today branching out for every worker to take rest and shelter, Sister Fernando said.

She said it’s these worker’s toil and tears that bring the much needed foreign exchange to the country. We believe this government that came to power through the ballot of the landless people will heed their cry and provide them a permanent house.

Rev. Fr. Sarath Iddamalgoda, core founder and director of Shramaabimani Centre said under whatever condition ‘we musn’t forget the vision and the mission that we are called to ensure justice for the oppressed and the marginalized people’

He said the condition of the landless community in the Gampaha district and in the rest of the country is similar to the estate community who have been living for over 200 years without proper status which reveals the extent of social inequality and discrimination in a nation that is signatory to many UN conventions on right to life and decent living.

“A bottom-top discussion and collaboration with a people-friendly and people-centred administrative mechanism is critical to address the persisting issue of the ‘unknown poor’ in the country whose call for a permanent house has gone unheeded for many decades, he said.

According to the UN an increasing number of people are driven from their homes by crises such as conflict, political instability, climate change, and economic hardship. A record number of people are forcibly displaced and – in an increasingly urbanizing world – displacement is becoming an urban phenomenon.

Meanwhile poverty in Sri Lanka has been rising since the economic crisis in 2022 where many households in the ‘middle income’ bracket have been pushed down to the ‘poor’ segment.

According to the World Bank poverty continued to increase in 2021, and doubled between 2021 and 2022, from 13.1 to 25.0 percent ($3.65 per capita, 2017 PPP) adding 2.5 million people into poverty in 2022.

Eradicating extreme poverty for all people everywhere by 2030 is a pivotal goal of the 2030 Agenda for Sustainable Development.

By Lalin Fernandopulle

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Aitken Spence Travels leads in regenerative tourism

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Aitken Spence Travels has once again reaffirmed its leadership in Sri Lanka’s tourism sector, being recognised as a Category Winner in the Hospitality & Tourism Services sector at the CPM (Chartered Professional Management) Best Management Practices Company Awards 2026 for the third successive year. Achieving a significant milestone, the company was also listed among Sri Lanka’s Top 40 companies for the first time, underscoring its continued commitment to excellence and innovation.

As Sri Lanka’s leading destination management company, Aitken Spence Travels has consistently demonstrated best in class management practices, earning recognition at the CPM awards, which celebrate organisations that uphold high standards of corporate performance, governance, and sustainability.

This year’s recognition reflects the company’s strategic focus on regenerative tourism, an approach that goes beyond sustainability to actively restore and enhance the environmental, cultural, and socioeconomic landscapes in which it operates. By designing travel experiences that create meaningful value for local communities while preserving natural ecosystems, Aitken Spence Travels continues to redefine the role of tourism in a rapidly evolving global context.

Aitken Spence Travels Managing Director Nalin Jayasundera stated, “At ASTL, sustainability is not a standalone initiative, it is central to our strategic direction and governance framework.” This commitment is driven by the continued leadership and dedication of both the Managing Director and the Aitken Spence Group, with the company’s sustainability initiatives closely aligned with Group level policies that ensure strong governance, accountability, and oversight. Notably, Aitken Spence Travels stands as the only destination management company in Sri Lanka to be certified by Travelife and the Global Sustainable Tourism Council (GSTC), in addition to holding ISO certifications, further reinforcing its leadership in responsible and regenerative tourism.

Commenting on this achievement, Chairperson/Chairman of Aitken Spence PLC, Stasshani Jayawardena added “Aitken Spence Travels reflects the broader Aitken Spence Group ethos, where sustainability is embedded into governance and strategic direction rather than as stand-alone projects. This has been an integral part of how our businesses operate, ensuring accountability, consistency, and responsible growth across all our sectors, including travel and tourism.”

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