An Echelon Media Company
Wednesday October 14th, 2026

Two problems that will continue to stay

One of the striking features of the presidential election was the division of the country’s electoral map along ethnic lines.  Over the weekend I was in Vavuniya to take part in an inter-religious exchange visit.  Three groups consisting of religious clergy, civil society leaders, government officials and police officers from Akurana, Weligama and Vavuniya, which are three localities in which there has been inter-religious conflict, met together in Vavuniya.  The purpose of this meeting of groups was to promote bridge-building and inter-community understanding.  All of those present, especially the government officials, wanted to strengthen ground level inter-community relations so that they would have less problems of conflict to deal with.  There was also the happiness of interaction and getting to know those who are different.

The event in Vavuniya showed that division is not necessarily the case at the person-to-person level or at the community level where non-political issues are concerned.  President Gotabaya Rajapaksa’s recent statements that increased devolution of power is not politically possible is based on the assessment of the present (and past) levels of political consciousness regarding the issue of devolution of power. The president has said that the ethnic majority population is not in favour of devolution of power, which is why it is not feasible and cannot be implemented.  The ethnic majority population placed its trust overwhelmingly with President Rajapaksa at the recent presidential election. 

On the other hand, for the past nearly one hundred years, the Tamil demand for power sharing arrangements with the ethnic Sinhalese majority has been present despite being rejected time and time again.  The first such demand was in the 1930s, when the Tamil political leaders called for a 50:50 power sharing arrangement between the ethnic majority and the ethnic minorities which was to be at the level of the central government. When this demand was rejected by the British colonial rulers at that time, the call changed to devolution of power at the regional level to the northern and eastern provinces.  The post-independence demand of the Tamil polity has been for power sharing in the form of either a federal arrangement (where the constitution is supreme) or for a strengthened system of devolution of power (where the central government remains supreme). 

REACH MIDPOINT

The concept of devolution is viewed with suspicion by the Sinhalese majority on account of its association with the campaign for separation by Tamil politicians of the past and by the LTTE.  But this is not an unchangeable perception.  In 2000, the Chandrika Bandaranaike Kumaratunga government attempted to strengthen the devolution of powers in a new constitution.  Her government carried out a public education campaign, called Sudu Nelum, that changed the perceptions of people so that public opinion surveys showed a majority in support of devolution of power.  But the constitutional bill was defeated in parliament by the opposition parties.  The most recent attempt commenced in 2015 when the Sirisena-Wickremesinghe government sought to draft a new constitution, but it did not take off the ground due to the government’s inability to put forward its own formulation of the solution. 

Since the watershed election of 1956, where the main election slogan was “Sinhala only” in which the Sinhala language was made the single official language over the opposition of Tamil speakers, the devolution of power has been akin to an article of faith to the Tamil polity.  They have not been willing to move from that position despite its rejection by the Sinhalese majority or by the failure of successive governments to implement their promises with regard to it.  If solving the problem is to be considered, the sentiments of the ethnic minorities will also need to be heeded and goodwill and trust-building from the community level needs to be taken to the national level.  Just as much as the Sinhalese need to be made aware of the Tamil feeling of nationalism, so must the Tamils be made to realize what the Sinhalese concerns are. 

President Rajapaksa’s preference for development as the way to peaceful relations within Sri Lanka has resonance in view of general Sinhalese opposition to the devolution of powers which has been manifested time and time again.  The international trend too at the present time is in favour of ethnic nationalism, which the president’s campaign team skillfully used to mobilise Sinhalese nationalism at the presidential elections.  But it also means that overcoming long standing Tamil nationalism through development alone is an unlikely prospect.  With them too, nationalism will tend to prevail over all other considerations.  If it is to be no to devolution, the problem will not be solved.  There needs to be movement towards a midpoint in which there is a change of heart and mind on all sides.

