SRI LANKA NEWS
(JUNE 2025)
Compiled by Victor Melder
The trade deficit in April had nearly doubled as against March due to higher imports and slower growth in exports. In April, the trade deficit was $ 717 million, as against $ 396 million in March, reflecting an over 80% Month-on-Month (MoM) increase. The 2025 April figure was also higher in comparison to $ 558 million posted a year ago. Exports in April grew by 10.4% year-on-year (YoY) to $ 968 million, whereas in March it was a record $ 1.24 billion, up 8% YoY. Imports in April grew by 17.5% YoY to $ 1.68 billion, a figure similar to March ($ 1.63 billion, up 8.6% YoY). The Central Bank said for the first four months of 2025, the deficit in the trade account widened to $ 2.25 billion. Cumulative export earnings rose by 6.4% YoY to $ 4.3 billion during the four months ending April 2025, driven mainly by higher earnings from textiles and garments (11.6%), spices (66.3%), food, beverages, and tobacco (25.0%), and chemical products (42.6%), among others. Import expenditure increased by 12.7% YoY to $ 6.57 billion mainly due to higher imports of machinery and equipment (26.5%), personal vehicles (707.9%), oils and fats (136.4%), transport equipment (142.2%), and sugar and confectionery (51.5%), among others. The export unit value index decreased by 1% YoY in April 2025 due to lower prices recorded in exports of industrial goods. The import unit value index in April 2025 declined by 3.8% YoY due to lower prices recorded in intermediate goods. Accordingly, the terms of trade improved by 3% YoY to 78.7 index points in April 2025. (Financial Times, 2.6.2025)
The consumer prices in the Colombo district fell 0.7 percent in the 12 months through May 2025, decelerating from the 2.0 percent decline recorded in April, as the country nears the end of its deflationary stretch that began in September last year, with base effects catching up. The prices measured on a monthly basis by the Colombo Consumer Price Index meanwhile rose 0.8 percent in May, following a 0.2 percent decline in April, reflecting the persistence of price pressures in the current context. The Central Bank last week cut its Overnight Policy Rate, its key policy rate, by 25 basis points to 7.75 percent, citing that the future inflation path appears slower than the previously anticipated, thus giving it room to ease monetary policy further. The Central Bank expects inflation to turn positive around the early third quarter, before reaching its medium-term target of 5.00 percent. The Central Bank said its inflation path factors in the upcoming electricity tariff revision, as it assumes cost-recovery pricing in its projections. The food prices meanwhile rose at a relatively faster pace of 5.2 percent in the year through May 2025, up from 1.3 percent in April. The monthly food prices jumped 2.7 percent, reversing the 0.3 percent decline recorded in April, indicating that the food prices rose in May over April levels. The prices of rice, fresh fish, dried fish, coconuts, coconut oil, vegetables, potatoes and similar staples increased. The price of salt rose notably, as the country is experiencing a salt shortage and the government has taken steps to import supplies. Conversely, the prices declined for commodities such as yogurt, eggs, fresh fruit, big onions, green chilies and the like. The non-food prices fell by 3.3 percent from a year ago, slightly easing from the 3.6 percent decline recorded in April. The monthly non-food prices slid 0.1 percent, unchanged from the rate seen in April.This was mainly due to the downward revision in the petrol and diesel prices as well as reduced spending on house maintenance and reconstruction activities. However, the prices have increased for spending at restaurants and hotels and to a lesser degree in recreation and culture, healthcare and household gas. There could be an uptick in non-food inflation from June, if electricity tariffs are increased. Meanwhile, the so-called core prices, which exclude the often-volatile food, beverage and transport items, rose by 1.2 percent, up from 0.8 percent in April. (Daily Mirror, 2.6.2025)
The Coconut Research Institute has forecast a further decline of 250 million nuts crop for the first half of 2025 harvest during the first half of this year compared to last year, the current harvest stands at 1,407 million nuts for the first half of 2025, according to statistics from it. Sri Lanka has now begun to import coconut related products to tackle the demand and supply issues in the market currently due to drop in annual coconut yield, which previously averaged 3 billion nuts. The harvest dropped to 2.68 billion nuts last year. The first batch of imported coconut milk brought in by the Ministry of Plantation Industries and Rural Infrastructure was inspected and accepted by officials of the Coconut Development Authority (CDA) at the Orugodawatte Container Terminal on June 2, an official said. CDA Chairman Shantha Ranathunga told the Daily Mirror that “the quality of imports are being tested in the labs before being sent out.” The import deadline for the products will last till December 31. Ranathunga said that 15 manufacturers had requested for imports of 36 different coconut products currently. President of the Ceylon Chamber of Coconut Industries Jayantha Samarakoon said that the major reason for the current coconut shortage was the spike in fertilizer prices. Speaking at a media briefing held at the National Chamber of Commerce Auditorium in January, he mentioned that coconut imports are essential at this time to counter a severe shortage that threatens both domestic supply and export revenue. The fertilizer costs increased from Rs. 1,500 to Rs. 12,000 per 50 kg bag, which resulted in reduced use of fertilizer to less than 10 percent, further worsening the production slump. The government announced that a 50-kilogram package of mixed fertilizer, valued at Rs. 9,500, were distributed to coconut growers nationwide at a subsidized price of Rs.4,000 from the 55,000 metric tons of fertilizer received from Russia. (Daily Mirror, 7.6.2025)
