Rupee’s tumble

Friday 22nd May, 2026

The depreciation of the rupee continues, and the government is accused of making only half-hearted attempts to arrest it. The UNP has said the country is facing a very serious issue due to the uncontrolled tumble of the rupee, and during the 20 months since the current administration assumed office, the exchange rate has moved from around Rs. 292 at the time former President Ranil Wickremesinghe handed over office to around Rs. 354 against the US dollar. It has attributed the current situation to the JVP-NPP government’s failure to continue economic policies introduced by the previous administration and pointed to what it describes as a lack of a clear economic plan and failure to strengthen foreign reserves. According to the UNP, these factors have contributed to the rising value of the US dollar. The SLPP-UNP government was lucky that it did not face a global oil price hike and increasing shipping costs.

However, the Joint Apparel Association Forum (JAAF) has argued that the depreciation of the Sri Lankan rupee should be examined in the context of global pressures, such as increasing world oil prices and shipping costs. The rupee depreciation should not be interpreted as a sign that Sri Lanka’s economy is underperforming, JAAF has said. It has been pointed out that the Sri Lankan rupee has depreciated by 4.8% against the US dollar, the Indian rupee by 6.4%, the Nepalese rupee by 6.2% and the Indonesian rupiah by 5.2%.

The JAAF statement reflects the global economic reality, but Sri Lanka’s situation is more serious than that in many other countries. Sri Lanka is still recovering from an economic crisis. The government will have to go beyond imposing a 50% customs duty surcharge on vehicle imports to curtail the forex outflow, strengthen the rupee and shore up foreign currency reserves.

President Anura Kumara Dissanayake has urged the public to cut down on fuel consumption and help boost the country’s foreign currency reserves and arrest the rapid depreciation of the rupee. But they have already cut down on fuel consumption due to soaring oil prices.

President Dissanayake has claimed that a litre of diesel costs as much a Rs. 720, and a government subsidy on diesel amounts to Rs. 100 a litre. If a litre of diesel costs Rs. 720, as the President claims, are the private fuel retailers incurring huge losses by selling diesel at the current price (Rs. 392 a litre)? Is the Ceylon Petroleum Corporation overpaying for fuel? The increasing national fuel bill and the country’s forex woes cannot be blamed on the fallout from the West Asia crisis alone. True, the Iran conflict and the closure of the Hormuz chokepoint have driven the world oil prices up. However, the huge rise in Sri Lanka’s fuel bill from USD 98 million in February to a projected USD 522 million in May, as the President says, is also due to a massive increase in the use of diesel, etc., to operate the oil-fired power plants to compensate for the generation loss caused by substandard coal at the Norochcholai power complex.

With the government struggling to maintain an uninterrupted power supply by burning costly diesel, scheduled power cuts may not be far away. The Opposition has told Parliament that unofficial power cuts are already underway.

The national fuel bill no doubt must be curtailed, but there are other avenues that the government should explore to arrest the rupee’s tumble. Exporters have gained from the depreciation of the rupee, which they themselves have to take responsibility for to some extent. It has been alleged that Sri Lanka is deprived of most export proceeds due to various rackets. Exporters unlawfully park foreign exchange abroad. This practice is linked to exchange control violations, tax evasion, capital flight and, in some cases, even trade-based money laundering. Common methods used by unscrupulous exporters to avoid the repatriation of most export proceeds include the following as we have reported over the years, quoting experts: under-invoicing exports, over-invoicing imports, keeping proceeds abroad through offshore entities, use of “open account” arrangements, multiple invoicing and phantom shipments. Some fraudsters use hawala or informal settlement systems. The media has exposed these malpractices over the years, but in vain.

These export-related rackets have prompted many countries to require exporters to repatriate export proceeds within a relatively short period, submit shipping and banking documentation, and convert part or all export earnings into local currency. Sri Lanka has adopted some of these methods but no government has had the courage to go the whole hog to ensure compliance, for exporters have huge slush funds to bankroll election campaigns. The JVP-NPP government must get tough with the errant exporters who resort to malpractices and deprive the country of much-needed forex. Ensuring the repatriation of export proceeds in a proper manner is half the battle in breaking the back of the forex problem.

The need for a holistic approach to rupee depreciation cannot be overstated, but stringent measures are necessary to curb the outflow of foreign currency.

from The Island https://ift.tt/lAuBy0c

Trump-Xi meet more about economics rather than politics

The fact that some of the US’ topmost figures in business, such as Tesla chief Elon Musk and major US chipmaker Jensen Huang of NVIDIA fame, occupied as nearly a prominent a position as President Donald Trump at the recent ‘historic and landmark’ visit by the latter to China underscores the continuing vital importance of business in US-China ties. Business seemed to outweigh politics to a considerable degree in importance during the visit although the political dimension in US-China ties appeared to be more ‘headline grabbing’.

