AGP Executive Report

Tax Compliance: TIN checks took effect on November 1 for eight transactions, including opening bank accounts, registering vehicles and businesses, and transferring company shares. Crowds at the Inland Revenue Department prompted officials to urge people to register online. Markets: The Colombo All-Share Index fell 0.3% on Monday, with communication and financial stocks weighing; foreign investors were net sellers. Cost Pressures: Sri Lanka’s fuel import bill rose 51.5% in the first nine months of 2026. Officials are preparing for possible El Niño-related food supply risks, while importers say supplies are currently planned through January. Trade and Tourism: Monthly exports hit a record in September, but tourism earnings fell 9.2% to US$2.25 billion in the first nine months, despite 1.7 million arrivals. Agriculture: The government’s AgriConnect initiative aims to boost farm incomes, jobs and food security, with plans to reach 900,000 farmers.

Currency and Energy: The rupee weakened 6.8% against the US dollar in the first 10 months of 2026, closing October at Rs. 332.61. Fuel imports cost US$4.49 billion in the first nine months, up 51.5% year on year; pump prices also rose from November 2. Tax and Finance: A valid TIN is now required for key transactions, including opening bank accounts, registering vehicles and transferring company shares. Alliance Finance has approval to raise up to Rs. 1 billion through what it says will be Sri Lanka’s first Orange Bond, funding small businesses, climate projects and women-led enterprises. Investment: The SEC chief urged the Government to back capital-market development, saying sustained 7–9% growth needs investment beyond public borrowing and bank credit. Cabinet also approved long-term leases of 15 plantation properties to selected investors. Connectivity: British Airways has launched three weekly winter flights between London Gatwick and Colombo, adding direct links for tourism and trade.

Tax Compliance: From today, a valid TIN certificate is required for eight transactions, including opening bank accounts, registering vehicles or land, and registering businesses. Fuel Costs: Sri Lanka’s fuel import bill rose 51.5% to US$4.49 billion in the first nine months of 2026, despite a year-on-year decline in September. Impact Finance: Alliance Finance plans to raise up to Rs. 1 billion through the country’s first Orange Bond, funding MSMEs, climate projects and women-led businesses. Plantation Investment: Cabinet approved long-term leases for 15 properties owned by State plantation entities, following investor interest in underused land, factories and tourist sites. Agriculture: A US$835 million AgriConnect plan aims to link 900,000 farmers to value chains by 2030, with delivery and income gains now the key test. Tourism: Earnings fell 9.2% to US$2.25 billion in the first nine months, even as arrivals reached 1.7 million.

Tax Rules: From today, a valid TIN is required for eight transactions, including opening a bank account, registering a vehicle or land, and obtaining a credit card. The Inland Revenue Department says income tax is payable only when annual income exceeds Rs. 1.8 million. Mattala Airport: Nineteen investors have expressed initial interest in developing aviation and support facilities at Mattala, but the Government has yet to decide on an investment or operating model. Agriculture: Sri Lanka’s AgriConnect plan aims to link 900,000 farmers to commercial opportunities by 2030, combining $665 million in institutional investment with efforts to attract up to $170 million in private capital. Tourism: Earnings fell 9.2% to $2.25 billion in the first nine months of 2026, despite 1.7 million arrivals. Heat and Jobs: The ILO estimates heat stress could cut working time in Sri Lanka by the equivalent of 145,000 full-time jobs by 2040, underscoring a growing risk to productivity.

Agriculture: Sri Lanka’s new AgriConnect plan aims to connect 900,000 farmers to markets, finance and technology by 2030, backed by $665 million from the World Bank Group and IFAD and a target of up to $170 million in private investment. Tax: From November 1, a valid TIN is required for eight transactions, including opening a bank account, registering a vehicle or business, and obtaining a credit card. The Inland Revenue Department says income tax is payable only above annual earnings of Rs. 1.8 million. Climate Costs: Heat stress could cut working time in Sri Lanka by the equivalent of 145,000 full-time jobs and contribute to $26.6 billion in annual losses across Sri Lanka and the Maldives by 2040. Trade and Tourism: September exports reached a monthly record, supported by petroleum and machinery, while tourism earnings fell 9.2% to $2.25 billion in the first nine months despite 1.7 million arrivals. Investment: China Merchant Holdings’ exit from a stalled $392 million Colombo logistics hub raises fresh concerns about regulatory barriers and investor confidence. Markets: The Government’s Rs. 100 billion Treasury bond auction was fully subscribed.