Ceylon Tea production rose 2.9 percent year-on-year (YoY) in May 2025 to 25.37 million kilograms, up from 24.65 million kilograms a year earlier, the official data showed. All elevations recorded gains compared to the same month in 2024.
However, the May 2025 figure marked a 5.4 percent decline, from the 26.83 million kilograms produced in May 2023. The cumulative production for the first five months of 2025 rose 8.7 percent to 113.96 million kilograms, from 104.80 million kilograms in the same period last year, with the output up across all elevations. Compared to the 111.58 million kilograms produced from January to May 2023, the 2025 cumulative figure reflects a 2.1 percent increase.. (Daily Mirror, 21.6.2025)
Sri Lanka’s workers’ remittances is on a roll, with May inflow surging to $ 641.7 million, marking the third consecutive month of record inflows for 2025. As per the latest Central Bank data, May inflow reflects a robust 18% year-on-year (YoY) growth, although it registered a mere 1% dip compared to April 2025.The April 2025 figure is also the fourth-highest monthly remittance inflow in history, behind $ 812.7 million recorded in December 2020, $ 729.35 million in January 2018 and $ 693.3 million in March 2025. The improved inflows during May also boosted the cumulative remittances for the first five months of 2025, which reached over $ 3.1 billion — an 18.2% YoY increase and the highest cumulative figure in the period since 2021. The cumulative figure also represents a 5% increase compared to the $ 2.96 billion registered in the same period of 2016 — the year that holds the record for the highest annual workers’ remittances inflow at $ 7.24 billion. In 2024, workers’ remittances hit a four-year high of $ 6.57 billion, up by 10.1% from $ 5.69 billion in 2023. This growth was followed by a record wave of people seeking foreign employment after an unprecedented economic crisis. The sharpest post-crisis rebound was in 2023, when workers’ remittances grew by 57% to $ 6 billion, recovering from a 12-year low of $ 3.78 billion in 2022. Historically, the highest-ever annual workers’ remittances were recorded in 2016, whilst between 2014 and 2018, the annual inflows averaged around $ 7 billion, or roughly around $ 600 million per month. (Ceylon Today, 11.6.2025)
Sri Lanka is among a few South Asian countries identified with a temperature level that is considered too hot for people to be able to work safely outdoors for an average of six hours a day, according to a report compiled by the World Bank. India, Pakistan and Bangladesh are the other three countries in the category. The World, in its book titled ‘From Risk to Resilience: Helping People and Firms Adapt in South Asia’ says this is expected to rise to eight to nine hours a day by 2050. South Asia is facing a sharp rise in extreme weather, with nearly 90 percent of the population expected to be exposed to intense heat and more than one in five people at risk of severe flooding by 2030. With public budgets under pressure, much of the adaptation effort will need to come from the private sector. A new World Bank report lays out policy reforms that would help households and firms adapt to increasingly frequent and damaging weather events, according to the World Bank. Quoting the Notre Dame Global Adaptation Initiative, the World Bank’s latest report, South Asia is the most vulnerable of the emerging market and developing economies (EMDEs). It has the highest frequency of floods and high temperature events in the last two decades, which is becoming more common. Since 2015, 67 million people per year, on average, have been affected by natural disasters in South Asia. Although there has been a decline in the number of deaths caused by floods over the past decade, deaths from extreme temperatures have risen, the book says. The report also highlights a major risk to Agricultural systems from climate change. “Climate change poses substantial risks to the region’s farming systems, including rising temperatures, water scarcity, changing rainfall patterns, and extreme weather events such as droughts and floods,” it says. (Daily Mirror, 5.6.2025)
The Ministry of Agriculture, Livestock, Lands, and Irrigation has released the results of Sri Lanka’s first countrywide wildlife census of common but often overlooked animals. According to a report released by the ministry, Sri Lanka is currently home to some 5.17 million Torque Monkeys (rilava), 1.74 million Grey Langurs (wandura), 2.66 million palm squirrels (dandu lēna), and more than 4.24 million peacocks (monaru).
