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Wednesday October 14th, 2026

Sri Lanka public sector ‘unbearable burden’: Finance Minister

ECONOMYNEXT – Sri Lanka’s public sector which has become an “unbearable burden” on the economy, Finance Minister Basil Rajapaksa said Saturday after bringing a budget proposal to increase the retirement age.

Explaining his maiden budget unveiled in parliament Friday, Rajapaksa said there will be no salary increases for the 1.42-million-strong state sector employees as the government struggled to pay their salaries.

Increasing the retirement age however will nix any chance of trimming the public sector by attrition.

The minister said new recruitment will be carried out only to fill vacancies created by retirees.

However, with the increase of the mandatory retirement age of the public sector by five years to 65, no public servant has to retire till November 2026.

“For at least one more year, there is absolutely no way we can spend public money on government sector employees,” Rajapaksa said.

Sri Lanka’s public sector is regulated expanded unemployed graduates, educated at tax payer funded state universities, who cannot find jobs in productive sectors.

President Gotabaya Rajapaksa after slashing valued added taxes in December 2019 to build a ‘production economy’ hired 53,000 graduates in to the public sector and set up a Multi-Purpose Development Task Force to hire another 100,000 workers who had passed Grade 8 to ‘reduce poverty’.

Related

Sri Lanka to expand public service by over 10-pct in 2020, 53,000 graduates

Sri Lanka to create 100,000-strong multi-task force: minister

In 2020, 86 percent of all taxes collected from the people went to pay for salaries and pensions.

In his budget speech Finance Minister Rajapaksa had allocated an addition 30,000 million rupees to address the salary anomalies of teachers who recently went on strike to press their demands to get what was due to them.

Rajapaksa said increasing the retirement age was a concession to the public sector.

“The public sector has expanded so rapidly that they have become an unbearable (uhu-lun-ner barry) burden. There is no need to give them lozenges. We must honestly accept, that this public sector is a burden (bu-ruck) to the country ,” he said.

“To give benefits to the public sector we have to take money from the public.”

He said there was one public servant for 113 citizens at the time of Sri Lanka gaining
independence from Britain in 1948, but the civil service has expanded and the ratio was now 1 civil servant for 13 citizens.

In 2020 and 2021 Sri Lanka printed money to finance the deficit and also keep rates down and the country is now facing forex shortages, the rupee is under pressure and inflation is rising (COLOMBO, November 13, 2021)

Sri Lanka’s Standard Capital exits loss-making paints subsidiary

ECONOMYNEXT — Sri Lanka listed investment company Standard Capital has disposed of its stake in subsidiary Standard Paints (Pvt) Ltd for a nominal consideration of 1650 rupees, saying the move would improve its financial position as the subsidiary carried a negative equity value.

In a disclosure to the Colombo Stock Exchange, Standard Capital said its board had previously decided on August 24, to either strike off the subsidiary or dispose of its equity stake for a nominal value.

The company subsequently sold its holdings in Standard Paints on September 28, comprising a 65 percent stake represented by 6.5 million ordinary voting shares and 100 percent of the subsidiary’s 10 million preferential shares.

The shares were disposed of for a total consideration of 1650 rupees. (Colombo/Oct14/2026)

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Global borrowing costs rise as bond yields increase: Fitch

Fitch Ratings-London: The recent sharp and widespread increase in government bond yields represents a significant increase in real global borrowing costs.

Bond yields have risen to multi-decade highs in the US, Germany, UK and Japan in recent weeks, as highlighted in Fitch Ratings’ latest Economic Monitor chart pack.

Ten-year government bond yields have risen in major global markets since the previous Fitch-20 Economic Monitor in June. US yields averaged 4.99% in September, up from 4.47% in June; 3.50% from 3.00% in Germany;
5.46% from 5.06% in the UK; and 2.99% from 2.65% in Japan. In Korea there also was a marked increase, with yields averaging 4.45% from 4.18% in June.

The chart pack highlights another notable development: the pick-up in world trade growth, driven by an IT investment boom that has boosted capital goods imports in the US. Trade growth has surged in several countries, including Mexico, Korea, Canada and Indonesia.

The quarterly ‘Fitch-20 Economic Monitor’ (formerly ‘20/20 Vision’) chart pack covers the 20 major economies (the Fitch-20) that are the focus of Fitch’s Economics team’s global macro analysis, and plots five years of high-frequency economic data for 20 variables, with consistent coverage across each country.

‘Fitch-20 Economic Monitor: September 2026’ is available by clicking the link above or at www.fitchratings.com.

