Business
Revenue decline puts pressure on govt’s fiscal management
Moves underway to strengthen gross official reserves
Seeking support from IMF ruled out
by Sanath Nanayakkare
As government revenues have fallen below expected levels, fiscal management of the government is under pressure, Ajith Nivard Cabraal, State Minister of Finance, Capital Markets and State Enterprise Reforms said in Colombo yesterday.
He made this remark while speaking at a media briefing held at the Ministry of Finance.
“Although a sovereign bond of USD one billion needs to be settled this month, the actual outflow would be USD 700 million as Sri Lankan citizens own a share of USD 300 million of it. The current reserves are at USD 4 billion. After making this payment, the reserves will technically remain at USD 3 billion. Agreements have been arrived at with People’s Bank of China for a SWAP loan of USD 1.5 billion. In addition, the foreign exchange reserves will have contributions from Bangladesh Bank (SWAP) – USD 200 million, Reserve Bank of India (SWAP) USD 400 million. IMF (SDR allocation) USD 780 million and China Development Bank (Balance Loan) USD 200 million,” he said.
“In the next six months, the Central Bank will purchase USD 500 million from the forex market to consolidate the gross official reserves,” he said.
Further, a number of bilateral discussions are underway including for a USD 500 million syndicated loan while the Central Bank Governor has forecast a decline of imports by USD 700 million. he said.
The state minister said that the government has been able to collect only 34% of the government revenue in the first six months while 48% of the allocated recurrent expenditure has been spent during the period and 30% of the capital expenditure has already been invested in projects.
“Although the exchange rate is Rs. 200 to a USD, further depreciation is possible. The reasons for this are; reluctance of the exporters to convert their forex earnings and importers acting swiftly to import goods to top up their stocks for a longer time than it is necessary,” he said.
Further speaking he said,” The economy weakened from 2015 to 2019. Growth rate declined to 2.3% from 6.8%. Per capita income reported only a slight increase of USD 33 from USD 3,819 to USD 3,852. Gross Domestic Product was up by only USD 4 billion from USD 80 billion to USD 84 billion. Debt to GDP ratio increased to 87% from 72%. The debt stock increased to Rs.13 trillion from Rs. 7.5 trillion. The government’s interest expenditure in proportion to GDP increased to 6% from 4.2%. Due to rupee depreciation during the period, the debt stock rose by Rs. 1772 billion. Sovereign bond interest rate increased to 7.8% from 5.8%. Exports remained at an average of USD 11.1 billion while the trade deficit increased to USD 9.3 billion from USD 7.6 billion. Although sovereign bonds to the tune of USD 12 billion had been issued during the five years, foreign exchange reserved declined to USD 7.6 billion from USD 8.2 billion. The budget deficit increased to 9.6% from from 5.7%. Employed persons reduced to 8.2 million from 8.4 million. Central Bank’s treasury bill holdings shot up to Rs. 75 billion from zero. Rupee to USD exchange rate depreciated by 39% from Rs. 131 to Rs. 182. USD 3,089 million worth of Central Bank reserves were sold to maintain the value of the rupee. If this had not been done, foreign exchange reserves would have remained at USD 10.7 billion. The country’s credit rating downgraded to B (Negative) from BB- (Stable) – four notches during the period. Foreign debt versus domestic debt shifted to 48:52 from 42:58. From 2015 to 2019, government revenue was up by 65%, but as interest rates were high amid low growth, that advantage slipped through.”
“When Covid-19 hit Sri Lanka in 2020, in spite of the resilience some sectors of the economy had shown, the overall economy further weakened. As the economy had been completely shut for 66 days, it led to a negative growth of 3.6% while per capita income declined to USD 3,682 with the lowering of GDP to USD 81 billion. Debt to GDP increased to 101% from 87% while the debt stock increased to Rs.15.1 trillion from Rs. 13 trillion, therefore, interest expenditure was up by 6.5% to GDP in spite of low interest rate.”
