News

Sri Lanka’s hard-won economic stabilisation, secured through the IMF-brokered rescue package after the 2022 collapse, now faces renewed uncertainty as global lenders carefully examine the 2026 Budget presented by the new JVP-led NPP government.

The IMF confirmed yesterday that it is reviewing the budget and assessing whether the administration’s fiscal direction remains consistent with the commitments signed under the US$3 billion Extended Fund Facility (EFF).

IMF Director of Communications Julie Kozack told reporters in Washington that the Fifth Review is expected to reach the Executive Board “in the coming weeks.”

A successful review will unlock the next tranche of US$347 million funding Sri Lanka critically needs to maintain reserves, service external debt, and keep its fragile recovery on track.

A staff-level agreement was already completed on 9 October, but the Fund now needs to verify that key reforms, revenue measures, and fiscal discipline have not drifted under the new administration.

Kozack noted that the IMF’s current assessment focuses heavily on whether the government’s fiscal framework aligns with programme targets, especially given the “structural reforms essential for strengthening Sri Lanka’s growth outlook.”

These reforms from trade liberalisation and streamlined FDI regulation to governance improvements and expanded social protection were central to stabilising the economy after the 2022 crisis. The question now is whether they will continue at the required pace.

Concerns have mounted within economic circles that the NPP government’s policy rollout has been slow, uncoordinated, and often ideologically conflicted.

Analysts warn that a drift away from predictable, rules-based policy implementation could weaken investor confidence, delay external financing, and threaten the hard-earned stability achieved since 2022.

Kozack appeared to underline these concerns subtly, emphasising that protecting vulnerable groups must remain a priority a reminder that fiscal populism, without structural reform, risks reversing progress.

International rating agencies are also watching closely. Fitch Ratings noted this week that while the 2026 Budget technically keeps Sri Lanka aligned with its fiscal reform trajectory, slower revenue growth, lower-than-planned capital expenditure, and risks emerging after the completion of the IMF programme could undermine the medium-term outlook.

The agency said the government still appears committed to reducing debt-to-GDP ratios after exceeding targets under the 2025 Budget, but warned that sustained revenue performance will be crucial.

Economists say the next few months will determine whether Sri Lanka can maintain the reform momentum that pulled it back from the brink in 2022 or whether the new administration’s hesitant, politically cautious approach will place the IMF programme, and the country’s recovery, in jeopardy.

 

With the Fifth Review nearing its decisive stage, the government’s ability to meet its commitments will shape both investor sentiment and Sri Lanka’s path to long-term stability.

The Ceylon Chamber of Commerce and the Gujarat Chamber of Commerce & Industry (GCCI) signed a Memorandum of Understanding on 13 November 2025 in Ahmedabad, Gujarat, to strengthen bilateral trade, investment, and business cooperation between Sri Lanka and Gujarat.

The MoU was signed by Chairperson of The Ceylon Chamber of Commerce, Krishan Balendra, and President of the Gujarat Chamber of Commerce & Industry, Sandeep R. Engineer.

The signing took place during the visit of Sri Lanka’s High Commissioner to India, Mahishini Colonne, marking her first official state-level engagement since assuming office.

The initiative and arrangements leading to the signing were facilitated by Sri Lanka’s Honorary Consul in Gujarat, Rakesh Shah, whose efforts played a key role in bringing the two chambers together.

Under the MoU, the Ceylon Chamber and the GCCI will collaborate to promote business opportunities, facilitate joint ventures and partnerships, organise B2B engagements, and enhance knowledge-sharing between the private sectors of both economies. It is hoped that the partnership would also serve to deepen maritime and logistics cooperation and build on the complementarities between Gujarat’s major ports and Sri Lanka’s role as a regional transshipment hub.

Both Chambers expressed confidence that the MoU will open new avenues for trade, investment, and sustainable economic cooperation.

High Commission of Sri Lanka New Delhi

Sri Lanka’s 2026 Budget has placed the country’s digital transformation at the centre of its economic recovery strategy, with the government pledging Rs. 35.6 billion (US$120 million) to modernise public services, strengthen digital infrastructure and establish the foundations of a competitive digital economy.

