News & market updates

China has retooled its Belt and Road Initiative, with deals linked to the programme reaching a record $213 billion in 2025. The revamp emphasizes smaller projects, greater equity stakes (about 40% by 2025) and 'soft connectivity' to export standards, services and digital systems abroad.

Sri Lanka and Türkiye held their second political consultations in Ankara on May 5, focusing on defence and security cooperation and exploring expanded investments and joint ventures in pharmaceuticals, renewable energy, tourism, logistics and technology. They also discussed connectivity, maritime cooperation and education links.

LAUGFS Gas revised domestic refill prices to Rs. 6,245 (12.5kg) and Rs. 2,500 (5kg). Litro Gas held retail LP gas prices for May unchanged at Rs. 4,765 (12.5kg), Rs. 1,910 (5kg) and Rs. 890 (2.3kg).

Colombo bourse rebounded as the ASPI rose 0.69% (155.47 pts) to 22,739.77 after Middle East developments pushed oil below $100, with turnover over Rs. 4.1bn and net foreign inflow of Rs. 62.4m. JKH, MELS and RIL were among top positive contributors while LIOC fell and REEF gained.

Sri Lanka's Ministry of Energy and Board of Investment issued an RFI for green hydrogen and green ammonia project proposals, with submissions due 5 June 2026. The move supports the National Hydrogen Roadmap targeting 70% renewable power by 2030 and USD 1bn annual green energy exports by 2030.

Economist Ganeshan Wignaraja said Sri Lanka could position itself as an Indian Ocean hub for finance, trade, aviation and services if it maintains macroeconomic stability and implements reforms. He urged considering an 18th IMF programme as the current one ends mid-2027 and warned rising oil/gas/fertilizer prices and war-linked tourism and remittance disruptions pose risks.

Asian stocks jumped to record highs (MSCI Asia-Pacific ex-Japan +2.3%) as AI-driven buying and signs of progress toward a U.S.-Iran agreement boosted risk appetite; Brent crude fell about 1.2% to $108.51/bbl. Tech and semiconductors led gains while the dollar eased.

Mercados Aries International S.A. was awarded a $1.49 million consultancy contract for the ADB-funded Power Grid Empowerment and Renewable Energy Integration Project after EOIs and RFP evaluations following Cabinet approval of the procurement process.

Cabinet approved obtaining ADB transaction advisory services for the 150 MW Kondachchi wind power project, with ADB providing end-to-end support and $1.2m in advisory services funded as a grant. The project will include a 150 MW wind farm with advanced battery storage to provide firmed power to the grid.

NCINGA won the 2026 Google Cloud Partner of the Year Award for Social Impact: Community Empowerment and Resilience. The firm says it leverages Google Cloud and Google AI for digital inclusion, education, healthcare and renewable energy transition programs and directs 10% of net profits to its Foundation of Humanity.

Sri Lanka and the Maldives pledged deeper economic cooperation at the Maldives–Sri Lanka Business Forum in Colombo, with Maldives announcing investment‑friendly reforms and leaders urging expansion of bilateral trade (US$137m in 2025), tourism, infrastructure and sector partnerships.

Sri Lanka's Ministry of Power and Energy is implementing technical reforms — procuring RE-desk software, operating a renewable forecasting system, and installing battery energy storage systems and a synchronous condenser — to prevent a repeat of the Feb 9, 2025 nationwide outage. The Ceylon Electricity Board has been ordered to implement 12 recommendations, update protection parameters and load-shedding settings, and a four-member committee will monitor progress.

The Iran war-driven energy crisis led the Asian Development Bank to cut growth for developing Asia to 4.7% this year and 4.8% in 2027 and raise its inflation forecast to 5.2% for this year. Governments are using subsidies, duty cuts, reserves and export curbs to shield consumers while several regional currencies have weakened.

Secondary bond yields rose marginally amid Middle East tensions and higher oil prices, with the 15.12.26 at 8.55%-8.65% and longer maturities trading around 10.05%-11.26%. Net money-market liquidity surplus was Rs.226.55bn (Rs.176.10bn at SDFR 7.25%), and USD/LKR closed at Rs.319.60/320.

Maxtherm Lanka won the Silver Award for Best Energy Efficiency Service Provider at the National Energy Efficiency Awards 2025. Its biomass boiler conversions can cut fuel costs by up to 75% and the company estimates its interventions delivered about $66m in national cost savings and a ~40m kg CO₂ reduction over three years.

