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Friday November 13th, 2026

Sri Lanka can improve on 94 position in Economic Freedom Index

Fred McMahon is a Fraser Institute resident fellow and holder of the Dr. Michael A. Walker Research Chair in Economic Freedom. Mr. McMahon will deliver a talk on the  state of Economic Freedom in Sri Lanka on the 12th of October at Advocata Economic Freedom Summit.

By Fred McMahon

As Sri Lanka celebrates the enormous benefits brought forward by four decades of the open economy, Advocata Institute looks back at the economic progress of the country and the benefits that have been passed onto the man on the street.

From 1977 to date Sri Lanka’s economic growth over the last forty years has expanded four and a half fold on a person basis on an inflation-adjusted term. However, despite Sri Lanka opening its doors 40 years ago, the benefits and prosperity would be much greater if the economic freedom of Sri Lankans was increased. In the just released 2017 Economic Freedom of the World Report, produced by Canada’s Fraser Institute, Sri Lanka ranks 94th out of 159 jurisdictions.

Sri Lanka’s Advocata Institute studies and promotes sound economic policy for the nation. Starting October 11, Advocata will hold an innovative conference – Economic Freedom Summit — which I am honoured to attend, to help build increased economic freedom for the people of Sri Lanka.

Sri Lanka’s growth may sound impressive, but consider Taiwan, which has long had a high level of economic freedom and ranks 32nd in the world. Its economy on a per person basis is eight times larger than it was in 1977, almost double the growth of Sri Lanka.

The longer-term effects of economic freedom are even more impressive, leading to greatly increased prosperity. Consider Hong Kong and Singapore, two tiny resource-poor places, but now number one and two in the world for economic freedom.

Singaporeans, averaged over the population, produce 14 times as much wealth per person as Sri Lankans; for Hong Kong, it’s 10 times as much. Taiwanese, with a lower level of economic freedom than Singapore or Hong Kong, but much higher than Sri Lanka, produce nearly seven times as much per person.

Why does economic freedom create such prosperity? Economic freedom is the ability of individuals and families to make their own economic decisions—what to buy, whether to set up a business, where to work or whom to hire, and so on—without interference from government or powerful interests of its cronies.

More than a century of experience has shown that the drive and ingenuity of individuals beats government planning or cronyism hands down in growth and prosperity.

With economic freedom, businesses can freely enter the market and consumers have choices. With a world of choice, every exchange must benefit both parties or the party that would come up short would reject the exchange and go elsewhere. This forces producers to constantly improve price, quality and innovation, driving productivity and economic growth and creating jobs.

The results are amazing, and not just for the rich. In the quarter least free nations globally, the average per capita income of the poorest 10 percent is US$1,100; in the quarter freest nations, the income of the poorest 10 percent is US$12,000, more than 10 times greater. Life expectancy rises from 64 years in the least free nations to 81 years in the freest nations.

The list could go on—over 600 studies have looked at the impact of economic freedom and found improvement in virtually all aspects of life. When people are free to look after themselves and their families, they do a good job.

The Fraser Institute studies economic freedom in five dimensions:

Size of government: When government taxes or spends too much, it reduces the space for free exchange and thus economic freedom. This is the one area in which Sri Lanka does well, but Sri Lankans should still ask whether the money they give the government by the way of taxes is well-spent.

Rule of Law and Property Rights: Everyone, not just the rich and powerful, should be able to depend on the rule of law to protect their property, ensure contracts are fairly enforced, and receive equal treatment in the courts.

Sound Money: Without sound money, inflation eats away at the value of your money and pay.

Free Trade: Sri Lankans should be able to buy from and sell to anyone, anywhere in the world. A small nation like Sri Lanka needs the world as its marketplace.

Regulation of credit, labor and business: Sri Lankans should be able to borrow from and lend to whom they wish; work for and hire whom they wish; start a business, or close it, as they wish.