 The investment marks one of the most ambitious technology-focused commitments made in recent years as the country attempts to boost efficiency, attract investment and expand digital access nationwide.

President and Finance Minister Anura Kumara Dissanayake said the multi-layered programme aims to ensure that digital inclusion reaches every part of the country, positioning Sri Lanka to emerge as a regional hub for data-driven services.

He stressed that the development of data centres will be a top priority, noting that creating an investor-friendly environment will be essential in drawing foreign and local participation.

Incentives such as concessional land, green-energy promotion and low-cost electricity during the initial years of operation will form part of the government’s strategy to strengthen investor confidence.

As an initial step, the government has allocated Rs. 500 million for 2026 to lay the groundwork for data centre development.

To further accelerate digital infrastructure rollout, a simplified and faster approval process for constructing communication towers will be implemented. All new towers built under this programme will qualify for a five-year tax exemption, a move expected to reduce costs and encourage network expansion.

Supporting innovation is another major focus. A new startup fund, backed by an initial allocation of Rs. 1.5 billion under the Ministry of Digital Economy, will be launched next year to provide financial and technical support to emerging entrepreneurs.

The government also plans to introduce “Virtual Special Economic Zones” through the Board of Investment, designed to function as digitally enabled export hubs aimed at generating employment and high-value services.

One of the most significant milestones in the digitalisation programme will be the rollout of the country’s first digital National Identity Card early next year.

The initiative forms part of the broader integration of the Electronic National Identity Card (e-NIC) with the Unique Digital ID (SL-UDI) system, a combined framework for secure personal identification.

Five Indian firms were recently shortlisted to operate the digital ID system, signalling progress in procurement and implementation.

The budget also allocates Rs. 750 million towards establishing an AI data centre to strengthen domestic capabilities in emerging technologies. In parallel, all government transactions will shift to digital payment systems, with service fees and QR charges for payments below Rs. 5,000—waived to encourage public adoption.

Additional measures include tax waivers for private-sector investments in expanding internet coverage, broadband vouchers to support online learning for children, and the development or reactivation of IT zones to bolster the broader technology ecosystem.

Together, these initiatives underscore the government’s intent to fast-track Sri Lanka’s digital transition and leverage technology as a key driver of economic growth in the years ahead.

A group of students from the Faculty of Engineering of the University of Ruhuna have been hospitalized following a wasp attack this morning (14), police reported.

The students, who had arrived for a practical workshop at the Plantation Training Center in the Morar Estate in Bogawantalawa, were attacked by a swarm of wasps after a wasp nest in a tree was disturbed.

Six students sustained injuries as a result of the attack and were admitted to the Bogawantalawa Regional Hospital, police reported.

Many students from several universities are currently staying in hostels at the location for the practical workshop and are expected to take part in the workshop activities

Bogawantalawa Police are conducting further investigations into the incident.

( Source : adaderana.lk) 

Sri Lanka’s long-standing public sector overstaffing problem has re-emerged as a critical economic threat in 2025, with new data showing that the state machinery already one of the largest in South Asia continues to drain scarce fiscal resources and obstruct national productivity. Government officials, including Deputy Minister of Industries Chathuranga Abeysinghe, now openly admit that the system is “bloated at the bottom tier” due to decades of politically driven recruitment.

As of 2025, Sri Lanka’s public sector including ministries, departments, state-owned enterprises (SOEs), statutory bodies and security forceshas swollen to approximately 1.38 million employees, edging closer to its approved cadre of 1.5 million. This makes the public service larger than the total private-sector workforce employed by the country’s top 50 corporations combined. Yet productivity indicators remain stagnant, and service delivery continues to deteriorate, particularly in education, healthcare, and local administration.

Speaking at a Deloitte post-budget forum, Deputy Minister Abeysinghe acknowledged a truth that previous governments avoided. “The public service has been expanded artificially, largely at the bottom, where jobs were handed out as political favours. What we are trying to do now is rightsizing—supported by technology to restore efficiency,” he said. The 2025 Budget’s proposed 75,000 new recruitments, he emphasized, would focus strictly on essential skilled categories such as nurses, teachers, and engineers, rather than unqualified general staff.