To be sure, the political dimension cannot be downplayed. For very good reason China could be seen as holding the power balance somewhat evenly between East and West. The international politics commentator couldn’t be seen as overstating the case if he takes the position that China could exercise substantial influence over the East currently; that is Russia and Iran, in the main. The latter powers hold the key in the Eastern hemisphere to shaping international politics in the direction of further war or of influencing it towards a measure of peace.

For example, time and again China has prevented the West from ‘having its own way’, so to speak, in the UN Security Council, for instance, in respect of the ongoing conflicts involving Russia and Iran, by way of abstaining from voting or by vetoing declarations that it sees as deleterious. That is, China has been what could be seen as a ‘moderating influence’ in international politics thus far. It has helped to keep the power balance somewhat intact between East and West.

At present a meet is ongoing between Chinese President Xi Jinping and Russian President Vladimir Putin in Beijing. This happened almost immediately after the Trump visit. Apparently, Beijing is in an effort to project itself as treating the US and Russia even-handedly while underscoring that it is no ‘special friend’ of the US or the West.

This effort at adopting a non-partisan stance on contentious questions in international politics is also seen in Beijing’s policy position on the Hormuz tangle and issues growing out of it. The Chinese authorities are quoted as saying in this regard, for instance, that China is for ‘a comprehensive and lasting ceasefire in the Middle East’.

Such a position has the effect of enhancing the perception that China is even-handed in its handling of divisive foreign policy posers. It is not openly anti-West nor is it weighing in with Iran and other Eastern actors that are opposed to the West in the West Asian theatre. A ‘comprehensive and lasting ceasefire’ implies that a solution needs to be arrived at that would be seen as fair by all quarters concerned.

On the highly sensitive Taiwan issue, President Xi was comparatively forthright during the Trump visit, but here too it was plain to see that Beijing was not intent on introducing a jarring, discordant note into the ongoing, largely cordial discussions with Washington. On the Taiwan question President Xi was quoted saying: ‘If mishandled, the two nations could collide even come into conflict.’ In other words, the US was cautioned that China’s interests need to be always borne in mind in its handling of the Taiwan issue.

The cautioning had the desired result because Trump in turn had reportedly conveyed to Taiwan that the latter’s concerns on the matter of independence had to be handled discreetly. He had told Taiwan plainly not to declare ‘independence.’

Accordingly, neither the US nor China had said or done anything that would have made either party lose face during their interaction. Apparently, both sides were sensitive to each others’ larger or national interests. And the economic interests of both powers were foremost among the latter considerations.

There is no glossing over or ignoring economic interests in the furtherance of ties between states. They are primal shaping forces of foreign policies and the fact that ‘economics drives politics’ is most apparent in US-China ties. That is, economic survival is fundamental.

Among the more memorable quotes from President Xi during the interaction, which also included US business leaders, was the following: ‘China’s doors will be open wider’ and US firms would have ‘broader prospects in the Chinese market.’

Xi went on to say that the sides had agreed to a ‘new positioning for ties’ based on ‘constructive strategic stability’. The implication here is that both sides would do well not to undermine existing, mutually beneficial economic relations in view of the wider national interests of both powers that are served by a continuation of these economic ties. That is, the way forward, in the words of the Chinese authorities, is ‘win-win cooperation.’

It is the above pronouncements by the Chinese authorities that probably led President Trump to gush that the talks were ‘very successful’ and of ‘historic and landmark’ importance. Such sentiments should only be expected of a billionaire US President, bent on economic empire-building.

One of the most important deals that were put through reportedly during the interaction was a Chinese agreement to buy some 200 Boeing jets and a ‘potential commitment to buy an additional 750 planes.’ However, details were not forthcoming on other business deals that may have been hatched.

Accordingly, from the viewpoint of the protagonists the talks went off well and the chances are that the sides would stand to gain substantially from unruffled future economic ties. However, there was no mention of whether the health of the world economy or the ongoing conflicts in West Asia were taken up for discussion.

Such neglect is regretful. Although the veritable economic power houses of the world, the US and China, are likely to thrive in the short and medium terms and their ruling strata could be expected to benefit enormously from these ongoing economic interactions the same could not be said of most of the rest of the world and its populations.

Needless to say, the ongoing oil and gas crisis, for instance, resulting from the conflict situation in West Asia, is taking a heavy toll on the majority of the world’s economies and the relevant publics. While no urgent intervention to ease the lot of the latter could be expected from the Trump administration there is much that China could do on this score.

China could use its good offices with the US to address the negative fallout on the poorer sections of the world from the present global economic crunch and urge the West to help in introducing systemic changes that could facilitate these positive outcomes. After all, China remains a socialist power.

from The Island https://ift.tt/GAiujnU

PM delivers lecture at the University of Oxford

Prime Minister Dr. Harini Amarasuriya attended the 2026 OSGA Annual Lecture held at the University of Oxford on May 19, where she delivered a lecture titled “The Politics of Development: Sri Lanka and Beyond.”