These findings, gathered during the 2024 countrywide census, reflect a detailed and collaborative effort spanning multiple government and research institutions. “This is the most comprehensive enumeration of these species ever undertaken in the country,” said A.L. Sandika, Director and CEO of the Hector Kobbekaduwa Agrarian Research and Training Institute (HARTI). “The numbers are a wake-up call—not just about their population densities, but about the mounting pressure these animals are placing on agriculture and rural livelihoods.” The Department of Wildlife Conservation (DWC), though not the lead agency in the census, welcomed the data, calling it a “critical baseline for future wildlife management.”The initiative was sparked not only by conservation priorities but also by growing farmer grievances. Monkeys, and peacocks are among the most frequently cited species in crop-raiding incidents, especially in districts like Moneragala, Ampara, and Anuradhapura. “These animals are not just statistics. They are part of a deeper, escalating conflict between people and nature,” said a spokesperson for the DWC. “This data will help shape humane and sustainable management strategies, rather than relying on ad-hoc or harmful methods of population control.” Unlike previous partial studies, this census employed a combination of direct observation, drone surveys, GPS-tagging, and farmer-reported data, covering both forested areas and farmlands. Officials confirmed that over 5,000 personnel were deployed across 25 districts during the year-long data-gathering phase. Experts say the census helps break the long-held assumption that only large mammals like elephants or leopards deserve close population monitoring. But not everyone is pleased. Some environmentalists warn that such population estimates may be misused to justify mass culling. The report has already sparked renewed public discourse. On social media, citizens are debating whether peacocks—once beloved for their beauty—have now become pests. Others are urging greater investment in non-lethal mitigation techniques, such as crop insurance schemes, electric fencing, and the reforestation of buffer zones.Some scientists, meanwhile, are calling for the next phase: integrating this data into a national biodiversity dashboard .The Ministry has proposed that such a census be conducted every five years, with expanded categories including reptiles, amphibians, and even invasive species. (Daily Mirror, 12.6.2024)
The Board of Investment (BOI) of Sri Lanka has successfully increased Foreign Direct Investment (FDI) by US$96 million in the first quarter of 2025, compared with the same period in 2024.. BOI officials also noted that, relative to the first quarter of 2024, domestic investment rose by US$21 million, while export income increased by US$176 million during the first quarter of 2025. In total, Sri Lanka has attracted US$4,669 million in investment proposals thus far in 2025. .Addressing the gathering, President Anura Kumara Disanayake stated that the Board of Investment holds a pivotal role in enhancing the national economy and improving the living standards of the rural population. He stressed that opportunities to attract investment in traditional sectors are becoming increasingly limited and therefore the nation must identify new areas for investment, an endeavour that falls under the BOI’s mandate. The President further noted that Sri Lanka has attracted only around US$22 billion in investment since 1978. In comparison to other countries in the region, he stated, Sri Lanka must advance rapidly, referencing Vietnam’s achievement of securing US$23 billion in investment in 2022 alone. He went on to state that the BOI should prioritise the expansion of investment in the services sector and proactively seek new investment opportunities, rather than focusing solely on recapturing missed ones.(Daily Island, 24.6.2025)