Agriculture Investment: Sri Lanka launched a US$665 million AgriConnect programme, backed by the World Bank and IFAD, to modernise farming and link 900,000 farmers to value chains by 2030; it aims to attract up to US$170 million in private investment. Exports: Earnings rose 5% to a record US$13.6 billion in the first nine months of 2026, but exporters warn regulatory barriers could constrain further growth. Tourism: The sector earned US$2.25 billion through September, down 9.2% year on year despite nearly 1.7 million visitors; overseas travel spending climbed 62.4%, adding pressure to foreign-exchange flows. Prices and Compliance: Annual inflation on the key index reached 8.3% in October, while tax identification certificates become mandatory for eight transactions from November 1. Climate and Jobs: The ILO warns heat stress could cost Sri Lanka around 145,000 full-time-equivalent jobs and US$26 billion in annual GDP by 2040, underscoring the economic stakes of protecting workers.

Prices & Taxes: Colombo inflation rose to 8.3% in October, a 40-month high and fourth straight month at the Central Bank’s upper limit; bread and bakery prices increase by Rs. 5 from tonight after flour costs climbed. From November 1, a valid TIN certificate is required for eight transactions, including opening bank accounts, registering businesses and transferring shares. Tourism: The Government is weighing mandatory SLTDA registration for accommodation providers and new rules for foreign-run businesses, as it targets $10 billion in tourism revenue and five million arrivals by 2030. Capital Markets: Sri Lanka has joined the global Orange Movement, with the first bond issues targeted by December; Alliance Finance plans a Rs. 1 billion raise for gender equality and climate resilience. Exports & Climate: Export earnings reached $13.6 billion in the first nine months, up 5% year on year. An ILO study warns heat stress could cost Sri Lanka the equivalent of 145,000 full-time jobs and around $26 billion in annual GDP by 2040. Corporate Results: Overseas Realty reported Rs. 6.9 billion in profit before tax for the first nine months of 2026, supported by higher occupancy and rents.

Household Costs: Bread and bakery prices will rise by Rs. 5 from midnight, following a Rs. 13-a-kilo increase in flour. The Consumer Affairs Authority is also weighing legal action against LAUGFS Gas after months of cylinder shortages strained supply. Jobs and Productivity: ILO studies warn heat stress could cut Sri Lanka’s working time by the equivalent of 145,000 full-time jobs by 2040, with annual GDP losses projected at about US$26 billion. Agriculture is expected to be hardest hit. Trade and Investment: Sri Lanka’s exports rose 5% to US$13.6 billion in the first nine months, with September setting a record, though apparel remains under pressure. The 2027 Budget sets out Rs. 2 trillion in capital spending to boost investment. Finance and Markets: Bank of Ceylon has launched an AI-powered instant loan service through its mobile app, while Sri Lankan shares rose 1.5% on Thursday, led by financial and consumer-staple stocks.

Markets: Sri Lankan shares rose 1.5% on Thursday, led by consumer and financial stocks, while the rupee weakened to Rs. 337.13 per US dollar. Local investors were net buyers as foreign investors sold. Budget: Parliament’s Public Finance Committee approved the 2027 Appropriation Bill, which provides for about Rs. 9.92 trillion in expenditure. Trade: Sri Lanka’s goods exports rose 21.66% in September, lifting nine-month earnings to a record, but apparel exporters still face a reported $210 million shortfall. Shipping: Hormuz-related freight disruption is easing, though container dwell at key Sri Lankan and Indian ports remains as much as 59% above pre-conflict levels. Business: Esna Holidays acquired Mackinnons Travels from John Keells Holdings, bringing the long-established travel firm under Esna Group. Prices: Dried chilli has climbed to Rs. 1,300 a kilo after substandard imports were held at Customs and Indian exporters suspended shipments to Sri Lanka.

Budget and Taxes: The Government has earmarked Rs. 2 trillion for 2027 capital spending, with roads, rail and logistics among the priorities. Ahead of the November 12 Budget, Deputy Finance Minister Anil Jayantha said indirect taxes were “super high,” but no decision had been made on a property tax; revenue targets must still be protected. Capital Markets: Most of the SEC’s 12 reform proposals have been accepted, but investors will be looking for clear delivery in the Budget. A new SOE law may miss its year-end target, with drafts stalled at the Legal Draftsman’s Department. Exports: Apparel shipments rose 3.47% in September to US$417 million, yet January–September exports were down 5.52%, leaving a US$210 million shortfall. Power Security: Norochcholai Unit 2 went offline for maintenance just days after the three units returned to the grid following the nationwide blackout, renewing questions over reliability and maintenance planning. Bank Funding: Bank of Ceylon plans to raise up to Rs. 30 billion through what would be Sri Lanka’s largest listed debenture issue, with subscriptions opening November 3.

