ECONOMYNEXT – Sri Lanka’s economic growth could slow down between 4-5 percent in the second half of this year due to tight monetary policy and higher prices, Central Bank Governor Nandalal Weerasinghe said.

The Central Bank raised the key monetary policy rate by 100 basis points in May after inflation started to rise from around 2 percent. It jumped to 7.3 percent in July.

“There could be some slowdown in the second half, but still, it could be around within 4-5%. The slowdown is expected because the tight monetary policy as well as the high prices,” Weerasinghe told Bloomberg in an interview on the country’s broader outlook.

“This will have some impact on growth, but it won’t be very adverse because things are settling down now. We think the second half of this year may be around 4-5%, then we will come back to more potential growth, we expect 5% next year onwards.”

The Central Bank held its key monetary policy rates steady last month despite inflation rising, citing that the current policy rates were enough to curb inflation.

The island nation’s inflation jumped to 7.3 percent, its highest since June 2023, the official data showed.

The Central Bank said the rise was primarily due to the government’s IMF-backed decision to implement cost-reflective prices for energy products.

As a result, fuel prices in Sri Lanka jumped more than 50 percent in two months, which contributed to the higher inflation.

However, Weerasinghe said inflation might stabilize around 5 percent if oil prices remain around US$80 per barrel until the end of this year.

“If oil prices remain around $80 a barrel towards the end of this year and next year, then we can manage the situation,” the Governor said.

“If there are any surprises, then obviously we have a challenge. So, what we see is current prediction of around US$80 now is moving around that level. If it remains at level, I think we can manage inflation and we are expecting inflation to come down around our target level of 5% in, say, towards end of this year and early next year.” (Colombo/August 17/2026)

ECONOMYNEXT – Sri Lanka’s rupee closed stronger at 332.00/20 to the US dollar in the spot market on Monday, from 332.75/95 the previous day, while bond yields held broadly steady, dealers said.

A bond maturing on 15.09.2027 closed flat at 9.75/90 percent.

A bond maturing on 15.10.2028 closed flat at 10.15/25 percent.

A bond maturing on 15.12.2029 closed flat at 10.55/65 percent.

A bond maturing on 01.08.2030 closed at 10.75/85 percent, up from 10.70/80 percent.

A bond maturing on 15.10.2030 closed flat at 10.75/85 percent.

A bond maturing on 01.02.2031 closed at 10.85/95 percent, up from 10.80/90 percent.

A bond maturing on 15.01.2033 closed at 11.40/50 percent, up from 11.40/45 percent.

A bond maturing on 15.10.2034 closed at 11.75/85 percent, up from 11.65/75 percent.

A bond maturing on 15.08.2036 closed at 12.05/15 percent, up from 12.05/10 percent.

A bond maturing on 01.07.2037 closed flat at 12.10/20 percent. (Colombo/Aug17/2026)

ECONOMYNEXT – Sri Lanka’s Hemas Holdings, through its subsidiary Atlas Axillia Company, has acquired a 75 percent stake in Twiga Stationers & Printers Limited, a Kenya stationery manufacturer, for 16.2 million dollars.

This is Hemas’ first international acquisition, the company said in stock exchange filing.

“It also positions Hemas with a strong operating platform in Kenya, one of East Africa’s most dynamic consumer markets, with a GDP of over USD 136 billion and a young, growing population of over 54 million.”

Twiga is the owner of well-known stationery and learning brands including “Kasuku”, “CrownBird” and “Envoy”, with regional exports.

“The acquisition strengthens Hemas’ Consumer Brands portfolio and creates meaningful synergies with Atlas Axillia, Sri Lanka’s leading learning brand, particularly in the back-to-school and education-linked consumer segments.”

Hemas stock closed flat at 31.40. (Colombo/Aug17/2026)

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed marginally down on Monday, CSE data showed.

The All Share Price Index was down 0.03 percent or 6.29 points at 21,616.88; while the S&P SL20 closed up 0.41 percent, or 24.62 points, at 6,090.34.

Market turnover was 1.89 billion rupees.