Sri Lanka scores worst in sound money and freedom to trade, 135th out of 159 jurisdictions in both. Lack of sound money creates uncertainty undermining economic growth, an area to be looked at seriously.

The country’s score in Freedom to Trade is inexcusable. Trade has been the path to prosperity for scores of nations. Sri Lanka must be open to sell to the world. The task of 1977’s opening remains incomplete with such barriers in place such as para tariffs that makes Sri Lanka’s trading regime complex to navigate compared to other economies.

Sri Lanka ranks 92nd in regulation. To create economic dynamism, obstacles to work, business and credit must be removed.

In Rule of Law and Property Rights, Sri Lanka ranks 73rd. This may sound good compared to other areas, but it’s a huge problem because of its key importance to economic freedom. Freedom is not safe unless protected by the law. No nation has reached a high prosperity unless its citizens and their property are protected equally by an efficient and fair rule of law.

The challenges are great for Sri Lanka. Advocata, through research and advocacy, is seeking the solutions to provide a better, more prosperous life for the people of Sri Lanka. Stay tuned.

 

Sri Lanka stocks close down 0.60-pct, dragged by HNB and LOLC

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Friday, CSE data showed, with the benchmark All Share Price Index moving down 0.60 percent.

The ASPI was down 133.22 points at 22,024.18, while the more liquid S&P SL20 was down 1.06 percent, or 67.55 points, at 6,298.02.

The ASPI ended the week up 784.53 points from last Friday.

Positive contributors to the ASPI were Dialog Axiata (up 0.40 percent at 50.20 rupees), Distilleries Company of Sri Lanka (up 0.52 percent at 58.30 rupees), Aitken Spence (up 3.60 percent at 151.00 rupees), Ceylon Tobacco Company (up 1.05 percent at 1,828.50 rupees), and LOLC Finance (up 1.96 percent at 5.20 rupees).

Hatton National Bank (down 1.88 percent at 403.75 rupees), Richard Pieris and Company (down 6.21 percent at 27.20 rupees), LOLC Holdings (down 2.17 percent at 405.00 rupees), Sampath Bank (down 1.91 percent at 154.00 rupees), and Singer (Sri Lanka) (down 2.40 percent at 77.30 rupees) were top negative contributors.

Market turnover was 3.23 billion rupees. Capital goods led turnover with 869.21 million rupees. (Colombo/Nov13/2026)

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Sri Lanka MP slams budget speech for omitting Tamil national question

ECONOMYNEXT – A Sri Lanka legislator has voiced strong disappointment that the President’s budget speech failed to make a single mention of the Tamil national question.

“It is very unfortunate that in His Excellency the President’s speech, there has not been a single word mentioned about the Tamil national question. Not a single word,” Shanakiyan Rasamanickam said.

“A budget speech generally, is a policy direction of the government for the next year. The budget speech is not only a statement of the country’s fiscal position or the economy’s position. It is the country’s, the government’s, plan, or what the government plans to do the following year. That’s a policy statement.”

Former presidents would at least mention the Tamil question even if it was not resolved, he said.

Former President Ranil Wickremesinghe in his speech, in his policy statement, he would mention: “The Tamil national question must be resolved,” Rasamanickam said.

Former Presidents Maithripala Sirisena and Gotabaya Rajapaksa also mentioned that the national ethnic question must be resolved, he added.

“Every President, every country’s Head of State, in their policy statements, have acknowledged the fact that there is an unresolved national issue, the Tamil national question, that it needs to be resolved. Various governments have proposed various mechanisms; none of them have succeeded, but at least it was mentioned.”

This year’s budget made allocations for the Office of Missing Persons, and the Office of Reparations.

“But the domestic mechanism is a mechanism that the victim community has rejected. So you all are allocating money to a mechanism where the victim community is not going to be part of.”

Last year’s budget 1 billion was allocated to be spent on the Trincomalee and Jaffna airports.