The lecture was held at the St Antony’s College, University of Oxford, and organized by the Oxford School of Global and Area Studies (OSGA), the department’s flagship annual event that brings together leading academics, policymakers, and practitioners to discuss contemporary global challenges.

Addressing an audience comprising students, academics, and researchers from across the University,  the Prime Minister reflected on the intersections of development, governance, and politics in Sri Lanka while discussing the broader realities faced by countries attempting to achieve meaningful social and economic reform.

During her lecture,  Dr. Harini Amarasuriya emphasized that development cannot be understood only through policies, statistics, and economic models, but must also be viewed through the everyday experiences of people. She highlighted that governance often requires balancing ideals with practical realities, particularly in countries recovering from economic crises, institutional challenges, and long-standing inequalities.

The Prime Minister also spoke extensively on women’s political participation and representation in Sri Lanka, noting the growing involvement of women in grassroots political movements and leadership spaces. She reflected on the efforts taken to create greater political opportunities for women and the continuing challenges faced in transforming deeply rooted social and political structures.

Speaking on economic recovery and social policy, Dr. Amarasuriya highlighted the importance of recognizing both paid and unpaid care work, stressing that the contribution of women to families, communities, and the economy has often remained invisible in traditional economic systems. She noted that sustainable development must ensure economic progress while also protecting dignity, fairness, and social well-being.

The Prime Minister further reflected on the relationship between governments, international development agencies, and local institutions, emphasizing the importance of ensuring that development priorities remain grounded in local realities and accountable to the people they are intended to serve.

Drawing from her experiences as a social anthropologist, activist, academic, and political leader, Dr. Amarasuriya also discussed the challenges of translating activism and public movements into long-term policy reforms and institutional change. She noted that meaningful transformation requires patience, negotiation, and sustained public engagement.

The lecture was followed by an interactive question-and-answer session with the audience, during which discussions focused on governance, institutional independence, political reform, economic recovery, and the challenges of balancing democratic accountability with policy implementation.

Professor Diego Sanchez-Ancochea, Head of the Oxford School of Global and Area Studies, commended the Prime Minister’s lecture, describing it as an important and timely reflection on the relationship between politics and development, informed by both scholarly insight and practical political experience.

Prime Minister’s Media Division

from The Island https://ift.tt/pN7mdX4

Cabinet approves establishment of National Regulatory Reform Council for strengthening regulatory governance in SMEs

The regulatory environment in Sri Lanka plays a decisive role in shaping the growth of the private sector, influencing investment decisions, and improving overall business competitiveness.

Although the fundamental elements of the country’s economy remain strong, it has been observed that the existing regulatory constraints disproportionately affect small and medium-sized enterprises and also adversely impact the attractiveness of Sri Lanka as an investment destination.

Taking those matters into consideration, the Ministry of Industry and Entrepreneurship Development, with the assistance of the Asian Development Bank, has carried out a comprehensive assessment of the regulatory framework in
Sri Lanka, and following extensive discussions held with the relevant stakeholders, the National Regulatory Reform Action Plan and its operational mechanism have been formulated.

The aforementioned Action Plan has presented a number of practical and actionable recommendations, and such recommendations have been prioritized and sequenced across short-term, medium-term, and long-term timeframes. Further, it has been proposed to establish a National Regulatory Reform Council as the central institutional mechanism for the implementation, direction, and supervision of the aforementioned Action Plan.

Accordingly, the Cabinet of Ministers has approved the resolution furnished by the Minister of Industry and Entrepreneurship Development to establish the aforementioned Council under the chairmanship of the  President and to designate his Ministry as its Secretariat of that council.

from The Island https://ift.tt/AkaIVhi

Defeat of terrorism and triumph of hypocrisy

Tuesday 19th May, 2026

Seventeen years have elapsed since the defeat of LTTE terrorism, which plagued the country for about a quarter century. If not for the successful military campaign that eliminated the LTTE leadership, thousands of lives would have been lost in terror attacks and on the battlefield since 2009, and it would not have been possible to rekindle democracy in the North and the East. Today, children can go to school without fear of being abducted and turned into cannon fodder by the LTTE; political dissent is no longer violently suppressed; people can exercise their franchise freely in the former war zone, and there are no political assassinations. Ironically, those who did not oppose the LTTE’s terror campaign or supported it are now championing democracy and human rights. Among them are prominent Tamil politicians, civil society activists and religious leaders.

Terrorism is not a means to an end. It is both the means and the end. Hence, the need to eliminate it in all its forms and manifestations. There were numerous attempts to persuade the LTTE to agree to a political solution, but Prabhakaran remained intransigent, and his terror had to be wiped out. There is space for the remaining LTTE members and their sympathisers to take to democratic politics. They ought to learn from the former southern terrorists.