Top positive contributors to the ASPI were Sampath Bank (up 1.75 rupees at 141.75), Dialog Axiata (up 90 cents at 48 rupees), Commercial Bank (up 1.25 rupees at 205.75), Melstacorp (up 1.25 rupees at 192) and PickMe (up 3.25 at 163.50 rupees).

Lee Hedge announced a dividend of 2 rupees per voting share. (Colombo/Aug17/2026)

Fitch Ratings – Colombo – 17 Aug 2026: Fitch Ratings has affirmed Sri Lanka-based Sampath Bank PLC’s National Long-Term Rating at ‘AA-(lka)’. The Outlook is Stable. At the same time, Fitch has affirmed Sampath’s outstanding Sri Lankan rupee subordinated debt at ‘A(lka)’.

Key Rating Drivers
Intrinsic Profile Drives Rating: Sampath’s National Long-Term Rating reflects its own financial strength, which is highly influenced by exposure to the sovereign’s weak credit profile (Long-Term Foreign-Currency and Local Currency Issuer Default Rating (IDR) of ‘CCC+’). The rating reflects predominantly domestic operations and direct and indirect sovereign exposure, counterbalanced by a strong domestic franchise as Sri Lanka’s fifth-largest commercial bank.

Sovereign Profile Shapes OE: The sovereign’s weak credit profile continues to drive our assessment of the banks’ operating environment (OE) score of ‘ccc+’. This reflects predominant exposure to the domestic economic environment and large exposure to the sovereign through government securities and lending to the broader public sector, which links the banks closely to the state’s financial health. Fitch expects the OE to remain broadly supportive; however external headwinds may exert pressure on the domestic OE and thereby, sector performance.

Corporate Lending Gaining Traction: Corporate lending, including mid-sized corporates, continued to dominate Sampath’s loan book, representing 53% of total loans at end-2025 and rising further in 1Q26. We expect this shift to continue, as the bank looks to mitigate downside risks stemming from a weaker OE, which is likely to weigh more on retail and SME borrowers. Cross-border lending should remain a key driver of this shift – at least a quarter of incremental corporate loan growth in 2025 and 1Q26.

High Growth Plans: Sampath’s risk profile remains influenced by its exposure to the challenging OE. Government securities holdings accounted for nearly one-third of total assets at end-2025. Loan growth has also remained strong, expanding by 28% in 2025 and a further 11% in 1Q26. The bank intends to sustain this pace, targeting 2026 growth broadly in line with 2025, driven primarily by the corporate and retail segment. Persistent, rapid balance-sheet expansion could pressure loan quality and liquidity, if not held to consistent underwriting standards.

Asset Quality to Weaken: Sampath’s impaired (stage 3) loan ratio improved to 9.3% at end-2025 (end-2024: 13.5%), with the trend sustained into 1Q26 – largely from loan growth, while new defaults rose only modestly. Nevertheless, the ratio remains among the highest of similarly rated private-sector peers, weighed down by SME defaults. Fitch expects credit impairments to increase moderately over the near-to-medium term amid a challenging OE, although rapid loan expansion should lead to further drops in the impaired-loan ratio.

Profitability to Moderate: Sampath’s operating profit/risk weighted assets (RWA) dipped to 4.4% in 1Q26 from 6.5% in 2025, due primarily to credit costs which accounted for 26% of pre-impairment operating profit. We expect profitability to hold steady in 2026-2027, as higher income from loan growth should be offset by narrower margins and higher impairment charges from new lending. Profitability is supported partly by a rising share of non-interest income, mainly fees and commission income: 21% of total operating income in 1Q26 (2025: 19%).

Capital Buffers Narrowing: We expect the common equity Tier-1 (CET1) ratio to continue to decline from 14.0% (including 1Q26 profit) at end-1Q26, reflecting loan growth, dividend payments and mark-to-market losses on the Fair Value Through Other Comprehensive Income (FVOCI) government securities portfolio. We believe RWA growth and valuation losses as interest rates rise will continue to weigh on capital ratios. Any capital support extended to subsidiaries would have a limited impact on overall capital, given the size of likely injections.