The most controversial segment remains the so-called “Development Officers”—a politically inflated cadre of graduates placed in state offices often without defined duties. As of January 2025, Sri Lanka employed nearly 104,000 Development Officers, despite an approved cadre of 78,000. Many report to district or divisional secretariats where, according to senior officials, “there are not enough desks or functional tasks for them.”

This surplus workforce places a heavy burden on public finances. Salaries, allowances, pensions, and overtime consume almost 86% of government revenue, leaving limited room for development spending. Sri Lanka’s public-sector wage bill is now one of the highest in Asia relative to GDP. Economists warn that unless the system is restructured, the country’s recovery from the 2022 financial crisis will be slowed significantly.

A second structural problem is the expanded post-war military. Unlike countries that downsized after conflict, Sri Lanka never undertook a demobilisation program. Nearly 40,000 personnel from the 2006–2009 recruitment wave will complete 20 years of service over the next three years. The government now faces the challenge of upskilling and reintegrating them into the economy, while thousands of deserters remain outside the formal system, limiting the country’s productivity potential.

Despite promises of voluntary retirement schemes, the government insists there will be no mass layoffs. Instead, it expects digitalisation to gradually “rightsize” ministries within three to five years. However, experts caution that without skill development, performance evaluations, and enforcement of merit-based hiring, digitalisation alone cannot fix structural inefficiency.

The consequences are already visible: parents opting for private education despite paying taxes for state schooling; patients “channeling” private doctors due to failing hospitals; and taxpayers subsidising loss-making SOEs, including enterprises re-nationalised during the Rajapaksa era.

 

With Sri Lanka aiming for long-term economic stability under IMF-guided reforms, analysts argue that meaningful public-sector restructuring is no longer optional—it is the cornerstone on which the country’s future progress depends.

A railway gate operator stationed at the highly sensitive Uttarananda Mawatha crossing in Kollupitiya was arrested yesterday after reporting to duty while intoxicated, Railway Department Spokesman Asanka Samarasinghe said.

The crossing—situated between Kollupitiya and Kompannavediya near Temple Trees—is regularly used by ambassadors, senior government officials, and other VIPs, making operational discipline and security crucial.

The arrested operator, identified as Sudath Dhammika, serves as an assistant at the Company Road railway station and also functions as the secretary of the Railway Clerks’ Parallel Services Association. He was immediately suspended from duty by the Secretary to the Ministry of Transport.

According to several railway employees, Dhammika has been linked to previous acts of misconduct and alleged attempts to create internal disputes within the system.

Authorities have taken steps to halt all salary and related payments to him with immediate effect as further inquiries continue.

United States and Sri Lanka Formalize Security Cooperation: Montana National Guard Signs MOU with Sri Lanka Armed Forces Under the State Partnership Program

            Advancing Peace, Security, and Disaster Response in the Indo-Pacific

Today, at the Ministry of Defense, the United States and Sri Lanka signed a Memorandum of Understanding (MOU) formalizing the defense partnership between the Montana National Guard, the U.S. Coast Guard District 13, and the Sri Lanka Armed Forces under the Department of War’s State Partnership Program (SPP).  U.S. Ambassador Julie Chung, Adjutant General of the Montana National Guard Brigadier General Trenton Gibson, and the Secretary of Defense Air Vice Marshal Sampath Thuyacontha, signed the MOU marking a historic milestone in U.S.–Sri Lanka defense relations, underscoring both nations’ shared commitment to regional stability, maritime security, and professional military collaboration in the Indo-Pacific to advance our common goal of peace through partnership. 

U.S. Ambassador Julie Chung highlighted the significance of the new chapter in U.S.–Sri Lanka defense cooperation: “From wildfire response and flood relief in Montana to peacekeeping and humanitarian efforts overseas, the Montana National Guard has a proud record of service and professionalism. This partnership with Sri Lanka, reaffirmed through today’s MOU, strengthens our shared resolve for a secure Indo-Pacific—building trust, readiness, and lasting peace through partnership.” 

