Marking a significant milestone in the country’s automotive industry, President Ranil Wickremesinghe today (17) inaugurated the Western Automobile Assembly Private Limited (WAA) vehicle assembly plant in Kuliyapitiya..

The first vehicle to be assembled at the $27 million facility, a 15-seater passenger van, is expected to enter the market by the end of the month. The factory, equipped with cutting-edge machinery designed by global automotive experts, will generate both direct and indirect employment opportunities for local youth. In line with international industry standards, the facility also houses a vocational training institute, offering young people the chance to gain skills that will qualify them for overseas job opportunities.

During the ceremony, President Wickremesinghe unveiled a commemorative plaque and toured the factory, engaging in friendly conversation with staff. In his speech, the President emphasized that no one will be allowed to obstruct projects vital to strengthening the national economy, despite protests. He also noted that although the Western Automobile Factory was initiated in 2015, it lacked the necessary support for timely completion.

President Ranil Wickremesinghe emphasized that his administration is committed to advancing development projects that will benefit the country, noting that significant job opportunities for youth were lost due to the 10-year delay in completing this project, which was initially expected to be finished in two years. He highlighted that the new factory will not only boost the local economy of Kuliyapitiya but also strengthen the national economy.

By Ifham Nizam

Sri Lanka’s economic recovery hangs in the balance as politics threatens to derail critical reforms, well known economist Emeritus Prof. Sirimevan Colombage warns.

Speaking at the launch of the book ‘Reforming Macroeconomic Policies for Stability and Growth: Sri Lanka’s Road to Economic Recovery’ at the Lakshman Kadirgamar Institute, Colombo 07 recently, Emeritus Professor Colombage of the Open University of Sri Lanka stressed the importance of prioritizing sound economic management over political agendas.

According to him, Sri Lanka must focus on reducing the fiscal deficit and encourage foreign investment to achieve long-term economic growth and stability.

Colombage added: ‘Sri Lanka’s economy must be prepared to service its debt repayments by 2028. With a projected growth rate of three per cent in the medium term, this figure is insufficient to significantly reduce unemployment or poverty.

‘It is essential to cut the fiscal deficit to reduce pressure on the domestic capital market and provide financial resources to the private sector, especially in boosting exports. A robust recovery package, is critical to improving the country’s global credit rankings and attracting Foreign Direct Investment (FDI).

‘The IMF’s Extended Fund Facility (EFF) is a key component in reviving the economy. It offers Sri Lanka much-needed “breathing space” to pursue debt restructuring and improve the country’s international image.

‘However, I doubt the existence of the political will to maintain the program, especially in light of the upcoming presidential elections.

‘Sri Lanka’s economic crisis stemmed from years of imprudent macroeconomic policies, particularly between 2019 and 2022, when ill-conceived policy decisions deepened existing imbalances.

‘The 2019 tax cuts, money printing and fixed exchange rates were major triggers for the crisis, resulting in high inflation, capital outflows and a foreign exchange shortage. As a result, Sri Lanka’s debt now stands at 116% of its GDP, with external debt reaching USD 43.3 billion.

‘With the presidential election looming, politically- motivated fiscal policies could jeopardize the country’s recovery. Various candidates have proposed salary hikes and other populist measures, which could undermine fiscal consolidation efforts.

‘Such promises may help win votes but will ultimately fuel inflation and deepen the country’s economic woes.

‘Sri Lanka has a history of “stop-go” economic reforms, where initiatives are often abandoned midway for political reasons.

‘The same fate could befall the current recovery plan. “Good politics is often bad economics.” ‘

‘The Expert Committee on Public Service Salary Disparities recommended an increase in the basic salary of public servants by 24% to over 50% from next January. It is reported that the President has endorsed the proposed salary increase. Other presidential candidates too have followed suit, offering similar or higher salary hikes. This is good politics and bad economics.

‘While such a salary hike may be justifiable to compensate for the rise in cost of living, it is questionable whether the so-called Expert Committee considered its adverse effects on government expenditure, fiscal deficit and more importantly on the macroeconomic policy reforms under the IMF-EFF program. The proposed salary hike, if implemented, would be a discretionary decision that is likely to create pro-cyclical effects, aggravating the economic crisis.

‘Reduction of the fiscal deficit to GDP ratio from around eight percent at present to five percent in 2025 and to 4.2 by 2028 is a major policy target of the recovery package.

‘The proposed salary increase will jeopardise the fiscal consolidation, causing a significant rise in the fiscal deficit to GDP ratio from 2025 onwards.

‘In 2023, the public sector salary bill amounted to Rs. 940 billion. A minimum 24% salary increase, as suggested by the Expert Committee, will incur an additional cost of around Rs. 225 billion to the government.’

Mastercard and Bank of Ceylon today announced their collaboration to launch ‘WellGlobe’, Sri Lanka’s first medical tourism card. The new card is designed to cater to the growing trend of Sri Lankans seeking medical treatment in countries like India and Singapore.

The WellGlobe card is aimed at simplifying medical travel for Sri Lankan patients traveling overseas, providing them peace of mind along with other benefits. The multi-currency travel card will come with 5% discount on in-patient billings at partner hospitals, access to professional medical consultations, assistance in choosing appropriate healthcare facilities, and dedicated support for comprehensive trip planning. Cardholders will be able to avail these benefits through Mastercard’s strategic partner Vaidam, a medical travel assistance platform that connects patients with top medical professionals and hospitals globally.

The introduction of this innovative card comes at a time when medical tourism is gaining popularity in the domestic market due to easy availability of specialized treatment at an affordable cost in countries like India and Singapore.

Sandun Hapugoda, Country Manager, Sri Lanka and Maldives at Mastercard, said, “The launch of this medical tourism card represents a significant step in addressing the evolving needs of Sri Lankan consumers. It integrates Mastercard’s global expertise in payments with Bank of Ceylon’s compelling financial services and Vaidam’s top healthcare assistance to act as a complete solution for cardholders seeking high-quality treatment in India.”