Loan Growth Reducing Liquidity: We expect Sampath’s loan/deposit ratio (LDR) to rise further from 82% at end-1Q26(2025: 78%; 2024: 68%), returning to pre-crisis levels, as the bank pursues strong loan growth. This growth has so far been funded largely by deploying excess liquidity alongside moderate deposit growth. Narrower liquidity buffers mean we expect loan growth to become increasingly deposit-funded. We believe access to foreign-currency term funding is showing early signs of improvement, in tandem with reduced sovereign default risk.

Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Sampath’s National Rating is sensitive to a change in the bank’s creditworthiness relative to other Sri Lankan issuers. A downgrade of the National Rating would most likely stem from a deterioration in Sri Lanka’s sovereign rating, through its influence on the banks’ OE.

A deterioration in key credit metrics beyond our base-case expectations relative to peers would also lead to heavier downward pressure on the National Rating, which is driven by its intrinsic financial strength, independent of any sovereign rating changes.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Sampath’s National Rating is sensitive to a change in its creditworthiness relative to other Sri Lankan issuers. Upside to the National Rating is limited in the near term, due to our assessment of the sovereign rating and OE. That said, an improvement in the sovereign rating may lead to an upgrade of the bank’s National Rating.

OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
SUBORDINATED DEBT

Sampath’s Basel III-compliant Sri Lankan rupee subordinated debt is rated two notches below the National Long-Term Rating anchor. This reflects Fitch’s baseline notching for loss severity for this type of debt, and our expectation of poor recoveries. There is no additional notching for non-performance risks, as the notes do not incorporate going-concern loss-absorption features.

OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
The subordinated debt rating will move in tandem with the bank’s National Long-Term Rating.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria. (Colombo/Aug17/2026)

ECONOMYNEXT – The Indian Cultural Association’s (ICA) third edition of the ICA International Marathon is scheduled to take place on December 13 at Galle Face Green, Colombo, Sri Lanka.

The event is set to bring together runners, fitness communities, corporate teams, and international participants for a certified road-running experience that combines athletic ambition with a sense of community purpose.

The event will feature the 21.1 kilometre half-marathon, the 10 kilometre Challengers Run and the 5 kilometre Family Run, with courses measured and certified under the World Athletics International Measurement Programme in cooperation with the Association of International Marathons and Distance Races (AIMS).

This strengthens Colombo’s positioning on the regional running calendar.

“This certification marks a major milestone for running in Sri Lanka,” said Captain Anirban Banerjee, President of the ICA.

“The ICA International Marathon is about more than crossing the finish line. It is a platform to raise athletic standards, support sports tourism and make a meaningful difference in our communities through clean water and organ donation initiatives.”

The event will award prizes to the top finishers across the 21.1km, 10 km, and 5km race categories.

The 2026 official event T-shirt, designed by Sri Lankan activewear brand Carnage, will add a local identity to the race experience.

The 2026 marathon is supported by the Ministry of Sports, the Ministry of Tourism and the High Commission of India.

“I congratulate ICA for successfully organising two editions of the International Half Marathon in the last two years. The participation of people from all walks of life in Sri Lanka and outside in the previous two editions was excellent,” High Commissioner of India to Sri Lanka Santosh Jha, said.

Proceeds from the event were donated to uplift the lives of 16,000 children living in orphanages in Sri Lanka.

“Our continued partnership with the ICA International Half Marathon Colombo 2026 as Title Sponsor reflects our commitment to supporting platforms that bring people together, promote active and healthier lifestyles, and create positive experiences for the wider community,” Ravi Liyanage, Director/Chief Executive Officer, Janashakthi Life, said.

Beyond the sporting platform, the ICA International Marathon continues to carry a strong social purpose.

Proceeds from the previous edition supported an islandwide clean water initiative, including the procurement of 54 Reverse Osmosis water filtration units for underprivileged schools and orphanages across Sri Lanka.

The units are intended to support access to safe drinking water, with supplier technicians overseeing installation to ensure proper implementation and long-term reliability.

The marathon will also continue its organ donation awareness campaign for the third consecutive year.

With participant consent, runners will receive donor cards with their race kits, encouraging greater public awareness and support for life-saving health initiatives.

Early Bird registration is open until August 31 . Runners, corporate teams and international participants can register at www.icainternationalmarathon.com. (Colombo/Aug17/2026)