Sri Lankan Defense Secretary Air Vice Marshal Sampath Thuyacontha (Retd) said: “This agreement represents a progressive initiative that will further enhance Sri Lanka’s defense capabilities and reinforce the enduring partnership with the United States. Over the years, our two nations have long cooperated in areas such as military training, disaster relief, and defense exchanges, fostering mutual understanding and trust. This framework will open new avenues for collaboration, promote capacity-building, and contribute to ensuring peace, security, and stability across the region.” 

Brigadier General Trenton Gibson, Adjutant General of the Montana National Guard, said: “We are honored to stand shoulder to shoulder with our Sri Lankan counterparts. Together, we’ll build strength, trust, and lasting bonds that enhance the security of both our nations.” 

A Partnership Rooted in Shared Security Goals 

Established in 2021, the Montana–Sri Lanka partnership takes a major step forward today as the MOU formalizes a framework for deeper collaboration, strengthening professional ties and advancing joint security cooperation between the two nations. Through the State Partnership Program, the Montana National Guard, the citizen-soldier component of the U.S. Armed Forces from the State of Montana, brings extensive expertise in disaster response, homeland defense, and global partnerships. Since 2021, the Montana National Guard and Sri Lanka’s armed forces have deepened their partnership through joint training, expert exchanges, and reciprocal visits that have built trust and strengthened defense cooperation. Notable recent engagements include ATLAS ANGEL 2024 and PACIFIC ANGEL 2025, where U.S. and Sri Lankan personnel worked side by side to enhance humanitarian assistance and disaster response capabilities. Under the State Partnership Program, the U.S. Coast Guard District 13 also welcomed Sri Lanka Coast Guard officers to Seattle in August 2025 for joint training on oil spill response, including hazardous waste operations, shoreline recovery, and on-water cleanup—sharing expertise to safeguard sea lanes and protect the marine environment.  

Looking Ahead 

With this MOU, Sri Lanka joins a global network of 115 nations partnered with U.S. state National Guards under the State Partnership Program (SPP). The first series of joint activities under this MOU is planned for summer of 2026, focusing on disaster response, maritime domain awareness, and professional military education.  

The Montana-Sri Lanka National Guard partnership will focus on: 

• Joint training and professional exchanges to enhance interoperability and readiness. 
• Maritime Domain Awareness cooperation, addressing trafficking, migration, and narcotics interdiction. 
• Crisis response and humanitarian assistance, leveraging the Guard’s dual military–civilian capabilities, to include military medical and engineer activities. 
• Aviation operations, supporting mission success through skill and excellence. 
• Military and civil disaster readiness and response, military-civilian coordination for disaster preparedness, response, and recovery. 

Background: The State Partnership Program (SPP) was created in 1993 by the U.S. Department of Defense—now the Department of War—after the end of the Cold War to foster enduring relationships between U.S. state National Guards and partner nations. The SPP pairs the U.S. National Guard with foreign military counterparts to support defense security goals such as civil-military preparedness, critical infrastructure protection, and defense modernization.  Through exchange programs and joint capacity-building exercises, partners strengthen interoperability. Today, through the SPP, the National Guard of every state, three U.S. territories and the District of Columbia is partnered with over 100 partner countries — nations on every continent but Antarctica —promoting peace, stability, and mutual readiness through training, humanitarian assistance, and expertise exchange.  

The Montana National Guard, headquartered in Helena, Montana, is composed of highly trained soldiers and airmen who serve both their state and the nation.  Its participation in the SPP reflects the Guard’s dual mission: defending the United States while advancing global peace and security through trusted international partnerships.  

U.S. Ambassador Julie Chung, Brigadier General Trenton Gibson, Adjutant General of the Montana National Guard, Deputy Minister of Defense Major General Aruna Jayasekara (Retd) and Secretary of Defense of Sri Lanka Air Vice Marshal Sampath Thuyacontha (Retd) sign a Memorandum of Understanding in Colombo formalizing the U.S.–Sri Lanka defense partnership under the Department of War’s State Partnership Program on November 14, 2025. The agreement strengthens cooperation in defense, disaster response, and regional security.

PRESS RELEASE

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The southern Indian state of Karnataka, which is also home to some of the world’s biggest IT firms, has become the first in the country to offer paid menstrual leave to all working women in formal jobs.

