Category: Breaking News

A fifth supreme court judge has recused himself from hearing the appeal filed by former minister Rishad Bathiudeen, who is seeking to overturn a court of appeal ruling that ordered him to reforest areas cleared near the Wilpattu wildlife reserve at his own expense.

Justice A.H.M.D. Nawaz stepped aside when the case was taken up before a three-judge bench comprising justices Nawaz, Sampath Abeykoon, and Gihan Kulatunga.

He said in open court that he was recusing himself on personal grounds.

The case has been referred to a different bench for hearing.

The case dates back to a writ petition filed in 2015 by the Centre for Environmental Justice against the clearing of forests in the Marichchikattu and Kallaru reserve areas adjoining the Wilpattu wildlife reserve, in which Bathiudeen was named as a respondent.

The court of appeal ruled that Bathiudeen was responsible for the forest clearing carried out to facilitate unauthorised settlements, and ordered him to fund the reforestation at his own expense.

The department of forest conservation estimated the cost at approximately Rs. 106 million.

Bathiudeen subsequently petitioned the supreme court to have the ruling set aside, arguing that it was flawed.

Justices Mahinda Samayawardena, Yasantha Kodagoda, Janak de Silva, and Arjuna Obeysekera had previously recused themselves from the same petition, making Justice Nawaz the fifth judge to step aside from the case.

Sri Lanka Police have arrested another individual on suspicion of involvement in a drug trafficking operation allegedly carried out using individuals wearing monastic robes.

The arrest was made following a raid conducted at a house in the Athurugiriya area.

Police said the raid was carried out based on information indicating that the suspect had previously sent Buddhist monks overseas and was involved in drug trafficking activities.

According to police, reports analysing the suspect’s mobile phone data have been called for, and further investigations into the incident are currently underway.

Meanwhile, the court has granted permission to detain and interrogate Venerable Agunakolaye Amitananda Thera for a period of seven days. The order was issued yesterday following his arrest on charges of aiding and abetting the transportation of a consignment of narcotics from Thailand to Sri Lanka using 22 young monks.

Police further revealed that a consignment exceeding 110 kilograms of narcotics, identified as Kush and Ash, had been meticulously concealed inside travel luggage and smuggled from Thailand. Tha value of the narcotics is over Rs. 1 Billion.

The 22 monks were arrested by the Police Narcotics Bureau at the Katunayake International Airport the on 26th April, in connection with the incident.

Investigations into the broader drug trafficking network are continuing.

Sri Lanka’s improved Treasury liquidity masks a weaker fiscal position, with cash balances swinging from a deficit of Rs. 832 billion in 2022 to a surplus exceeding Rs. 1.2 trillion by August 2025, driven by Rs. 1.78 trillion in excess borrowing that has raised the interest burden on unused funds, Verité Research warned.

“Sri Lanka’s treasury cash balance has improved sharply. At first glance, that looks like a striking fiscal turnaround. It suggests the Government has rebuilt financial space. But that reading is incomplete,” the think tank said in brief yesterday.

“This rise in cash balances did not come from revenue left over after the Government met its expenses. It came from borrowing more than was needed at the time and holding the excess as cash in the Treasury,” it noted.

Verite said:

A large cash balance can create the impression that the Government has money to spare – or has come into a substantially better financial position. Is that what has happened?

The Finance Ministry’s cash flow statements show that, from 2022 to August 2025, the Government borrowed more than it needed to cover its Budget shortfall and debt repayments. The extra borrowing was then accumulated as cash in the Treasury, instead of being used to reduce debt (see table).

The pattern is clearest in 2023, when the cash buffer grew the most.

That year, the Government’s total financing need was Rs. 7,495 billion. This included Rs. 5,331 billion in debt repayments and a Budget deficit of Rs. 2,164 billion. Yet, the Government borrowed Rs. 8,137 billion. In effect, it borrowed around Rs. 642 billion more than it needed at the time. That excess was added to the Treasury cash balance.

The same pattern can be seen across the full 2022 to 2025 period.

Between 2022 and August 2025, the Treasury borrowed in total Rs. 1,783 billion more than it needed for its financing requirements. This extra borrowing was used to build up the cash buffer, which was negative Rs. 832 billion at the start of 2022 and increased, by these means, to a positive Rs. 1,205 billion by August 2025.

A simple example helps. Imagine a person that takes a loan and leaves the money in their bank account. Their cash balance goes up; but so does their level of debt. In fact they go up equally, leaving the net asset position same. The same dynamics and logic applies to the Treasury cash balance and the Government.

Is the Government better off?

A rising cash buffer can be easily misinterpreted as a sign of a stronger fiscal position. However, with a debt financed cash buffer, this is not the case.

Yes, in terms of liquidity, the Government is in a better position. The cash buffer enables the Treasury to meet urgent financing needs without coming to the market to borrow; and more importantly, creates space to reduce borrowing at the regular Bond auctions, when the asking yields of lenders seems too high.

Now, in terms of interest cost, the Government is in a worse position. The Government is effectively paying to keep borrowed money that it isn’t using. The cash balance can earn an interest, but almost surely a lower rate than what was paid to borrow it – making a net loss for every day that it holds the cash balance.