Assets worth over Rs.4 billion belonging to 88 individuals who have accumulated wealth through illegal activities, including drug trafficking, have been frozen by the Illegal Assets Investigation Division, data from the Criminal Investigation Department (CID) shows. The frozen assets include more than 77 large land plots totalling over 1,500 perches, more than 40 houses and buildings, 12 gemstones, over 10 kilogrammes of gold, a supermarket, a pharmacy, two hotels, a soap manufacturing machine, over 100 vehicles, seven multi-day fishing vessels, 328 bicycles, and two vallam boats.The assets of 26 major underworld drug traffickers are among those frozen. The largest volume of assets frozen, preventing sale or transfer, belongs to an individual known as Dematagoda Ruwan, who is the brother of Dematagoda Chaminda, a known underworld figure. According to the Illegal Assets Investigation Division, the total value of assets frozen under Dematagoda Ruwan’s name stands at Rs.666.9 million. These include five bank accounts holding Rs 90 million, two land plots worth Rs.380 million, 10 vehicles valued at Rs.200 million, 1.5 kilogrammes of gold worth over Rs.20 million, two houses worth over Rs.40 million, and pawned items valued at more than Rs.10 million.The list of those whose assets have been frozen includes many prominent underworld drug figures such as Kudu Salindu, Kudu Roshan, Mohamed Rifkan, Weliwita Suda, Karandeniya Sudda, Ganemulla Sanjeewa, Ladiya, Kevuma, Batuwatte Chamara, Basiq, Olumara, Bathala Heen, Parei Sudda, and Kirinde Chamara, among others. The division’s information reveals that the assets of these individuals have now been officially frozen. Bathala Heen, a well-known cannabis trafficker, recently had Rs.100 million worth of assets frozen, while last week an additional Rs.30 million worth of assets under his wife’s name were also frozen. Many of these underworld drug traffickers whose assets have been frozen are currently overseas, and much of the property is registered under the names of their relatives. These asset freezes are the result of investigations ongoing since 2021. A senior Police officer stated that further investigations will be carried out into the assets of a large number of other individuals, and that necessary steps will be taken to freeze those assets as well. (Daily News, 16.6.2025)
Sri Lanka’s official foreign reserves have been overstated by approximately USD 1.4 billion due to the inclusion of a currency swap from China that does not meet international standards, a new report published by FactCheck.lk said. The report, titled “Reservations on Sri Lanka’s Reporting of Foreign Reserves”, highlights that the discrepancy stems from the inclusion of a RMB 10 billion (roughly USD 1.4 billion) swap agreement with the People’s Bank of China. Under the guidelines of the International Monetary Fund (IMF), only assets that are readily available and free from conditions can be classified as reserve assets. The Chinese swap, however, carries restrictions that disqualify it from being considered usable reserves. As a result, Sri Lanka’s official reserves appear higher than they actually are. In May 2025, for instance, the Central Bank reported reserves of USD 6.3 billion. But after excluding the Chinese swap in line with IMF standards, the usable reserve figure would be closer to USD 4.9 billion.The report also criticizes the inconsistent reporting practices by Sri Lankan officials since April 2022. It notes that both public officials and politicians have selectively used reserve figures to paint an overly optimistic picture of economic recovery, contributing to public confusion.Experts cited in the report stress the importance of adhering to the IMF’s definition of “usable reserves” when measuring reserve growth. They argue that including ineligible assets like the Chinese swap undermines transparency and weakens the credibility of Sri Lanka’s financial reporting. The revelation comes at a critical time as Sri Lanka continues efforts to rebuild confidence among international lenders and investors following its 2022 debt default. (Daily Mirror, 15.6.2025)
Listed companies posted 57.4 percent year-on-year increase in earnings for the March 2025 quarter, marking the sixth consecutive quarter of growth. This is as banking and consumer-led sectors outperformed on the back of lower finance costs and improved operating conditions, according to an analysis by First Capital Research. The sharp recovery in corporate profitability was driven by a boost in net interest income within the banking sector, alongside reduced impairment charges and higher fee-based revenue, analysis showed. Lower interest rates also helped compress finance costs across many sectors, lifting overall bottom lines. The banking sector recorded a 