Under the new policy, women aged 18 to 52 working in government and private companies can take one day of menstrual leave every month, which cannot be carried forward. No medical certificate is required to avail the leave.

The policy covers 350,000 to 400,000 women in the formal sector, although it excludes a much larger cohort - estimated to be six million - who are engaged as domestic workers, daily-wage labourers, and gig workers in the unorganised sector.

Experts say the policy should extend to the informal sector.

But the state’s menstrual leave policy is still being regarded as significant for being the first to include the private sector, applying to workers regardless of job type or contract.

The concept of menstrual leave is not new. Countries like Spain, Japan, South Korea and Indonesia already offer menstrual leave. Some Indian states also offer limited menstrual leave: Bihar and Odisha give two days per month to government employees, while Kerala provides it to university and industrial training institute staff.

But in India, the move to give an extra day off to women sparks debate over potential gender bias and equality concerns.

Others argue it’s a necessary right, allowing women to avoid losing pay or working through unavoidable menstrual pain.

“This is one of the most progressive policy decisions for women that the government is implementing,’’ Santosh Lad, Karnataka’s labour minister, told the BBC.

An official from Nasscom - a non-profit trade association of the IT and BPO industries - told the BBC that many companies in Karnataka already provide menstrual leave, so implementing the government order wouldn’t be an issue.

Pratibha R, president of the local Garment and Textile Workers’ Union, welcomed the decision, noting that most female garment workers get barely 11 leave days a year.

However, some women feel that the policy will be hard to implement.

Menstruation remains taboo in many parts of India, with women often barred from temples or isolated at home as “unclean” during their periods.

“How can one go and seek menstrual leave when we don’t even speak about it [menstruation]? Our society has not reached that level,’’ Anunita Kundu, a manager at a software company, told the BBC.

Aruna Papireddy, another IT worker, said: “If you ask me, leave is not required. Women have reached high positions without even mentioning the M word.’’

Pushpendra, a social scientist who goes by one name, says the real challenge is battling the deep-seated stigma around menstruation.

“If a woman seeks two days’ leave in Bihar, it is understood that it is because of menstruation. It has facilitated women, but it has not empowered them.’’

He notes that in many parts of India - including Bihar, which has offered menstrual leave for decades - shopkeepers still wrap sanitary pads in old newspapers.

Efforts to de-stigmatise menstruation in the past have included empathy exercises for men in the neighbouring state of Kerala. Yet in 2018, protests erupted in the state against lifting the ban on menstruating women from visiting Sabarimala temple, one of the holiest shrines in southern India.

Some women in Karnataka say the government’s menstrual leave policy could make people more comfortable discussing menstruation.

“Calling it menstrual leave helps in fighting the stigma,” said Shreya Shree, a teacher based in Bengaluru city.

Sapna S, an associate dean at Christ University and head of Karnataka’s menstrual leave committee, urged women to take advantage of the policy.

“What is needed is an attack on the social conditioning that exists. Women should not be apologetic or shy to ask for menstrual leave,” she said.

( Source : adaderana.lk)

A 38-year-old Sri Lankan national from Galle, who had arrived in Israel two months ago for employment in construction sector, was reportedly found murdered last night (13).

According to Israeli authorities, the incident has been confirmed as a murder committed by an individual of African origin.

Sri Lanka’s Ambassador to Israel, Nimal Bandara, stated that the case is being investigated by the Interpol branch of the Israeli Police.

The victim had arrived in Israel just two months ago under a employment offer facilitated by the Sri Lankan government, he added.

( Source : adaderana.lk)

In a dramatic turn for one of Sri Lanka’s most scrutinized state agencies, Sri Lanka Customs has shattered all previous revenue records, collecting Rs. 2.117 trillion as of November 11, 2025surpassing its annual target of Rs. 2.115 trillion well ahead of schedule.

 

The achievement marks the highest-ever revenue in the Department’s history, positioning Customs as the country’s top state revenue generator.

Director General Seevali Arukgoda hailed the accomplishment as “a historic milestone,” attributing it to the department’s renewed focus on efficiency, technology-driven systems, and strengthened integrity controls.