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Sri Lanka to get $100mn ADB loan to strengthen skills training

ECONOMYNEXT – Sri Lanka’s cabinet has approved obtaining a 100 million dollar results-based loan from the Asian Development Bank (ADB) to implement a Skills Development System Transformation Programme aimed at strengthening the country’s technical and vocational education and training (TVET) sector.

“The financing package comprises 50 million dollars in regular ordinary capital resources and 50 million dollars in concessional ordinary capital resources,” minister Nalinda Jayatissa said.

The funds are intended to support sector reforms and the development of a more effective skills development system aligned with labour market needs, he claimed. (Colombo/Oct14/2026)

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Fitch rates Sri Lanka Sampath Bank’s Rs10bn debenture issue A(lka)

Fitch Ratings – Singapore: Fitch Ratings has assigned Sampath Bank PLC’s (AA-(lka)/Stable) proposed Sri Lankan rupee-denominated Basel III-compliant subordinated debentures of up to LKR10 billion a final National Long-Term Rating of ‘A(lka)’.

The proposed debentures, which will mature in five and seven years, will be listed on the Colombo Stock Exchange. The bank plans to use the proceeds to supplement its Tier 2 capital base to maintain capital adequacy compliance as well as to support loan book growth.

The proposed debentures will qualify as Basel III-compliant regulatory Tier 2 capital. The debentures include a non-viability clause that states they will convert to ordinary voting shares upon the occurrence of a trigger event, as determined by the Governing Board of the Central Bank of Sri Lanka.

The final rating is the same as the expected rating assigned on 10 September 2026 and follows the receipt of documents conforming to information already received.

Key Rating Drivers

Fitch rates the proposed Basel III Tier 2 debentures two notches below the bank’s National Long-Term Rating of ‘AA-(lka)’. This reflects Fitch’s baseline notching for loss severity for this type of debt and our expectations of poor recoveries. There is no additional notching for non-performance risks, as the proposed debentures do not incorporate going-concern loss-absorption features.

Sampath’s National Long-Term Rating is used as the anchor rating for this instrument because the rating reflects the bank’s standalone financial strength and best indicates the risk of the bank becoming non-viable.

Fitch affirmed Sampath’s ratings on 17 August 2026. See our latest rating action commentary, Fitch Affirms Sampath Bank at ‘AA-(lka)’; Outlook Stable , for the key rating drivers and sensitivities.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of the bank’s National Long-Term Rating will lead to a downgrade of the subordinated debt rating.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of the bank’s National Long-Term Rating will lead to an upgrade of the subordinated debt rating.

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Oman’s OQ Trading wins Sri Lanka LPG deal at Aramco price plus $133.93

ECONOMYNEXT – Sri Lanka’s cabinet has approved the proposal to award the contract for the supply of 420,000 metric tonnes (±20%) of Liquefied Petroleum Gas (LPG) to Oman’s OQ Trading Limited for a period of 12 months commencing 1 January 2027, minister Nalinda Jayatissa said.

The contract provides for the supply of 420,000 metric tonnes (±20%) of LPG, including a guaranteed minimum quantity of 336,000 metric tonnes, at a price of Saudi Aramco Contract Price plus US$133.93 per metric tonne on a Cost, Insurance and Freight (CIF) basis, Jayatissa said.

International competitive bids were invited for the procurement, and 4 bids were received.

“The contract was awarded to M/s OQ Trading Limited, the lowest substantially responsive bidder,” he told reporters. (Colombo/Oce14/2026)

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Sri Lanka stocks continue to slide, ASPI drops 0.14-pct

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange were trending down on Wednesday, nearing the psychological 20,000 mark, CSE data showed, with the benchmark All Share Price Index moving down 0.14 percent.

The ASPI was down 27.26 points at 20,050.22, while the more liquid S&P SL20 was down 0.02 percent, or 0.96 points, at 5,729.14.

Positive contributors to the ASPI were LOLC Holdings (up 3.08 percent at 418.00 rupees), Vallibel One (up 2.21 percent at 87.90 rupees), Asiri Hospital Holdings (up 4.98 percent at 25.30 rupees), Ambeon Holdings (up 3.45 percent at 33.00 rupees), and Haycarb (up 1.55 percent at 197.00 rupees).

Commercial Bank of Ceylon (down 0.25 percent at 198.00 rupees), SMB Finance (flat at 1.00 rupee), Hayleys (down 0.23 percent at 221.50 rupees), and Odel (down 7.41 percent at 10.00 rupees) were top negative contributors.

Market turnover was 318.20 million rupees. Retailing led turnover with 100.89 million rupees. (Colombo/Oct14/2026)

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