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Monday October 19th, 2026

Sri Lanka’s new “diplomatic” PM starts foreign aid talks amid political stability concerns

ECONOMYNEXT – Sri Lanka’s newly appointed prime minister Ranil Wickremesinghe on Friday started discussions over foreign aids for the crisis-hit island nation’s economic recovery, his office said.

Wickremesinghe, 73, who was handpicked for the job by President Gotabaya Rajapaksa on Thursday, held preliminary talks with foreign envoys representing India, Japan, United States of America, Britain, and China on Friday and the discussions focused on rapid economic recovery in the next few months.

His office did not give any further details on the foreign aid consortium.

“He is trying to get some foreign funding through a donor conference,” an aide close to the prime minister told Economy Next.

Sri Lanka is facing its worst financial crisis since the independence from British colonial rulers in 1948.

It has already suspended its 51 billion US dollar worth foreign debt repayments from April 12 as the island nation has run out of dollars even to buy the essentials for its 22 million people.

Amid extended power cuts due to lack of fuel imports, the 84.5 billion US dollar economy’s people face acute shortage of fuel, medicines, food, cooking gas, and milk powder mainly due economic mismanagement by President Gotabaya Rajapaksa’s ruling Sri Lanka Podujana Peramuna (SLPP).

Wickremesinghe’s appointment came amid continuous protests by hundreds of people near presidential secretariat demanding Rajapaksa, his brother and then Prime Minister Mahinda Rajapaksa along with the SLPP government to step down.

Mahinda Rajapaksa resigned on Monday (09) after his supporters brutally attacked hundreds of unarmed and peaceful protesters near both presidential secretariat and Temple Trees, the prime minister’s official residence, who had been demanding the resignation of the both leaders.

Diplomatic Hiccups

Wickremesinghe’s appointment also came when diplomatic relations with many foreign countries have been severed time to time under Rajapaksa.

Senior government officials have told Economy Next despite repeated request by then foreign minister G L Peiris, many countries declined to respond to his calls after a series of “cardinal errors” in international diplomacy.

Then prime minister Mahinda Rajapaksa unilaterally cancelled 500 million US dollar East Container Terminal (ECT) project which was already signed among India, Japan, and Sri Lanka in 2018.

Similarly, President Gotabaya Rajapaksa unilaterally canceled a Japanese-funded 1.5 billion US dollar Light Railway Transit (LRT) project connecting the commercial heart of capital Colombo to suburbs even after the project was under implementation.

President Rajapaksa also canceled a 480 million US dollar grant from the U.S.-based Millennium Challenge Corporation (MCC) given for rural infrastructure projects. He rejected it on the advice of an expert panel report which said based on the current status of countries which had implemented the MCC granted projects, the fate of those countries is tragic. Sources from US embassy in Colombo, however, had said contents of the expert panel report on the MCC grant was exaggerated and based on unfounded facts.

Rajapaksa government’s close relations with China also led other countries to have a “minimum level” of diplomatic relations with Rajapaksas in the past, officials from the island nation’s foreign ministry have told Economy Next.

China helped Rajapaksas with billions of US dollars in loans for post-war infrastructure between 2010 and 2015 when Mahinda Rajapaksa was the president. But many of the projects yet to give a sizable return on investment to repay the loans, which many Western nations say as “debt trap” and contributed to the country’s debt burden.

However, President Rajapaksa has said China had never dragged Sri Lanka into a debt trap.

Political Maneuvering  

The Rajapaksa government also had issues with the European Union on some commitment it had asked to fulfill in return of GSP plus, a trade concession which is annually worth over 500 million US dollars and helped the South Asian island nation’s top exports, garments.

The trade concession was signed in 2016 under the previous government, but Rajapaksa government was hesitant to implement some commitments including removal of four-decades old anti-terrorism law.

When the EU raised the issue, some members of Rajapaksa government publicly said the country cannot compromise the people’s mandate to continue the trade concession. However, the downfall in the economy compelled the government to engage with the EU and finally amend the anti-terrorism law.

The Rajapaksa government also backtracked three renewable energy projects granted to a Chinese firm in the Northern islands after Indian raised security concerns. The Chinese firm was chosen via an internationally accepted bidding process. However, Rajapaksa government unilaterally withdrew the project awarded to China, also unilaterally which resulted in China having reservations on financially assisting Rajapaksa government.