Due to rupee depreciation, the debt stock increased by Rs. 356 billion. The repayment of USD 1 billion sovereign bond, the loss of income from Tourism around USD 3.5 billion, foreign exchange reserves fell to USD 5.7 billion from USD 7.6 billion. The impact of Covid-19 saw a spike in expenditure by about Rs. 100 billion while the government revenue declined, hence the budget deficit increased to 11.1%. The rupee depreciated 2.6% versus the USD to Rs. 187. However, the Central Bank bought USD 283 million from the forex market, and in 2021, the Bank has bought USD 130 million up to now. While the credit rating was downgraded to CCC(Stable) foreign debt to local debt ratio turned favourable by becoming 40:60 from 48:52. Low interest rate in 2020 brought some relief to the overall economy while the government also gained from it. Although exports were down to USD 10 billion, thanks to import controls, the trade balance was reduced to USD 6 billion.”
The state minister said that although there is a challenge to managing the economy, the government would not run away from its responsibility and would restore it a point where there is space for Sri Lanka to make a favourable turnaround with expected non-debt creating inflows to the Port City, Hambantota Industrial Zone, Pharmaceutical Manufacturing Zone, and last but not least with Sri Lanka Tourism reopening its boarders for the lucrative industry as the vaccine rollout is progressing well.
He empasised the fact that the government would not look to the IMF to get any help from it as those who recommend it want the government to get into difficulty as we would have to fall in line with IMF’s stringent economic recipe and conditions which come in hand in hand with their support.
DFCC Bank PLC has entered a partnership with The Ceylon Chamber of Commerce, to formally integrate Ceylon Chamber-led macroeconomic and sectoral intelligence into its service model. This strategic collaboration is set to enhance both internal expertise and client-facing value, reinforcing DFCC Bank’s position as the most insight-driven and customer-aligned bank in the country.
By harnessing the Ceylon Chamber’s deep research capabilities, DFCC Bank will gain privileged access to quarterly macroeconomic outlooks, sector-specific insights, and dynamic market intelligence. These deliverables will inform decision-making across the organisation—from strategy formulation to client advisory—ensuring DFCC Bank teams remain ahead of the curve in responding to economic developments and customer needs.
Through this partnership, the Ceylon Chamber will provide briefings on key economic indicators such as GDP performance, inflation trends, policy shifts, and global economic movements, alongside industry analyses tailored to DFCC Bank’s client sectors. These insights will not only serve internal capability-building but also enhance client conversations—offering DFCC Bank customers access to curated intelligence through strategic reviews and presentations.
Thimal Perera, CEO of DFCC Bank, commented:
“As we sharpen our focus on delivering value beyond banking, this collaboration with the Ceylon Chamber of Commerce gives us and our clients a distinct advantage. Timely economic insights and sector intelligence will strengthen the relevance and depth of our engagements – enabling us to support customers with more informed, responsive financial solutions that align with the realities they face.”
Buwanekabahu Perera, Secretary General and CEO of the Ceylon Chamber stated:
“Our goal is to take economic intelligence beyond boardrooms and make it practical and actionable for businesses. Partnering with DFCC Bank allows us to do exactly that, by ensuring that insights translate into better advice, faster decisions, and stronger outcomes for businesses.”
The official signing of the Memorandum of Understanding took place on 12 June 2025, symbolising a shared vision for smarter financial ecosystems in Sri Lanka.
In an impassioned call to action, Deputy Minister of Industry and Entrepreneurship Development, Chathuranga Abeysinghe, declared that Sri Lanka was ready to “unleash a new era of startup-driven growth, as he kicked off the prelude to Disrupt Asia 2025 — a four-day mega-event that aspires to redefine the nation’s digital economy and transform it into South Asia’s next innovation hub.
“We are no longer waiting for the future. We are building it, right here, starting now, said Abeysinghe. “With Disrupt Asia, we aim to place Sri Lanka firmly on the map as a gateway to South Asia, the Gulf, and Southeast Asia for global investors, innovators and disruptors.”
Scheduled to run from September 17–20 in Colombo, Disrupt Asia 2025 is more than just another tech event. Backed by the Ministry of Digital Economy and the ICT Agency (ICTA), the platform is being positioned as the national accelerator for startups and innovation—bringing together universities, industry leaders, policymakers, investors, and the general public into one unified ecosystem.
The event is anchored in Sri Lanka’s broader ambition to grow its digital economy from a current estimated transaction volume of USD 3–5 billion to USD 15 billion by 2030. To achieve this, the government is rolling out a multi-pronged strategy: a USD 50 million Fund of Funds to boost venture capital availability, the creation of a Virtual Special Economic Zone (SEZ) and new equity pathways for startups through the Colombo Stock Exchange.