43.5 percent year-on-year increase in earnings. Major players including Commercial Bank (COMB), Hatton National Bank (HNB), Sampath Bank (SAMP), Nations Trust Bank (NTB), National Development Bank (NDB), Seylan Bank (SEYB), and Pan Asia Banking Corporation (PABC) collectively recorded a 52.9 percent surge in profits for the quarter. However earnings boost was supported by an expansion in net interest income, as lower interest rates reduced funding costs faster than income yields declined. Fee and commission income also grew, aided by increased card transactions and digital banking services. A decline in loan impairment charges, reflecting improved credit quality, further strengthened the sector’s profitability. The Food, Beverage, and Tobacco sector reported the strongest earnings growth across all segments, with profits climbing 174.8 percent from a year earlier. The increase was driven by strong topline growth, margin expansions, and reduced finance costs. Key contributors to the sector’s performance included Ceylon Tobacco Company (CTC), Melstacorp (MELS), Cargills (CARS), Distilleries Company of Sri Lanka (DIST), Bukit Darah (BUKI), Cold Storage (CCS), and Lion Brewery (LION), which together accounted for 63.4 percent of sector earnings. Improved macroeconomic stability helped support demand recovery, while lower input costs and a strengthening rupee improved margins. The low-interest rate environment further reduced borrowing costs, adding to bottom-line gains. Meanwhile, earnings from the Consumer Durables and Apparel sector fell sharply by 206.6 percent year-on-year, reversing previous gains. The sector’s downturn was primarily driven by HELA and Dipped Products (DPL), which together saw a 251.5 percent earnings contraction. HELA reported a loss of Rs. 8.8 billion during the quarter, compared to a profit of Rs. 6.0 billion in the same period last year. The reversal was attributed to reduced gross margins, higher operational expenses, and impairment charges on financial assets and goodwill. DPL’s results were impacted by a 31.0 percent decline in revenue and a 113.0 percent increase in selling and distribution expenses as it attempted to retain market share in a price-sensitive environment. The Real Estate sector posted a 26.0 percent year-on-year drop in earnings, dragged down by steep declines at sector heavyweights Overseas Realty (OSEA) and CT Land Development (CTLD). OSEA reported a 44.7 percent drop in quarterly earnings, hit by foreign exchange losses during the period, reversing gains made in the prior year. CTLD saw its earnings fall 73.3 percent, due to a lower revaluation gain on investment properties compared to the March 2024 quarter. (Daily Mirror, 20.6.2025)
Sri Lanka’s tea exports in volumes and values have increased in May, resulting in a solid growth during the first five months, despite the ongoing geopolitical volatility and economic uncertainty. As the global tea trade continues to navigate in ambiguity, Sri Lanka’s tea industry appears to be holding steady with total export volumes in May reaching 21.87 million kilos, marking a year-on-year (YoY) increase of 2.42 million kilos compared to the 19.45 million kilos registered in May 2024.Forbes & Walker Research said the performance reflects a resilient rebound across most product segments, although bulk tea exports lagged behind. The average Free on Board (FOB) price for May rose to Rs. 1,804.31 per kilo, up Rs. 32.07 from the same period last year. In Dollar terms, the gain was a modest $ 0.12 YoY, but indicative of sustained international demand despite global economic headwinds. In the cumulative period from January to May, exports totalled 103.28 million kilos, a notable increase of 5.12 million kilos from the 98.16 million kilos shipped in the same period last year. This upward trend was seen across all categories, except for bulk tea, which continues to face price and logistical pressures.Despite the growth in volume, Forbes & Walker Research said the average FOB value during the first five months dropped slightly in Rupee terms by Rs. 15.87 to Rs. 1,756.46 compared to Rs. 1,772.33 in 2024. In contrast, the same period from January to May 2025 saw an increase of $ 0.15 per kilo in Dollar terms, highlighting a currency effect that could be playing in Sri Lanka’s favour. Cumulatively, all categories except bulk tea