Sri Lanka’s conduct in human rights also has raised international concerns.

Former Finance Minister Basil Rajapaksa gave a liquefied natural gas (LNG) project to a US-based New Fortress Energy in an unsolicited manner while the authorities had received international bids through an internationally accepted process.

As a result of all of these diplomatic hiccups, many countries had hesitated and reservations to financially assist Rajapaksa amid many corruption allegations.

“Diplomatic PM”

Retired Sri Lankan diplomats said the new prime minister stands out in his diplomatic ways of handling the issues.

“He is a diplomatic prime minister. He knows whom to access internationally for what and when,” for retired career diplomat told Economy Next.

“This is why you see all these diplomats meet him just within 24 hours.”

Wickremesinghe in 2002 proved his ability in managing a crisis hit economy.

The island nation’s economic growth contracted in 2001 after Tamil Tiger rebels who demanded for a separate state within Sri Lana destroyed the only airport and complete fleet of state-owned SriLankan Airlines.

Wicktremesinghe became the prime minister after winning snap polls in December 2001 and approached international partners to help the country’s economy to recovery.

His long term efforts helped him to organize ‘Tokyo Donor Conference’ on June 10, 2003 which saw the participation of 51 countries and 21 international organizations.

At the end of the conference, Wickremesinge who personally participated in the event got pledges of over 4.5 billion US dollars for reconstruction and development of the entirety of Sri Lanka.

Sources close to Wickremesinghe said the plan was to have some immediate funding to ensure essentials which are in shortage for the public now.

“Once that is dealt with, his plan is to focus on the debt restructuring and IMF programme,” he told Economy Next asking not to be named.

However, many analysts say it may not be as easy as Wickremesinghe thinks.

Undiplomatic Politician

The new prime minister is seen as a stubborn and elitist leader by his own center-right United National Party (UNP) members.

Already most of the opposition political parties have said they will not support his leadership in the parliament as majority of them consider it as against the people mandate.

Some critics also see his appointment as a way out for Rajapaksas to buy time for them to evade possible prosecutions demanded by most people over the corruption charges and wealth accumulation.

Wickremesinghe’s UNP for the first time in its history failed to win any seat at the 2020 parliamentary polls. He also personally got defeated. However, he entered the parliament through a bonus seat in the 225-member legislature.

Many opposition parties including Samagi Jana Balavegaya (SJB), the Marxists Janatha Vimukthi Peramuna (JVP)-led National People’s Power, and Sri Lanka Freedom Party (SLFP) have declined to back him in the parliament and rejected his request to accept cabinet ministerial portfolio.

President’s SLPP has pledged support to Wickremesinghe, but political analysts say the new prime minister may need support of some opposition members for parliamentary majority.

Many parliamentarians see him as a leader who does not want to listen to their views, some opposition law makers have said.

Wickremesinghe wants the parliamentary majority for a new budget including some tough economic, fiscal, and public sector reforms to ensure a loan from the International Monetary Fund and to go ahead with foreign debt restructuring plans. (Colombo/May14/2022)

Sri Lanka rupee closes weaker at 331.60/70 to US dollar spot, bond yields higher

ECONOMYNEXT – Sri Lanka’s rupee closed at 331.60/770 to the US dollar in the spot market on Monday, weaker from 331.25/35 the previous day, while bond yields closed higher, dealers said.

A bond maturing on 15.09.2029 closed at 11.10/25 percent, up from 11.05/15 percent.

A bond maturing on 01.08.2030 closed at 11.50/60 percent, up from 11.40/50 percent.

A bond maturing on 15.10.2030 closed at 11.65/75 percent, up from 11.50/55 percent.

A bond maturing on 01.02.2031 closed at 11.75/80 percent, up from 11.55/65 percent.

A bond maturing on 15.12.2032 closed at 11.90/12.10 percent, up from 11.80/90 percent.

A bond maturing on 15.01.2033 closed at 12.25/30 percent, up from 11.95/12.05 percent.

A bond maturing on 15.06.2034 closed at 12.40/50 percent, up from 12.20/25 percent. (Colombo/Oct19/2026)

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Sri Lanka shares close down on Monday; ASPI falls 0.62-pct

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Monday, CSE data showed, with the benchmark All Share Price Index falling 0.62 percent.

