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Sri Lanka economy managed in ‘alternative’ way: CB Governor

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ECONOMYNEXT – Sri Lanka’s economy is managed through new policies in an ‘alternative way’ but critics are using the downturn seen in the second quarter of 2020 to make, doom and gloom predictions for 2021, Central Bank Governor W D Lakshman said on Friday.

The alternative policy now being deployed seemed to be criticized based on a political or ideological basis in his view, he said.

It was important to have a positive view he said. A pick-up in business confidence has been seen in the purchasing managers’ index.

 

Alternative Policy

“It is important to note the government’s determination to move away from the, so far, heavy dependence on imports for foodstuffs,” he said. “That is indeed a really significant long term policy approach despite in the short run there is an adverse impact in the prices.”

Sri Lanka was already growing enough turmeric he said. Sri Lanka banned the import of turmeric and as prices shot up to 200 rupees for 50 grams (about 4,000 rupees a kilogram) smuggling commenced.

But now nobody is talking about turmeric, he said.

The Navy was deployed to stop smuggling. Sri Lanka had seen similar smuggling in the 1970s.

Most negative analysis and critiques were based on the performance of the economy in the second quarter of 2020, but conditions for 2021 were different, he said.

The country was now using limited closures of areas instead of national lockdowns and business activity was picking up with people starting to move around.

Tourism, which was the most badly hit was also now starting to unlike in 2020, he said.

The government was moving towards a mass vaccination campaign which would also help.

The International Monetary Fund has forecast global economic growth to pick up to around 5.5 percent in 2021.

 

Pick Up

Gross domestic growth of 5.5 to 6.0 percent in 2021 was expected, recovering from a 3.9 percent contraction in 2019. The low base will also help the recovery number, Governor Lakshman said.

Per capita GDP is expected to be 4,000 dollars.

Inflation of 4-6 percent is targeted in 2020. Private credit is expected to grow by 850 billion rupees.

There were challenges in the fiscal side and external sector. But we will repay debt and maintain our unblemished record of debt repayment.

Year end gross official reserves were targeted at 5.5 billion US dollars. Negotiations were underway with multilateral lenders, and foreign central banks as well as commercial banks for credit and swaps, details of which would be announced as they are finalized, he said.

It was not correct to simply add debt repayments and compare against foreign reserves. The foreign share of central government debt was expected to fall to 35 percent in 2021 according to Central Bank projections. In 2020, foreign loans were repaid partly by using foreign reserves and selling Treasury bills to the Central Bank. Despite stronger private credit a 500 million dollar surplus in the current account is also forecast.

 

Inflows in 2021

Exports are targeted tat 13 billion US dollars, with apparel at 6.0 billion USD, tea 1.5 billion dollars, gem and jewelry 1 billion dollars. Imports are expected to be 17 billion USD. Among services, IT/BPO is expected to be 1.75 billion USD and tourist earnings 1.75 billion USD.

Worker remittances would be around 7.5 billion US dollars and foreign direct investments would be about 2.0 billion US dollars. Port City lease sales would bring in an additional billion US dollars.

Sri Lanka had recorded a surplus in the current account for part of 2020 for the first time in decades.

In 2020 up to October the government had repaid foreign debt on a net basis. Up to August 2020, private credit was negative, and the second quarter GDP was negative, which will also help create a current account surplus, analysts say.



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PM holds bilateral meetings in the Philippines to strengthen cooperation in Education, Skills Development, and Agricultural Research

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Prime Minister Dr. Harini Amarasuriya held a series of meetings with key Philippine institutions during her official visit to the Philippines from 09–11 March 2026, focusing on strengthening cooperation in education, higher education, technical skills development, and agricultural research.

On 09 March, the Prime Minister met with the Secretary of Education of the Philippines, Sonny Angara. Discussions focused on strengthening bilateral cooperation in the education sector, including sharing best practices in education policy, teacher training, curriculum reforms, and digital learning initiatives. The Prime Minister also briefed the Philippine delegation on Sri Lanka’s ongoing education reforms aimed at modernizing curricula and integrating technology into learning.