and packeted tea registered gains in Rupee-denominated FOB values, while in Dollar termForbes & Walker Research said Iraq emerged as the top importer of Ceylon Tea in the first five months, buying 14.47 million kilos, an 18% increase from12.29 million kilos a year ago. Libya followed with a dramatic surge in purchases, importing 9.42 million kilos, up 324% YoY, whilst Russia slipped to the third place with 9.12 million kilos marking a decline of 15% from 10.67 million kilos in the corresponding period of 2024. The UAE with 7.20 million kilos saw a 30% YoY decrease was placed in fourth position followed by Iran at fifth place who has recorded 5.87 million kilos, an 18% YoY increase surpassing Türkiye at 5.78 million kilos with an 18% YoY decrease. Chile secured the seventh place with 4.74 million kilos edging over China’s 4.22 million kilos, Saudi Arabia at 3.56 million kilos and Germany at tenth position with 3.27 million kilos for the year in progress. (Daily Financial Times, 25.6.2025)
Sri Lanka’s rich culinary and cultural heritage has received global recognition as several locally popular words have been officially added to the Oxford English Dictionary (OED) in its June 2025 update. Among the new entries is the word “asweddumize”, a term long associated with Sri Lanka’s agricultural and land reform history. First recorded in 1857, it was formally accepted into the dictionary after persistent efforts by local scholars and historians. In addition to “asweddumize”, several beloved Sri Lankan dishes and cultural expressions have earned a place in the prestigious dictionary. These include “kottu roti”, the famed street food made of chopped flatbread, and “vatalappam”, a traditional spiced coconut custard dessert. Other words added to the dictionary are “mellum” (a leafy vegetable dish), “kiribath” (milk rice), “avurudu” (Sinhala and Tamil New Year), “baila” (a lively music genre), and “papare” (brass band music popular at public gatherings and sporting events). The latest update reflects the growing global awareness and appreciation of Sri Lanka’s distinctive language, cuisine, and cultural practices. (Daily Mirror, 26.6.2025)
Sri Lanka’s apparel exports in May 2025 remained relatively flat with a slight dip of 0.63% compared to the same month last year, totaling $ 365.08 million. While shipments to the EU grew by 5.15% and exports to other markets rose sharply by 11.1%, this growth was offset by contractions in key markets. Exports to the US and UK declined by 7.59% and 6.81%, respectively, reflecting ongoing demand volatility in Western consumer markets. Despite the dip in May, cumulative exports for the period January to May 2025 show a strong recovery trajectory, with total earnings increasing by 9.8% to reach $ 2.02 billion. Exports to the EU (excluding UK) saw the most significant growth at 15.36%, followed by a 13.12% growth in non-traditional markets. Shipments to the US and UK also recorded moderate gains of 6.52% and 3.74%, respectively. Commenting on the performance, a Joint Apparel Association Forum (JAAF) spokesperson said: “The industry’s year-to-date performance demonstrates resilience and adaptability, driven by strategic market shifts and continued investment in value-added products. We are encouraged by the momentum, particularly in emerging and EU markets.” To sustain this progress, the JAAF reiterated the importance of a stable and predictable trade policy environment that enables long-term competitiveness and supports exporters navigating global headwinds. (Financial News, 30.6.2025)
The Ministry of Health reported that some 27,932 Dengue cases and 16 deaths were recorded so far this year. The Western Province accounts for 45% of all cases with the Eastern, Sabaragamuwa, and Southern provinces also identified as high-risk zones Health authorities have confirmed that several child fatalities have occurred due to the disease. To combat the spread of Dengue and Chickungunya, the Health Ministry will launch a mosquito control week from June 30 to July 6. Dr. Asela Gunawardena, Director General of Health Services, stated that the program will target 16 districts, focusing on reducing mosquito density amid increased rainfall from the Southwest monsoon. The initiative aims to curb further outbreaks as Dengue infections continue to rise in hotspot regions. (Daily Mirror, 30.6.2025)