“Where was that 1 billion for the Trincomalee and Jaffna airports spent last year?”

“The trajectory of this government, Honourable Deputy Speaker, is worrying to me. It’s really worrying to me. Because if the objective is to say that there is no Tamil national question, if the objective is to say that you all have resolved any ethnic issue that this country faced, then Honourable Deputy Speaker, then I think the Tamil people will teach this government a very, very, very harsh lesson in the future.” (Colombo/Nov13/2026)

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Sri Lanka sells extra Rs6.5bn Treasury bills after auction

ECONOMYNEXT – Sri Lanka has sold 6,500 million rupees of treasury bills offered on tap at an average rate of 9.95 percent, the public debt management office said, bringing the total of bills sold in the week to 85.562 billion rupees.

The issue offered 90 billion.

Total market subscription was 6.5 billion rupees.

The debt office sold a 12-month bill at 9.95 percent.

On Wednesday (11) the debt office raised 79 billion rupees of 3, 6 and 12 month bills after offering 90 billion.

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Sri Lanka Treasury bill yields hold broadly steady, less bills sold

The settlement date is November 13. (Colombo/Nov13/2026)

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Access Engineering Sept quarter group net profit surges 200-pct to Rs4.75bn

ECONOMYNEXT — Sri Lanka’s Access Engineering PLC recorded a group net profit attributable to equity holders of Rs. 4.75 billion for the quarter ended September 30, surging 200 percent from Rs. 1.58 billion a year earlier, interim accounts showed.

Basic earnings per share rose to Rs. 4.08 for the September quarter, up from Rs. 1.58 previously.

Quarterly group revenue expanded 36 percent to Rs. 20.39 billion from Rs. 14.94 billion, underpinned by condominium property handovers — reflected in inventories dropping Rs. 7.69 billion since March to Rs. 35.71 billion — alongside strong automobile sales and steady civil engineering execution.

Cost of sales rose at a slower 27 percent to Rs. 14.34 billion, lifting gross profit by 64 percent to Rs. 6.05 billion and expanding gross margins to 29.7 percent from 24.7 percent.

Other income jumped 144 percent to Rs. 259.9 million, while administrative expenses rose 75 percent to Rs. 1.14 billion, leaving operating profit up 64 percent at Rs. 5.16 billion.

However, finance costs more than doubled, rising 107 percent to Rs. 1.18 billion on elevated group borrowings of Rs. 43.74 billion, partly offset by finance income climbing 302 percent to Rs. 42.2 million.

Share of results from equity-accounted investees rose 122 percent to Rs. 26.7 million, pushing pre-tax profit up 56 percent to Rs. 4.05 billion.

Income tax swung to a net reversal of Rs. 186.6 million from an expense of Rs. 804.1 million, boosted by deferred tax assets on unrelieved losses from a 100 percent enhanced capital allowance claimed by 60 percent-owned radiopharmaceutical subsidiary Access Medical Tracers (Private) Limited.

Total period profit rose 136 percent to Rs. 4.24 billion, with non-controlling interest declining 24 percent to Rs. 164.9 million following last year’s buyout of minority shareholders in Harbour Village (Private) Limited.

No separate exchange gain or loss was itemized in quarterly earnings, though foreign currency translation via associates recorded a Rs. 17.4 million loss in other comprehensive income, alongside USD 16.6 million in corporate guarantees.

Notes also flagged an expected Rs. 1.45 billion recovery from the terminated South Asia Commercial and Logistics Hub project, a Rs. 225 million post-quarter legal settlement already provided for, and a Supreme Court appeal over a 2011/12 PAYE tax ruling.

Group assets stood at Rs. 132.4 billion as of September 30, with net asset value per share at Rs. 46.70, as the Employees’ Provident Fund raised its stake to 5.69 percent.

