Monetary tightening and the Central Bank of Sri Lanka (CBSL) flexible exchange rate policy served to cool the economy by slowing down credit to desired levels and controlling inflation to some degree. The economy, which saw significant weakness in 2016 and the first quarter of 2017, readjusted accordingly. Starting in February 2017 foreign investors returned at a slow and steady pace, resulting…
Sri Lanka is poised to become a regional, and perhaps global, leader in renewable energy (RE) development, with the push to switch to a robust clean energy agenda coming in the wake of increasingly extreme weather patterns, which includes two years of severe drought that significantly reduced hydropower output. According to a May 2017 report published by the Asian Development Bank (ADB) and…
Sri Lanka’s electricity shortages have become increasingly severe in recent years, with declining hydro-power output, and chronic problems and breakdowns at the Lakvijaya coal station, a 900-MW plant located in Norochcholai. This, combined with rising Japanese and Indian interest in countering China’s geopolitical influence, has facilitated the incorporation of liquefied natural gas (LNG)…
Increased incidence of extreme weather patterns and rising domestic demand have strained Sri Lanka’s national grid in recent years, forcing the government to increase costly fuel imports and implement rolling power cuts as a result of periodic shortages. In its most recent energy development strategy, released in 2017, the state-owned electricity company, the Ceylon Electricity Board (CEB),…
Sri Lanka has a long history of developing economic zones, including export processing zones (EPZs), industrial parks (IPs), industrial estates, and special economic zones (SEZs). These areas are considered vital for attracting investment and building industry. Sri Lanka currently has 10 EPZs and two IPs throughout the country. They offer a number of advantages. Tax exemptions are provided…
Sri Lanka’s export economy has been facing challenges in recent years from intense international competition and lack of investment, especially foreign direct investment. As a result, the government is stepping up its commitment to support exports, especially from industrial small and medium-sized enterprises. A number of programmes have been initiated, while the country is more broadly…
Rural connectivity is poised to improve significantly, with the government securing financing from the Asian Development Bank (ADB) to rehabilitate over 3400 km of rural roads. These road renovations form part of an expansive infrastructure agenda that will also see the construction of a host of rural expressways in the coming years. Although budgetary shortfalls could make it difficult for…
In an effort to address the rising levels of public debt, the government moved to sell a majority stake in the recently constructed deepwater port in Hambantota to the state-owned China Merchants Port Holdings (CMPH) in July 2017. The deal will help shore up state reserves to allow for higher spending on priority infrastructure. It also demonstrates that there are opportunities for foreign…
Sri Lanka was suffering from the worst drought in 40 years in 2016 and early 2017 when the country was then hit by some of the heaviest floods in decades. Flooding of the Galle and Kalutara Rivers in May 2017 caused landslides, evacuations of hundreds of thousands of farmers and significant crop damage. As these events indicate, Sri Lanka and its agriculture sector are highly vulnerable to…
Identified as a potential turning point for Sri Lanka, the landmark Port City Colombo (PCC) development on a swathe of reclaimed land will start to take shape in 2018. Patali Champika Ranawaka, the minister of megapolis and western development, announced in January 2018 that a consortium led by China Harbour Engineering Company (CHEC) would invest $1bn in building three 60-storey office towers…