He credited the resumption of vehicle imports, which had been restricted for several years, as the main catalyst for the record income, bringing in a staggering Rs. 680 billion this year compared with just Rs. 50 billion in 2024. General cargo revenue also rose by 13% year-on-year, reflecting stronger trade activity and stricter monitoring.

Despite the celebratory tone, the Customs’ triumph comes at a time when the institution itself is under intense public scrutiny.

The department has faced allegations of corruption, internal irregularities, and politically influenced clearances, including the now-infamous 322-container clearance scandal that shook the agency earlier this year.

The controversy, involving allegations of bypassed procedures and undervaluation of imported goods, sparked public outrage and prompted a series of internal investigations.

Customs officials insist that the creation of an Internal Affairs Unit has begun to address integrity concerns and improve transparency.

Arukgoda emphasized that the agency had “taken firm steps to minimize revenue leakages and disciplinary breaches,” adding that enhanced compliance monitoring had helped detect and prevent several tax evasion attempts.

Independent fiscal analysts, however, note that the record-breaking numbers also reflect external factors notably, the sharp rebound in imports following economic stabilization and the rupee’s relative appreciation, which increased the value of duties collected. They warn that the 2025 windfall may not be sustainable as vehicle imports normalize and domestic demand plateaus in 2026.

Nevertheless, Customs’ consistent upward trend in revenue collection paints a remarkable picture of institutional resilience. The Department’s earnings have more than doubled within two years, from Rs. 975 billion in 2023 to Rs. 1.503 trillion in 2024, culminating in this year’s historic performance.

Behind the numbers, however, lies a deeper challenge restoring public trust in an agency long accused of inefficiency and corruption. Trade unions and logistics industry representatives have urged authorities to ensure accountability in ongoing inquiries into the 322-container episode and other alleged irregularities.

For the government, Customs’ success provides a crucial boost to fiscal recovery under tight IMF monitoring. Yet for many observers, the real test lies not in the trillions collected, but in whether the Department can sustain transparency, rebuild credibility, and institutionalize integrity in an environment historically vulnerable to malpractice.

As Sri Lanka pushes forward with tax reforms and state-sector restructuring, the Customs Department stands as both a symbol of fiscal revival and a reminder of the need for uncompromising accountability within the nation’s revenue machinery.

Courtesy Call of the Ambassador Mahinda Samarasinghe on Assistant Secretary Paul Kapur and Deputy Assistant Secretary Bethany Poulos Morrison, U.S. Department of State

The Ambassador Mahinda Samarasinghe called on Assistant Secretary for South and Central Asian Affairs, Professor Paul Kapur, and Deputy Assistant Secretary (DAS) Bethany Poulos Morrison of the Bureau of South and Central Asian Affairs of the U.S. Department of State, on 12 November 2025, at the State Department. Prof Kapur succeeded former Assistant Secretary, Amb. Donald Lu.

Assistant Secretary Paul Kapur, who has visited Sri Lanka on multiple occasions as a scholar, reaffirmed the strong and cordial relations between Sri Lanka and the United States and engaged in discussions on areas of mutual interest, including bilateral cooperation, trade engagement, and regional developments in South Asia and the Indo-Pacific. During the meeting, he emphasized the strategic significance of the U.S.–Sri Lanka partnership for regional peace, prosperity, and stability. The Ambassador conveyed appreciation for the United States’ continued engagement with Sri Lanka and underscored Sri Lanka’s commitment, including the Prosperity Guardian Mission, highlighting opportunities for collaboration with Boeing as discussed during the President’s meeting, which was facilitated by the Ambassador.

Key ongoing economic matters were addressed, including Sri Lankan exports in the context of recent U.S. trade-tariff concerns, and the importance of strengthening market access, trade facilitation, and the investment climate. The Ambassador apprised both Assistant Secretary Kapur and DAS Morrison of the latest developments in the ongoing USTR negotiations. He further highlighted Sri Lanka’s strategic location in the Indian Ocean and expressed interest in constructive engagement with the United States in areas such as maritime security, connectivity, supply-chain resilience, and education and training cooperation, particularly in hydrographic mapping. The Ambassador emphasized the importance of sharing data accumulated by foreign partners in Sri Lankan waters, noting the Standard Operating Procedure (SOP) currently under finalization.

