News & market updates

India pledged a $450m reconstruction package for Sri Lanka—$350m in concessional lines of credit and $100m in grants—to support recovery from Cyclone Ditwah. Assistance will target roads, bridges, housing, health and education, agriculture and disaster-response, with India also encouraging tourism and FDI.

China pledged comprehensive assistance and to share expertise for Sri Lanka's "Rebuilding Sri Lanka" program, offering support for ongoing and new projects and key initiatives including the Clean Sri Lanka and anti-corruption programs.

Access Engineering PLC was awarded a contract by the Cabinet to build 615 housing units at Colombage Mawatha, Kirulapone. The award follows the procurement process and a High Level Standing Procurement Committee recommendation after four bids were received.

Fitch assigned a 'neutral' sector outlook for APAC corporates for 2026, forecasting mild improvement in credit metrics and aggregate EBITDA margins rising to just over 15% from ~14.5% in 2025. It flagged risks from geopolitics, US–China tensions and tariffs, China property weakness weighing on construction, and deteriorating outlooks for tech, automotive, chemicals and shipping.

The 364-day Treasury Bill weighted average rate rose 16bps to 8.19% at yesterday's auction, while the 91- and 182-day rates moved to 7.55% and 7.95%; the auction was undersubscribed at 54.97% (Rs.82.45bn of Rs.150bn). Secondary bond trading tapered off, net liquidity surplus rose to Rs.92.22bn and USD/LKR closed at 309.65/309.75.

Sri Lanka has yet to fully assess Cyclone Ditwah's economic fallout; the World Bank's rapid estimate puts direct physical damage at $4.1bn (about 4% of GDP), while the government says a comprehensive damage-and-needs assessment will take at least four weeks and likely show higher total costs.

Cabinet approved inviting fresh investment proposals for a UDA-owned 2 roods 14.7 perches parcel on Chatham Street, Fort Colombo, to be offered on a 99-year lease for a mixed-use development. The UDA will re-launch after 2024 attempts drew no interest.

Cabinet approved resumption of eight stalled hospital projects at a revised total State cost of Rs.16.223 billion. Most projects are now targeted for completion by end-2028, with revisions adding Rs.9.508 billion to public finances versus original estimates.

Opposition MP Dr. Harsha de Silva rejected calls to suspend Sri Lanka's external sovereign debt repayments after Cyclone Ditwah, warning such a move would jeopardise market access and credit ratings needed for climate adaptation and reconstruction. He also accused senior government figures of reversing their earlier opposition to the IMF-backed restructuring.

China offered to extend all necessary assistance and share experience with Sri Lanka under the "Rebuilding Sri Lanka" programme, Chinese official Wang Junzheng told President Anura Kumara Dissanayake. China said it will support ongoing and new projects, including the Clean Sri Lanka programme and rural poverty eradication efforts.

Colombo Stock Exchange closed 0.15% higher as the ASPI rose 32.05 points to 21,959.05, led by gains in selected banking, construction and retail stocks. Top contributors included Senkadagala Finance, Sampath Bank, Bukit Darah, Royal Ceramics and Tokyo Cement; turnover rose to Rs 4.1bn with a Rs 331mn net foreign outflow.

India will provide a comprehensive assistance package to Sri Lanka for relief and rehabilitation after Cyclone Ditwah, with External Affairs Minister S. Jaishankar sent as Special Envoy to coordinate implementation. The support follows 'Operation Sagar Bandhu' which delivered immediate relief and emergency services.

Bank of Ceylon issued a Basel III–compliant Tier II listed Sustainability Bond — the largest sustainability bond in Sri Lanka — which was oversubscribed and closed on opening day (22 December). Proceeds will fund eligible green and social projects including renewables, water/waste, agriculture, MSMEs, healthcare and education.

Colombo Dockyard led gains as the ASPI rose 0.13% to 21,927.00, with Dockyard up to Rs127.00. Other contributors included Sampath Bank, John Keells, Tokyo Cement and Sierra Cables; turnover fell to Rs2.5bn and the CSE recorded a net foreign outflow of Rs68.58m.

India committed US$450 million to Sri Lanka for Cyclone Ditwah recovery, comprising US$350m in concessional lines of credit and US$100m in grants to rebuild roads, railways, bridges, houses, health services and rehabilitate agriculture.