HEALING HEARTS

President Rajapaksa’s strength as a national leader who can overcome the fear and suspicion of the Sinhalese majority is on account of his leadership in the war with the LTTE that secured a victory that few though possible.  At the same time as he is the main national leader at this time he will need to reach out to the minorities and find solutions to their concerns.  Apart from the longstanding issue of devolution of power there is also the more recent issue of missing persons.  As a former army officer who had firsthand experience of the war with the LTTE, the president has pointed to the impossibility of identifying those who died on the military battlefields and left for dead behind enemy lines.  The president pointed out that there were more than 5000 soldiers who went missing in that manner.

However, the unresolved problem lies with those who claim that they themselves surrendered their relatives to government forces and also those who claim that their loved ones were abducted in their presence.  I was at a meeting recently with relatives of war victims when one of them came up and gave me a set of photocopies of an identity card and other documents relating to the case of his missing son.  When I checked the dates it was after the war had ended.  So this would not be a battlefield disappearance.  We can be sure that the parents of those who went missing or wives of husbands who went missing will never stop hoping and looking for their loved ones.  I personally know of a mother of a soldier who went missing nearly two decades ago, whose eyes lit up with hope when a fortune teller told her that her son was alive in a foreign country.

German Ambassador Joern Rohde recently shared his personal experience of being a beneficiary of a policy of government reparation at a meeting with war victims.  He said that during the Second World War, his father was left without a single living relative at the age of 16.  But he was able to grow into being an adult who could enjoy a good life due to a scheme of reparations instituted by the post-war German government.  The most important thing that a government could do for people recovering from the trauma of war and death, according to Ambassador Rohde, was to show that it cared for them. The dead cannot be brought back to life and those missing may never be found.  A compassionate society and a compassionate government will reach out to their relatives and help them to heal.  Today the government has both an Office of Missing Persons and an Office for Reparations, both of which can give that message of care and heal hearts and minds.

Sri Lanka Treasury bill yields rise on shorter term, less bills sold

ECONOMYNEXT – Sri Lanka’s Treasury bill yields rose on the shorter tenor at Wednesday’s auction, with 66.12 billion rupees of bills sold of an offered 90 billion, data from the Public Debt Management Office showed.

The 3-month bill was up 4 basis points at 9.30 percent, with 40 billion rupees offered and 40.19 billion rupees sold.

The 6-month bill was unchanged at 9.44 percent, with 30 billion rupees offered and 8.45 billion rupees sold.

The 12-month bill was unchanged at 9.95 percent, with 20 billion rupees offered and 17.48 billion rupees sold.

All 3 bills are available on tap. (Colombo/Oct14/2026)

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Sri Lanka stocks close down 1.4 pct on geopolitical concerns, profit-taking

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Wednesday, CSE data showed, with the benchmark All Share Price Index moving down 1.40 percent.

The ASPI was down 281.42 points at 19,796.06, while the more liquid S&P SL20 was down 0.94 percent, or 53.67 points, at 5,676.43.

Market sentiment was largely weighed down by geopolitical tensions in the Middle East and fluctuating oil prices, alongside margin calls, profit-taking, and the day’s Treasury bill auction.

“Things are moving more on sentiment rather than fundamentals these days, mainly with oil price fluctuations and Middle East developments, along with some margin calls and profit-taking,” Shahana, Senior Assistant Manager – Research at First Capital, said.

Positive contributors to the ASPI were Haycarb (up 2.84 percent at 199.50 rupees), Teejay Lanka (up 1.41 percent at 28.70 rupees), Aitken Spence (up 0.57 percent at 133.25 rupees), and Vidullanka (up 0.47 percent at 21.30 rupees).

Carson Cumberbatch (down 4.86 percent at 655.50 rupees), Tokyo Cement Company (down 4.79 percent at 73.50 rupees), Dialog Axiata (down 2.98 percent at 42.30 rupees), Distilleries Company of Sri Lanka (down 2.16 percent at 49.90 rupees), and Commercial Bank of Ceylon (down 0.63 percent at 197.25 rupees) were top negative contributors.