The Ambassador also requested the provision of a fifth Coast Guard cutter and briefed the U.S. side on how previously provided cutters have been utilized to enhance Indo-Pacific security, particularly in mitigating drug trafficking and human smuggling. Continued U.S. support for Sri Lanka’s capacity-building initiatives was welcomed. The meeting concluded with both sides reaffirming their commitment to further advance the Sri Lanka–U.S. partnership across bilateral and multilateral platforms trafficking and human smuggling and welcomed continued U.S. facilitation for Sri Lanka’s efforts in capacity-building.

The meeting concluded with both sides reaffirming their commitment to further advancing the Sri Lanka–U.S. partnership across bilateral and multilateral platforms.

Deputy Chief of Mission Madhuka Wickramachchi, Counsellor Chathuri Perera, and Defence Advisor Commodore Dumindu Abeywickrema accompanied the Ambassador to the meeting. Director, Alla Kamins and Sri Lanka Desk Officer, Iris Kim, also participated from the U.S. Department of State.

Embassy of Sri Lanka Washington D.C

14 November 2025

Sri Lanka’s ambitious urban modernization drive meant to transform key cities into modern, livable, and commercially vibrant spaces has come under renewed scrutiny following delays and questions surrounding the transfer and use of prime state lands in Colombo and other major cities.

Documents reveal that Cabinet approval was granted on 27 October 2020 to transfer both government and privately held lands to the Urban Development Authority (UDA) for a series of urban redevelopment projects islandwide.

 The move was part of the broader national strategy to rejuvenate Colombo, Kandy, Galle, Jaffna, and other urban centres under the National Physical Plan and the Urban Regeneration Programme led by the Ministry of Urban Development and Housing.

Under Cabinet Memorandum No. MUD/H/2020/CP/37, dated 12 October 2020, the UDA was authorized to take possession of 45 identified lands, some already occupied by private clubs and institutions.

 Among these were three high-value plots totaling 1.8274 hectares, which housed the Otters Aquatic Club and the 80 Club Colombo—two long-established social institutions in Colombo’s most valuable real estate zones.

Although the Cabinet decision permitted the UDA to develop, open, and repurpose these lands for public use, the Authority has yet to utilize them effectively for commercial or public benefit.

According to finance ministry observations issued on 16 October 2020, any revenue generated through the commercial use of these lands was to be credited to the Consolidated Fund, after deducting UDA’s acquisition and development expenses.

However, more than four years later, none of the targeted lands have been commercially developed, raising concerns over administrative inefficiencies, political interference, and potential underutilization of valuable public assets.

Senior sources within the UDA acknowledge that procedural hurdles and disputes over property rights have delayed progress.

The controversy unfolds against the backdrop of several high-profile urban transformation projects currently under implementation.

These include the Colombo City Beautification and Waterfront Development Project, the Beira Lake Restoration and Promenade, the Battaramulla Administrative City, and the ongoing Port City Colombo mega development. Collectively, these initiatives are aimed at reimagining urban spaces, easing congestion, and attracting foreign investment.

The Urban Regeneration Project, launched with support from international agencies such as the World Bank and Asian Development Bank, has already resettled over 50,000 underserved families from informal settlements to modern housing complexes, particularly in Colombo North and East.

Yet critics argue that while the UDA’s housing component has shown visible results, commercial land utilization has lagged, undermining potential revenue generation.

Urban economists point out that strategic use of government-owned land could inject billions into state coffers through public-private partnerships (PPPs), retail complexes, or green urban spaces. “Land in Colombo 7 and surrounding areas is among the most valuable in South Asia.

The longer these assets remain idle, the greater the economic opportunity cost,” said one senior economist familiar with the process.

Meanwhile, opposition lawmakers have demanded a Parliamentary oversight review into why lands earmarked for development such as the Otters and 80 Club properties—remain inactive, and whether their temporary status has benefited any private interests.

As Sri Lanka intensifies its urban renewal agenda amid fiscal strain, the issue highlights a deeper challenge how to balance modernization, transparency, and accountability in managing the country’s scarce urban land resources.

Whether the UDA can translate Cabinet approvals into tangible results will be a key test of its institutional credibility and the government’s broader urban development vision