Investment Plans: Sri Lanka plans about US$6 billion in capital spending in 2027, focused on infrastructure, logistics and transport, while inviting Indian businesses to invest in manufacturing, renewable energy, technology and other sectors. The President has also called for faster mineral exploration and stronger investment. Exports: Earnings reached a record US$13.6 billion in the first nine months, up 5% year on year, with September goods exports rising 21.66%. Apparel exports grew 3.47% in September to US$417 million, but remained down 5.52% for the year to date. Monetary and Credit: The Central Bank raised its policy rate by 50 basis points as inflation is forecast to stay above 8%; meanwhile, CRIB added four licensed microfinance firms to its credit-information network, aiming to widen access to formal lending. Tourism and Resilience: The Government is pursuing a 2030 target of five million visitors and US$10 billion in tourism revenue. Japan has pledged about Rs. 4.54 billion for flood-mitigation improvements in the Kelani River Basin, which supports key Colombo-area businesses and infrastructure.

Trade and Connectivity: Sri Lanka and Türkiye signed an amended air transport agreement, aiming to boost tourism, trade and investment through stronger air links. Exports: September earnings hit a record US$1.69 billion, lifting nine-month exports 5% to US$13.61 billion; electronics exports surged 61%, while apparel and textiles fell 5.7%. The Export Development Board says the country remains on track to exceed its US$18 billion annual target. Economic Outlook: Central Bank Governor Nandalal Weerasinghe expects inflation to stay around or above 8% through the first quarter of 2027 before easing towards 5%; rising energy and transport costs remain a pressure. State Enterprises: The Government says it plans to step back from running ordinary commercial businesses, while reviewing 527 state-owned entities, many of which are not commercial enterprises. Ports: A US$17 million US grant will support Colombo Port’s digital modernization, including systems to streamline cargo and regulatory processes. Investor Risk: Apparel industry leaders warn that Sri Lanka’s proposed anti-terrorism law could jeopardise GSP+ eligibility when the EU trade concession is renewed in 2027.

Markets: The rupee closed at 332.40/50 to the US dollar, while bond yields edged higher. Economic Support: Cabinet approved a US$100 million ADB loan for a recovery programme aimed at resilience and inclusive economic opportunities. It also backed negotiations for a US$60 million OPEC Fund loan for the second phase of the Mahaweli water-security programme, estimated to cost US$536.5 million. Exports: Earnings rose 5% to US$13.6 billion in the first nine months of 2026, with September posting a record performance. Ports: A US$17 million US grant will support Colombo Port modernization, while reports that China has withdrawn from a proposed port logistics hub raise questions about investment plans. Connectivity: Sri Lanka and Türkiye signed a protocol to amend their air transport agreement, with improved links expected to support tourism, trade and investment.

Exports: Sri Lanka earned US$13.61 billion from goods and services in the first nine months of 2026, up 5% year on year. September exports hit a record US$1.69 billion, with merchandise exports up 21.7%. Tourism & Trade: British Airways has resumed thrice-weekly direct Colombo–London flights, its first since 2015, supporting tourism and business travel. Digital Payments: WEBXPAY and Pine Labs have enabled UPI, Indian cards and net banking at Sri Lankan online checkouts, making it easier for Indian customers to pay local merchants. Investment: Nepalese billionaire Binod Chaudhary is considering expanding his Sri Lankan interests in banking, hospitality and other sectors. Business Costs: Carton manufacturers face rising paper and operating costs, with key paper grades up 30–50%, squeezing margins. Sustainable Finance: Resus Energy’s Rs. 1 billion green bond has become the first from a Sri Lankan non-financial company to list on Luxembourg’s sustainable finance platform.

Markets: Sri Lankan shares fell for a sixth straight session on Monday, with the All-Share Index down 0.23%; foreign investors were net sellers, while local investors bought shares. Retail Expansion: India’s Wow! Momo Foods plans to enter Sri Lanka by year-end with Softlogic as master franchisee, opening three Colombo outlets and targeting 20 within two years. Trade and Investment: Sri Lanka is promoting 18 planned industrial zones to attract investors, while talks with Ajman explored cooperation in fintech, food security, manufacturing and IT. Exports: Five local pharmaceutical companies joined an industry exposure and business-networking programme in Milan, seeking partners and routes to international markets. Tourism Links: British Airways has launched a three-times-weekly winter service between London Gatwick and Colombo, adding direct air capacity for the season.

Digital Payments: Sri Lanka’s national LankaQR rewards draw starts on October 27, offering Rs. 51 million in prizes to encourage customer and merchant transactions. Markets: Bond yields recovered from early-week highs but ended slightly higher on some maturities; foreign holdings of rupee Treasuries fell below Rs. 200 billion. Household Costs: Rain has pushed vegetable prices sharply higher, while Lanka IOC and Sinopec raised Octane 95 by Rs. 20 a litre to Rs. 495. Litro says it is ramping up deliveries to meet demand. Investment: The Government’s plan for 18 industrial zones faces a test in attracting credible investors and securing infrastructure funding. PVR Inox is also exploring expansion beyond Colombo, with Jaffna a likely next location. Energy and Fiscal Policy: Higher oil costs are driving calls to accelerate the shift to renewables, though major constraints remain. The Institute of Policy Studies urges a fairer tax base, warning against cutting VAT before revenue is secure.