Deputy Minister Abeysinghe noted that the government was working with financial advisory firm KPMG to address longstanding taxation and regulatory hurdles, including the double taxation of venture capital funds and limited frameworks for foreign co-founders.
“These policies are no longer in the shadows, he stressed. “They are being debated, fixed and aligned so that startups can thrive in a globally competitive landscape.”
Heminda Jayaweera, Executive Director at TRACE Sri Lanka, the ecosystem partner and host of the Innovation Festival on September 19, called the event “a confluence of creativity, code, and capital.”
TRACE Expert City will host more than 50 interactive product demos, themed exhibitions spanning HealthTech, AgriTech, FinTech, AI, Tourism, and GovTech, and immersive installations aimed at both the general public and young innovators.
Jayaweera emphasized the importance of creating an “incubation ground” that serves not just the tech elite, but also students, small-town entrepreneurs, and policymakers. “This is where ideas collide and evolve,” he said. “It’s where we disrupt the status quo.”
Sandun Hapugoda, Country Manager of Mastercard Sri Lanka and Maldives, added a private sector perspective to the conversation. “This is not just another tech expo, he said. “It’s a serious commitment to transform Sri Lanka into a digitally inclusive, investor-attractive economy.”
Mastercard’s participation as a strategic partner underscores the importance of collaboration in achieving these goals. “Innovation doesn’t happen in silos, Hapugoda noted. “We are working with entrepreneurs, policymakers, and financiers to build scalable solutions.”
Mastercard’s support extends to FinTech integrations, digital commerce enablement, and cybersecurity solutions — all crucial building blocks for a vibrant digital economy.
Prajeeth Balasubramaniam, Managing Partner at BOV Capital and founder of LAN, said the platform was already working to secure listings for at least two promising startups on the Colombo Stock Exchange. “Equity is not a foreign concept. We’re just late adopters. But now, we’re building the runway, he said.
Disrupt Asia 2025 will also host a “Sundowner Cultural Showcase” that celebrates Sri Lanka’s creative and artisanal identity. Featuring curated culinary offerings from Asaya Sands, gem exhibitions, and artisanal tastings, the event aims to build a bridge between innovation and tradition.
“This is more than a networking mixer, said event curator Ruwani Fernando. “It’s a statement. Sri Lanka is a land of both ancient wisdom and future-focused solutions.”
By Ifham Nizam
Business
Sampath Bank pioneers SL’s standardised API banking platform, redefining transaction banking
Sampath Bank has set a new milestone as the first bank in Sri Lanka to launch a standardised Application Programming Interface (API) platform. This revolutionary move redefines corporate banking by simplifying and automating intricate financial processes for businesses of all sizes, reflecting the Bank’s steadfast commitment to providing agile, technology-driven solutions for its expanding base of corporate and SME clients.
API banking fundamentally transforms traditional banking by exposing core functions and data as web services accessible to third-party applications. This approach creates a more interconnected and flexible ecosystem that enhances convenience, encourages innovation and improves efficiency in delivering and consuming financial services.
The new platform empowers businesses to seamlessly integrate Sampath Bank’s core banking capabilities into their internal Enterprise Resource Planning (ERP) systems. This integration supports faster supplier payments, streamlined collections, real-time balance inquiries and trade-related transactions, while maintaining established approval chains and audit controls inherent in corporate systems.
Driven by a deep understanding of digitalisation’s transformative potential, the development of this platform aims to empower corporate decision-makers by saving time and increasing visibility across financial operations. As Mr. Sanjaya Gunawardane, Chief Strategy Officer at Sampath Bank, explains, “There is no longer a need to spend hours managing physical payments or manually reconciling bank records. This platform empowers businesses, enabling them to configure, validate and execute transactions securely through a single interface. Our goal was to deliver an end-to-end solution that not only boosts efficiency but also transforms the overall banking experience. This is part of our ongoing commitment to introducing cutting-edge technologies to reshape the Sri Lankan business landscape.”
Addressing a critical challenge in financial supply chain management, this innovation offers companies a suite of ready-to-integrate APIs, automated testing tools and rapid onboarding processes that make it possible to go live within days rather than weeks.
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