The ASPI was down 125.63 points at 20,059.42, while the more liquid S&P SL20 was down 0.51 percent, or 29.36 points, at 5,709.47.

Raynal Wickremeratne, Head of Research and Strategy at NDB Securities, noted that market turnover remained low, with local sentiment reflecting the recent volatility and declines across regional Asian markets.

Positive contributors to the ASPI were Watawala Plantations (up 2.43 percent at 46.40 rupees), Richard Pieris and Company (up 1.54 percent at 26.40 rupees), Ceylon Cold Stores (up 0.62 percent at 122.00 rupees), and Commercial Bank of Ceylon (up 0.13 percent at 198.25 rupees).

Dialog Axiata (down 2.27 percent at 43.00 rupees), Overseas Realty (Ceylon) (down 2.00 percent at 49.00 rupees), John Keells Holdings (down 1.67 percent at 17.70 rupees), Hemas Holdings (down 1.29 percent at 30.50 rupees), and Hatton National Bank (down 0.79 percent at 375.00 rupees) were top negative contributors.

Market turnover was 680.32 million rupees. The banking sector led turnover with 188.71 million rupees, followed by capital goods with 177.78 million rupees.

Crossings were recorded in Seylan Bank for 98 million rupees and John Keells Holdings for 26 million rupees. (Colombo/Oct19/2026)

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Sri Lanka drops $280mn Colombo Port logistics JV with China Merchants, calls new PPP bids

ECONOMYNEXT  – The Sri Lanka Ports Authority (SLPA) will seek a private partner through competitive bidding to build a new logistics hub at the Port of Colombo, after scrapping an earlier 280 million US dollar joint venture with China Merchants Port Holdings and Access Engineering PLC.

The earlier project was formed in 2023 under South Asia Commercial and Logistics Hub (SACLH), with China Merchants holding a 70 percent stake, while the SLPA and Access Engineering held 15 percent each.

The consortium planned to build a 150,000-square-metre modern logistics complex.

However, following a review of external circumstances, commercial considerations, and shareholder interests, the parties decided to discontinue the venture.

As part of the exit arrangement, approximately 29.8 million US dollars in equity contributions will be refunded to the three shareholders in proportion to their stakes.

The port authority emphasized that walking away from the joint venture does not mean it is abandoning logistics infrastructure.

“The decision not to proceed with the earlier joint venture does not represent a departure from its commitment to logistics infrastructure development. Rather, it provides an opportunity to pursue an alternative development model,” the SLPA said.

The authority will now launch an open competitive bidding process to set up the facility under a Public–Private Partnership (PPP) model, subject to relevant approvals.

The project will utilize a large land area inside the port to host integrated, value-added logistics services, bring in private investment, and earn long-term revenue.

Officials said the hub will help transform Colombo from purely a container transshipment terminal into a full maritime center, serving shipping lines, cargo owners, and logistics operators.

“The SLPA remains firmly committed to positioning the Port of Colombo as a leading maritime, transshipment and logistics hub in South Asia, while ensuring that future port development initiatives are commercially viable,” the SLPA said.  (Colombo/Oct19/2026)

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Sri Lanka IRD urges 1.2-mn taxpayers to file returns before Nov 30 deadline

ECONOMYNEXT – Sri Lanka’s Inland Revenue Department (IRD) has urged close to 1.2 million registered individual taxpayers to file their 2025/2026 income tax returns online before the November 30 deadline, warning of penalties and legal action for non-compliance.

Officials said that all registered individuals must submit their annual returns.

This includes individuals who do not have taxable income, as well as those whose taxes have already been deducted at source through Pay-As-You-Earn (PAYE), Advance Personal Income Tax (APIT), or withholding tax on bank interest.

Failure to submit returns empowers the Commissioner General to impose financial penalties, issue estimated assessments or initiate legal proceedings against defaulters.

“Even if withholding tax has been deducted from your salary, or even if withholding tax has been deducted from your interest, we expect all of you to submit the return relevant to the 2025/2026 Year of Assessment by November 30,” Inland Revenue Deputy Commissioner General J M S S Rathnawardana said.