The Prime Minister also met with a delegation of the Commission on Higher Education of the Philippines (CHED), led by Chairperson Dr. Shirley C. Agrupis. Discussions centered on the development of higher education in both countries, with particular attention to research collaboration, academic partnerships between universities, student and faculty exchanges, and strengthening quality assurance frameworks.

In a separate meeting, the Prime Minister held talks with the Secretary and Director General of the Technical Education and Skills Development Authority (TESDA), Jose Francisco B. Benitez. The discussions focused on cooperation in technical and vocational education and training (TVET), including knowledge sharing, institutional partnerships, and possible alignment of qualifications frameworks to enhance skills recognition and workforce mobility.

The meetings reaffirmed the commitment of Sri Lanka and the Philippines, along with international research institutions, to strengthen collaboration in education, skills development, and agricultural research in support of sustainable development and human capital growth.

The Sri Lankan delegation included the Ambassador of Sri Lanka to the Philippines, Dr. Chanaka Talpahewa, and Senior Assistant Secretary to the Prime Minister, Ms. P.H. Piyumee Bandara.

[Prime Minister’s Media Division]

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Heat Index at Caution Level in the Western, Sabaragamuwa and North-western provinces and Monaragala district.

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Warm Weather Advisory issued by the Natural Hazards Early Warning Centre of the Department of Meteorology at 3.30 p.m. on 09 March 2026, valid for 10 March 2026.

The public are warned that the  Heat index, the temperature felt on the human body is likely to increase up to ‘Caution level’ at some places in Western, Sabaragamuwa and North-western provinces and in Monaragala district.

The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body.

This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.


Effect of the heat index on the human body is mentioned in the above table and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.

ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated.
Dress: Wear lightweight and white or light-colored clothing.

Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.

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Prof. Dunusinghe warns Lanka at serious risk due to ME war

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Prof. Priyanga Dunusinghe

Prof. Priyanga Dunusinghe has warned that Sri Lanka could face a catastrophic situation due to a rapid and sharp drop in revenue caused by the escalating Gulf war.

Appearing on Derana ‘Big Focus’ yesterday, the Professor in Economics in the Department of Economics, and Head – Department of Information Technology, University of Colombo, Dunusinghe said that that drop in remittances from the Middle East, as well as exports, should be examined against the backdrop of runaway oil prices.

Dunusinghe said so responding to interviewer Pasan de Silva who sought expert opinion on the crisis. Referring to continuing Iranian retaliatory attacks on Gulf countries hosting US military bases, the academic pointed out that approximately one million Sri Lankans were employed in the region.

Global oil prices rose to over $100 per barrel on 08 March, for the first time since the Russia-Ukraine war erupted in February 2022. By noon prices were around USD 115 per barrel.

If a consensus couldn’t be reached soon, the consequences for Sri Lanka would be devastating, Dunusinghe said, suggesting that the government should seriously consider, what he called, a relatively small but immediate fuel hike to cushion the impact of future fuel price hikes.

Dunusinghe explained that in addition to the drop in remittances from the Middle East, Sri Lanka could lose employment opportunities in the war devastated region. Responding to the interviewer, the Prof said that if the situation further deteriorated the government would have to face the daunting challenge of evacuating Sri Lankans from the Middle East.

Referring to the devastating impact of Cyclone Ditwah, Dunusinghe pointed out that in terms of the agreement with the IMF, finalised in 2023, the debt repayment would have to be recommenced in 2028. The new Middle East war has placed the country in an extremely difficult situation, Dunusinghe said, while emphasising the responsibility on the part of the government to address the issues at hand immediately.

The rapidly changing oil markets indicated that regardless of optimism expressed by the US and Israel of swift victory, the ground realities were quite different, the academic said.

By Shamindra Ferdinando

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