Access Engineering shares closed at 80.00 rupees at the end of September and are currently trading around 85.80 rupees. (Colombo/Nov13/2026)

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Sri Lanka private sector says timely implementation of Budget 2027 key

ECONOMYNEXT – Private sector body, The Ceylon Chamber of Commerce, said it was encouraged by the broad direction of Budget 2027, noting that it reinforces Sri Lanka’s commitment to economic transformation while maintaining policy continuity, macroeconomic stability, and fiscal discipline.

“This continuity is particularly important as the country seeks to transition from economic stabilisation to a more durable, investment-led growth trajectory.”

The chamber also noted several areas where the Budget could have placed greater emphasis to strengthen the country’s growth prospects.

“In particular, there is a need for a stronger focus on attracting Foreign Direct Investment (FDI), accelerating factor market reforms, particularly in land and labour, and fast-tracking public procurement reforms to improve the efficiency and speed of project implementation.

“More targeted and actionable proposals could have been introduced to unlock the potential of sectors with significant growth opportunities, including tourism, agriculture, IT/BPO and logistics.”

The chamber said the budget contains positive measures aimed at enhancing competitiveness, and external sector resilience, while presenting opportunities for focus on sectors that can accelerate growth.

“A number of the key structural reforms identified in last year’s Budget have been carried forward and strengthened, providing greater certainty and predictability to businesses and investors.

“These include the continued implementation of the Trade National Single Window (TNSW), the phased removal of para-tariffs, the rollout of the Digital ID framework, efforts to expand market access through new Free Trade Agreements (FTAs), the strengthening of one-stop-shop investment facilitation mechanisms, progress on Customs reforms, the expansion of Bandaranaike International Airport (BIA), enhanced financing support for SMEs, and reforms relating to the management of State-Owned Enterprises.”

The CCC said that more than 20 proposals submitted by it have been reflected in Budget 2027.

These include measures to strengthen investor facilitation through the establishment of a professionally managed investment promotion agency; continued efforts to improve trade facilitation and export competitiveness; the Government’s consideration of a successor programme with the International Monetary Fund (IMF); accelerated progress on key legislative reforms; the expansion of digital government services; and the promotion of cashless payments and broader digital adoption. The Budget has also captured several priorities relating to energy security, including the accelerated deployment of Battery Energy Storage Systems (BESS) and investments in fuel storage infrastructure, initiatives to optimize underutilized agricultural land, measures to support the expansion of the digital economy and the IT/BPO sector, and tax reforms to support exporters, including the acceptance of newly VAT-registered exporters as eligible exporters.

“The inclusion of these priorities reflects the value of sustained public-private dialogue and demonstrates increasing alignment between national policy objectives and the needs of a competitive, export-oriented economy.

“The priority now must be effective and timely implementation to translate policy commitments into investment, competitiveness, exports and sustainable growth.” (Colombo/Nov13/2026)

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Sri Lanka stocks trend lower day after budget reading

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange was trending lower on Friday, CSE data showed, with the benchmark All Share Price Index moving down 0.66 percent.

The ASPI was down 146.78 points at 22,011, while the more liquid S&P SL20 was down 0.94 percent, or 59.99 points, at 6,306.

Positive contributors to the ASPI were Access Engineering (up 1.30 percent at 85.80 rupees), LAUGFS Gas (up 3.31 percent at 49.90 rupees), Ceylon Tobacco Company (up 1.13 percent at 1,830 rupees), Ceylon Cold Stores (up 0.80 percent at 126 rupees), and Namunukula Plantations (up 1.79 percent at 68.10 rupees).

LOLC Holdings (down 1.03 percent at 409.75 rupees), Hatton National Bank (down 0.61 percent at 409 rupees), Sunshine Holdings (down 3.81 percent at 30.30 rupees), and Sampath Bank (down 1.91 percent at 154 rupees) were top negative contributors.

Market turnover was 1.55 billion rupees. Capital goods led turnover with 459.57 million rupees. (Colombo/Nov13/2026)

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