Rathnawardana said that while the online submission portal has been open since July 1, taxpayers should file well in advance rather than waiting for the final deadline.

To complete the filing, taxpayers must log into the IRD’s RAMIS system via ird.gov.lk using a password or one-time password (OTP) sent to their registered email or postal address.

Taxpayers needing to update their email can send a written request and a copy of their National Identity Card to ci@ird.gov.lk.

The department has provided an auto-filled, simplified return for individuals whose earnings come solely from employment and interest.

Taxpayers with business income are required to complete the standard return.

“What we earnestly request from everyone—since a large volume of returns is expected to be submitted in the coming month—is not to wait until the very last moment. We have technical constraints, and we can only facilitate submissions within those system capacities,” Inland Revenue Commissioner Nandana Kumara said.

Once submitted, taxpayers will immediately receive an official electronic acknowledgment as proof of filing. The department has also set up advisory desks at its head office and regional branches, alongside call centre support on 1944, to assist filers. (Colombo/Oct19/2026)

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Sri Lanka holds pre-bid meeting ahead of Domestic Dollar Bond issue

ECONOMYNEXT – Sri Lanka’s Public Debt Management Office (PDMO) has held a pre-bid meeting with designated agents ahead of the planned issuance of a new Domestic Dollar Bond (DDB) 2026, a US dollar-denominated debt instrument aimed at diversifying government funding sources and deepening the local government securities market.

The PDMO, under the Ministry of Finance, said the DDB 2026 will be offered in the domestic market through 15 designated agents comprising primary dealers and licensed commercial banks.

A pre-bid meeting was held on October 16, with all 15 designated agents and the paying agent participating, the ministry said.

According to the PDMO, the meeting was held to provide clarification on the operational and regulatory aspects of the upcoming bond issuance.

Officials from the Central Bank of Sri Lanka’s Foreign Exchange Department, as well as the Fiscal Policy Department and Treasury Operations Department of the General Treasury, were present.

The government said the bond issue forms part of broader efforts to diversify its financing base while supporting the development of the domestic market for government securities. (Colombo/Oct19/2026)

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Dialog cuts controlling stake in Doc990 operator Digital Health to 45-pct

ECONOMYNEXT – Dialog Axiata PLC has reduced its controlling stake in Doc990 operator Digital Health (Private) Limited, meaning the digital platform will cease to be a subsidiary and will become an associate company, a stock exchange filing showed.

Under the ownership reorganisation, Dialog’s wholly owned unit, Digital Holdings Lanka (Private) Limited, sold a 16.65 percent stake (3,747,132 shares) to Sunshine Healthcare Lanka Limited for 312.17 million rupees.

Digital Holdings also sold a 3.35 percent stake (752,868 shares) to Nawaloka Hospitals PLC for 62.72 million rupees, after Nawaloka exercised its right of first refusal under the shareholders’ agreement.

“The transaction enables the Company to partially monetise its investment in Digital Health while introducing Sunshine Health as a strategic healthcare partner,” Dialog Axiata Director and Group Chief Executive Supun Weerasinghe said in a regulatory filing.

Separately, Ceylon Hospitals PLC (Durdans Hospital) sold its entire 5.26 percent holding of 1,184,211 shares to Sunshine Health through tag-along rights.

Following the transactions, Sunshine Healthcare, a subsidiary of Sunshine Holdings PLC, entered the company with a 21.92 percent stake.

The share sales reduced Dialog Group’s combined stake from 64.66 percent to 44.66 percent, held through Digital Holdings and the Dialog Axiata Digital Innovation Fund.

Consequently, Digital Health will cease to be a subsidiary of Dialog and will be accounted for as an associate in its consolidated financial statements under Sri Lanka Accounting Standards.

“The transaction is expected to support the continued growth of the Doc990 platform by combining its digital healthcare capabilities with Sunshine Health’s presence across the pharmaceutical, healthcare distribution, manufacturing and retail sectors,” Weerasinghe said.

Among the remaining shareholders, Nawaloka Hospitals increased its shareholding to 12.12 percent, while Asiri Hospital Holdings PLC retains 13.33 percent and Aartiz Technologies (Private) Limited holds 7.98 percent. (Colombo/Oct19/2026)

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