Market turnover was 1.93 billion rupees, roughly 35 percent above the monthly average. Capital goods led turnover with 405.82 million rupees, followed by the banking sector. Crossings were recorded in Dialog Axiata, DIMO, and John Keells Holdings, while foreign investors recorded a net selling of close to 5 million rupees.

Galadari Hotels (Lanka) announced that, following the conclusion of its ongoing refurbishment and pursuant to approval from Radisson Hospitality Belgium BV under the Hotel Management Agreement, the reopening of the hotel as ‘Radisson Blu Hotel Galadari Colombo’ is scheduled during the fourth quarter of 2026. (Colombo/Oct14/2026)

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Sri Lanka Customs set to reach fresh record revenue this year: analysts

ECONOMYNEXT – Sri Lanka Customs is likely to achieve a fresh record high revenue this year after reaching this year’s target of Rs. 2,207 billion this week, with more than 11 weeks to the year-end, analysts say.

Customs Spokesman Chandana Punchihewa said the revenue-collecting body had already surpassed this year’s target on Tuesday (13), reaching Rs. 2,208 billion.

The Customs exceeded its target for the second straight year in 2026.

Last year, Customs collected a record 2,551 billion rupees in revenue, exceeding a revised target of 2,241 billion rupees for the year and achieving 64.2% higher revenue than the previous year’s revenue of 1,553 million rupees.

Analysts say Customs will surpass last year’s record revenue by the end of November if there are no major policy reversals or disruptions to the economy in the country during that time.

Customs’ 2026 target of 2,207 billion was 13.5% less than last year’s because they originally expected a significant decline in car imports early this year. (Colombo/October 14/2026)

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Sri Lanka President reveals timelinefor new laws related to SOE, investments

ECONOMYNEXT – Sri Lanka President Anura Kumara Dissanayake revealed the timeline for key laws related to State-Owned Enterprises (SOE) and Public-Private-Partnership (PPP) to boost investments in the island nation.

Delays in formulating and enacting key structural legislation, specifically governing SOE reforms, PPPs, labor market flexibility, and modernizing the century-old Customs Ordinance, have emerged as major bottlenecks to Sri Lanka’s long-term economic competitiveness and fiscal sustainability.

The absence of a modernized legal framework for SOEs perpetuates fiscal leakages, inefficient governance, and persistent public sector debt burdens, while vague or outdated rules on PPPs and labor deter both domestic and foreign direct investment by creating regulatory ambiguity and rigid operational constraints.

Furthermore, the archaic Customs Ordinance of 1869 hinders trade facilitation, fosters administrative opacity, and creates revenue leakage risks at a time when export-led growth is critical.

Under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) arrangement, Sri Lanka has committed to prioritizing these legislative enactments.

Commenting on these laws, President Dissanayake said the government has been working on them and expects them to be enacted soon.

“Regarding the SOE law, I expect it will be presented to the Cabinet in about two weeks,” Dissanayake told the gathering at the launch of the Sri Lanka Economic and Investment Summit 2026 on Monday (12).

“The PPP law has been drafted and submitted to the Legal Draftsman’s Department, and we have received their recommendations.”

“Regarding labour law, about twelve different labour statutes currently exist. We are consolidating these into unified legislation. A draft bill has already been formulated, though reviewing and finalizing it will take some time.”

He said an agreement has been reached on the Customs Ordinance following extensive discussions involving the Treasury and the Customs Department.

“The proposed amendments to the Customs Ordinance are the most appropriate way forward,” he said.

“Those proposals have now been submitted to the Legal Draftsman’s Department, and we expect the bill to be finalized promptly. Most likely, all of these bills will be presented to Parliament by February.”

The IMF contends that establishing transparent, enforceable, and modern legal frameworks is essential to eliminate governance vulnerabilities, enforce fiscal discipline, improve revenue collection, and signal regulatory stability to foreign investors, thereby ensuring Sri Lanka’s post-default recovery transitions into sustainable macroeconomic growth. (Colombo/October 14/2026)

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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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