Therefore, while a positive cash balance can ease short-term liquidity pressures, it does not put the government in a better fiscal position.

In fact, when the cash balance is in excess of liquidity requirements, the fiscal outcome is negative – because it increases the debt and interest burden. So, while having a cash buffer is positive – it allows the government to push back on auction bids that ask for yields that are too high; having a lot of it is negative – the Government ends up carrying an additional interest burden for holding cash that it does not immediately need, the think tank said.

Sri Lanka’s fiscal position strengthened sharply in January 2026, with the primary surplus rising 86.7% YoY to Rs. 222.82 billion and the overall Budget deficit narrowing 96.8% to Rs. 3.81 billion, indicating a near-balanced position. Revenue growth remained strong, up 35.3% on higher tax collections, while expenditure was largely contained, rising just 1.4%.

The improved performance, despite a Rs. 500 billion post-Ditwah spending allocation, reflects continued fiscal consolidation and has created space for a Rs. 100 billion short-term relief package to cushion the impact of global energy shocks.

A report containing recommendations to enable more than 1.5 million Sri Lankans living abroad to exercise their voting rights in domestic elections has been officially handed over to the Minister of Public Administration, Provincial Councils and Local Government.

The report was prepared by a Special Committee appointed to formulate the necessary legal and practical mechanisms to facilitate overseas voting.

Accepting the report, the Minister stated that denying Sri Lankans living overseas the opportunity to participate in deciding the country’s governance is unjust, particularly given their substantial contribution to the national economy.

The Minister described the report as a significant milestone in Sri Lanka’s history, noting that it incorporates the views of approximately 16 different political parties and civil society organizations. He said the report will be presented to the Cabinet, after which the government is prepared to engage in extensive discussions and take the required next steps.

Chairman of the Committee, Additional Elections Commissioner and Attorney-at-Law L.A.P.K. Kulatunga, said that Sri Lankans living abroad were categorized into four groups during the preparation of the report: migrant workers, students, dual citizens and those residing overseas for other purposes.

He explained that the proposed mechanism focuses on four key areas: voter registration, election campaigning, casting of votes and the counting and release of results.

Under voter registration, mechanisms have been proposed for the formal registration of migrant workers, students and dual citizens.

In relation to election campaigning, the report examines how campaign activities could be conducted for overseas voters and the implications of the Regulation of Election Expenditure Act.

For the casting of votes, the committee explored possibilities such as voting through Sri Lankan missions overseas, postal voting and secure online voting methods.

The final area addresses procedures for vote counting and the release of results.

The Special Committee was appointed in December 2025 following a Cabinet decision to pursue this long-discussed reform. A key highlight noted in the report is that it was completed within three months, ahead of the expected timeline, after consultations with all relevant stakeholders.

Although discussions on granting voting rights to Sri Lankans living abroad date back to the 1990s, this marks the first occasion on which a formal program and a systematic report have been presented for this purpose. Data and views were obtained from political parties, independent organizations, individuals, and overseas groups during the process.

The report also highlights the need to consider advanced or mobile voting systems for essential service personnel such as doctors and customs officers, as well as for fishermen, prisoners and the bedridden within Sri Lanka.

The Ministry of Public Administration, Provincial Councils and Local Government stated that the recommendations are expected to be opened for public discussion in the future, with the aim of further strengthening the country’s democratic process.

Sri Lanka’s government on Sunday 26) issued a call for investments in a currently loss-making airport, after a 30-year lease agreement with an Indo-Russian joint venture failed to take off.

Mattala Rajapaksa International Airport, built with Chinese loans near a wildlife sanctuary on the island’s southern coast, has no regular flights.

The small airport has failed to generate enough revenue to cover even electricity bills since opening in 2013, and has been a running sore on state coffers.

Calling for expressions of interest from investors, the government said the facility offers “untapped potential for growth opportunities… for exotic tourism development and strategic investment”.

In 2024, the Sri Lankan government announced it had awarded a 30-year lease to a joint venture between India’s Shaurya Aeronautics and Russia’s Airports of Regions Management Company, but the plan never materialised.

The airport is named after former president Mahinda Rajapaksa, who borrowed heavily from China for infrastructure projects that quickly became commercial failures.

Debts to China are partly blamed for an unprecedented financial crisis that prompted Sri Lanka to default on its US$46 billion foreign debt in 2022.

Since receiving an International Monetary Fund bailout early the following year, Sri Lanka has sought to privatise a host of unprofitable state-owned enterprises, with no success.

The Mattala airport is located on a migratory bird route, with several aircraft forced to ground after striking airborne fowl.

At one point, Sri Lanka’s military deployed hundreds of troops to remove deer, wild buffalo and elephants from the runway so operations could continue.

The airport is regarded as an alternate destination in case of bad weather at the country’s main international gateway in the capital Colombo, a half-hour flight away.

Several cargo carriers and some charter aircraft operate via Mattala, but the revenue is insufficient for the facility’s upkeep, according to official reports.

In 2017, unable to repay a large Chinese loan, Sri Lanka allowed China Merchants Port Holdings to take over the Hambantota port, near Mattala.

The deal, which granted the Chinese company a 99-year lease, fuelled fears over Beijing’s use of “debt traps” to exert influence.

(AFP)