India will provide USD 450 million (a USD 350 million concessionary line of credit and USD 100 million in grants) to support reconstruction of areas in Sri Lanka hit by Cyclone Ditvah.

121 leading economists called for the immediate suspension of Sri Lanka’s external sovereign debt payments, saying the IMF-backed 48-month restructuring offers limited debt-service relief. They urged a new framework treating climate disasters as systemic shocks and significant debt cancellation to enable recovery and reconstruction.

IMF warns Cyclone Ditwah could destroy 2.5–5% of GDP, widen the balance-of-payments gap by about $700m and push average inflation to 5.4% in 2026, above the CBSL 5% limit. Agriculture and tourism are hardest hit while reconstruction may support construction but raises external and debt risks.

IMF warns Sri Lanka's debt risks remain elevated and says capacity to repay the Fund has weakened after Cyclone Ditwah, with IMF credit outstanding projected to peak at 3.1% of GDP in 2027. The Fund urges strict adherence to the Public Financial Management Act, fiscal discipline, and safeguards for emergency and reconstruction spending.

EDB Chairman says Sri Lanka is on track to surpass $17.0bn in export revenue in 2025 after goods and services earned $15.77bn in Jan–Nov, up 5.8% YoY. Apparel reached $4.82bn (4.9% YoY), tea exceeded $1.4bn (7.4% YoY) and services were $3.35bn (3.6% YoY).

Vidullanka PLC was named the lowest-cost bidder on 19 Dec for a contract to expand and upgrade a 100 kW mini-hydropower facility at Buca Village, Fiji, though the final award remains pending. The company said this identification is a material step and further announcements will follow upon formal contract award or other significant developments.

Hatton National Bank PLC raised Rs. 10 billion from an oversubscribed issuance of 100 million listed, rated “AA-(lka)” unsecured senior sustainable bonds in five- and seven-year tenors. Proceeds will fund renewable energy, energy-efficiency, green buildings, water infrastructure, housing, healthcare, education and women’s entrepreneurship initiatives.

HNB PLC raised LKR 10 Bn from an oversubscribed issuance of 100 million listed, rated (AA-(lka)) unsecured senior sustainable bonds in 5- and 7-year tenors. Proceeds will fund renewable-energy, energy-efficiency, green buildings, water projects and social initiatives including housing, healthcare and education.

Colombo Dockyard PLC secured the largest shipbuilding contract in its history — a repeat order from Orange Marine for two cable laying/repair vessels — and completed four complex cable‑ship repair projects, boosting dock utilisation and returns.

Commercial Bank of Ceylon committed over Rs.125 million to Cyclone Ditwah recovery, including a Rs.110 million donation to the Rebuild Sri Lanka Fund. The bank also donated dry rations to 5,000+ families, provided business recovery assistance, sponsored a disaster-risk data portal revamp and supported school clean-ups and supplies.

Hayleys Fentons Limited was named Sri Lanka’s Best Integrated Solutions Provider in Engineering Services at the World Business Outlook Awards 2025 in Bangkok. Hayleys Fentons, part of Hayleys PLC, is recognised as a leading solar EPC and MEP contractor, highlighting its engineering and renewable-energy credentials.

Macktiles Lanka executed its first export shipment of tiles to Australia. The company said the tiles use Sri Lankan raw materials and Italian technology, marking a milestone entry into a highly developed market.

A Sri Lankan trade delegation visited Phnom Penh to explore investment and trade opportunities and agreed with Cambodia’s Investment Board to organise a virtual investment roadshow. Discussions highlighted opportunities in premium rice, cashews, agrifood processing, microfinance, logistics, digital innovation and Cambodia’s tax incentives (3–9 year tax holidays, VAT exemptions, up to 150% R&D deductions).

LOLC Holdings launched the 'Obai Mamai Ape Ratai' initiative, committing over Rs. 400 million to a three-phase Cyclone Ditwah relief programme to distribute family super packs, renovate 200 schools and rebuild destroyed schools.

Tristar UAE donated Rs. 25 million to the 'Rebuild Sri Lanka' Fund to support economic recovery, infrastructure development and relief for victims of the Ditwah cyclone.