What paved the way for the JVP’s re-entry into the democratic process and rise to power was the decimation of its leadership and military wing, which was responsible for many gruesome crimes in the late 1980s. The JVP killed thousands of dissenters and state workers who did not follow its illegal orders, and destroyed state assets worth billions of dollars. Today, a JVP-led government is trying to develop the country.

Attempts are being made in some quarters to revive memories of old battles to reclaim lost ground on the political front. Prominent among those who are doing so are SLPP politicians who were in power when the LTTE was defeated. They are trying to rouse nationalism in a bid to make a comeback. They would not have been in the current predicament if they had not misused the defeat of terrorism for political gain.

What the Rajapaksas and their allies did to the country, after defeating the LTTE, was like saving a damsel in distress and abusing her. They laboured under the misconception that the defeat of terrorism for which they provided political leadership was a special licence for them to do as they pleased. They sought to politicise and monopolise the war victory to accelerate their dynasty-building project and perpetuate their hold on power. The post-war Mahinda Rajapaksa administration became a government of the Rajapaksas by the Rajapaksas for the Rajapaksas, with a member of the ruling family in almost every key position in the state sector. They bulldozed their way through, launching as they did witch-hunts against their rivals. They also resorted to state terror to further their political interests. Blinded by the arrogance of power, they ruined things for themselves and suffered a humiliating electoral defeat in 2015. They succeeded in returning to power four years later, as the public thought they had changed and voted for them, only to be disillusioned again when they mismanaged the economy, indulged in corruption and bankrupted the country.

The Rajapaksas squandered an opportunity that presented itself, after the conclusion of the war, to bring about national reconciliation and defeat the LTTE ideology politically. The entry of war-winning Army Commander General Sarath Fonseka into the presidential fray in 2010 at the behest of the JVP and others, provided the pro-LTTE groups, here and overseas, with a rallying point; they crawled out of the woodwork and backed Fonseka in a bid to see the back of Mahinda Rajapaksa, albeit in vain. They succeeded in 2015, and emerged stronger, after enabling Maithripala Sirisena to secure the presidency. In a dramatic turn of events in 2024, they threw their weight behind the NPP led by the JVP.

An oft-heard lament is that reconciliation continues to elude this country. This sorry state of affairs has come about because reconciliation has become a victim of hypocrisy. Those who claim to champion reconciliation are using it to further their own interests, and those who should have made a serious effort to help achieve it after defeating terrorism did not care to do so and chose to advance their own political agenda.

from The Island https://ift.tt/MUzxADO

Trump's 'most beautiful' assistant shares behind-the-scenes footage from China trip

Donald Trump's advisor Margo Martin, 30, took to social media to share a number of behind-the-scenes clips from the China trip after they returned to the US.

from Daily Express :: US Feed https://ift.tt/LGZl5uA

First drop in new business in three years: The hidden warning in Sri Lanka’s April PMI

Here is the point that carries more weight than the headline PMI figures released by the Central Bank of Sri Lanka. While much of April’s contraction in manufacturing (42.6) and services (46.7) was dismissed as seasonal — the Sinhala and Tamil New Year holidays, fewer working days, fading festive demand — the rupture in new business flows tells a different, more troubling tale.

April 2026 marked the first month since April 2023 that services sector new business contracted. Not a slowdown. Not a plateau. An outright decline. Nor was it narrow in scope. The deterioration cut across transportation of goods, insurance, wholesale and retail trade, and accommodation, food and beverage service activities.

The Island Financial Review asked an independent analyst for his take. Here is what he said.

“These are not fringe sub-sectors; they are the arteries of Sri Lanka’s domestic economy. Why does this matter beyond the seasonal logic? Because new business is a leading indicator. What falls today in new orders will show up tomorrow in production, employment and stock purchases. April’s drop in new business — the first in three full years — suggests that May’s anticipated recovery may be shallower than hoped, and that a return above the neutral 50 PMI threshold before June is unlikely unless geopolitical tensions ease sharply.”

“Compounding the concern, the decline in new business was not an isolated Sri Lankan phenomenon. It arrived alongside two external shocks: rising energy prices, which hammered transport and personal services, and the ongoing Middle East conflict, which lengthened supplier delivery times and added logistical friction.”

“To be sure, expectations over the next three months remain positive. Firms hope for a stabilisation following the end of the war. But the first decline in new business in three years is a quiet alarm. Seasonal patterns explain April’s production dip. They do not explain why customers stopped placing new orders. For Sri Lanka’s policymakers and business leaders, that is the story to watch in May,” he said.

By Sanath Nanayakkare

from The Island https://ift.tt/y7FuYEA