Oil prices rose over 3% after Iran claimed it struck a U.S. warship, pushing Brent to $111.81/bbl and WTI to $105.34/bbl. The U.S. denied the strike; OPEC+ approved a modest output rise but flows through the Strait of Hormuz remain constrained.

Sri Lanka has seen four fuel price hikes in five weeks, the latest effective May 3 under a cost-reflective formula tied to higher global crude, driving a sharp rise in inflation and living costs. The CPI jump leaves the Central Bank weighing rate hikes against rupee depreciation risks.

Fuel dealers accuse the Ceylon Petroleum Corporation of unlawfully cutting dealer margins and question CPC’s reported Rs. 36.4 billion profit for 2025. CPC raised retail fuel prices from 1 May (auto diesel +Rs10 to Rs.392; super diesel +Rs15 to Rs.458; petrol 92 +Rs12 to Rs.410; petrol 95 +Rs15 to Rs.470; kerosene +Rs10 to Rs.265) and Lanka IOC said it revised its prices in line.

Sri Lanka's current account surplus fell 43.9% YoY to $531.5m in 1Q2026. The decline was driven by a sharply wider trade deficit (up 122% YoY), weaker services/tourism inflows with March surplus collapsing 90.7% YoY to $44.6m, and a 74.7% surge in fuel import costs.

Colombo Stock Exchange closed higher Monday with the ASPI up 0.65% at 22,695.00 and turnover of 4.81 billion rupees, driven by buying in banking counters. Top contributors included NDB, Dialog, Melstacorp and Colombo Dockyard, while Ceylinco Insurance and Windforce were among decliners.

KPMG Sri Lanka Academy will host a webinar on 5 May to explain recent tax reforms — including the Social Security Contribution Levy Act, the VAT (Amendment) Bill, expanded withholding taxes and higher capital gains tax — and their compliance implications for businesses and individuals.

Sri Lanka's Consumer Sentiment Index fell 16 points in March to 70, the lowest since June 2024 and the steepest monthly drop since Jan 2021. The decline reflects rising cost of living, energy and fuel concerns, heatwave risks to utilities, and trade-union action including a GMOA strike.

Brent crude rose above $120 a barrel, briefly hitting $122 — its highest since 2022 — after disruptions around the Strait of Hormuz and reports of a potential US blockade of Iran's ports. The World Bank warned energy prices could surge 24% in 2026 if acute disruptions ease.

Sri Lanka's current account posted a Q1 cumulative surplus of USD 531m, even as the merchandise trade deficit widened to USD 2.3bn driven by a 74.7% jump in fuel import spending. Tourist arrivals fell 19.8% and services surplus dropped 42.4% while remittances rose 26.5% to about USD 2.3bn; gross official reserves were USD 7.0bn and the rupee was down 2.9% YTD by end-April.

Fuel dealers allege Ceylon Petroleum Corporation reduced dealer margins from 3% to 1.5% from 1 March 2025 and absorbed the deducted amounts into CPC’s reported Rs.36.4 billion 2025 profit, warning nearly 200 cooperative stations and many rural outlets face closure and urging renewed pricing transparency.

Sri Lanka's rupee closed at 319.75/320.00 to the US dollar, slipping below 320 as inflation reached the central bank's 5% target; the central bank intervened around 319.50 and conducted repo operations while bond yields remained broadly steady.

Sri Lanka's CCPI inflation rose to 5.4% in April 2026, up from 2.2% in March, after a roughly 35% government fuel price increase; the rise may prompt the Central Bank to tighten monetary policy sooner than expected.

Sri Lanka's headline inflation accelerated to 5.4% year‑on‑year in April 2026, up from 2.2% in March, driven mainly by higher transport (petrol +Rs.91.18/l, diesel +Rs.88.82/l) and utility costs (12.5kg LP gas +Rs.595.81; electricity). Food inflation also rose to 2.7%, supporting the Central Bank's projection but keeping monetary policy risks elevated.

PUCSL opened a public consultation on proposed electricity tariff adjustments for Q2–Q3 2026 after the National System Operator estimated a Rs.38 billion generation-cost deficit. The government will provide a Rs.15 billion subsidy from 10 May and PUCSL aims to decide on 9 May.

Brent crude jumped to around $115 a barrel after reports the US is preparing an 'extended' blockade of Iran’s ports, raising concerns over supply via the Strait of Hormuz. The disruption has driven oil volatility and prompted forecasts of higher energy prices if conflicts persist.