By: Staff Writer

Colombo (LNW): The Korean government today assured that they have taken necessary measures to open up new employment opportunities for Sri Lankans in Korea and increase the number of jobs provided to Sri Lankans.

The decision was announced following an official meeting between Korea Labour and Employment Minister Lee Jung-Sik and Minister Manusha Nanayakkara today at the Ministry.

On the invitation of the Sri Lanka Labour and Foreign Employment Minister Manusha Nanayakkara, Korean Minister Lee Jung-Sik arrived in Sri Lanka yesterday morning for a two-day official visit.

They had a long discussion on taking necessary measures to get more employment opportunities for Sri Lankans in Korea.

The Korean Minister told Minister Nanayakkara that after 20 years the EPS system under which foreigners are recruited for employment in South Korea will be amended and as a result Sri Lankan job aspirants will get more opportunities to work in Korea.

Minister Nanayakkara requested that Korea opens up new employment fields such as the garment sector and caregiver sector, and received a positive response from the Korean Minister.

It was discussed that a large number of workers are needed for jobs in the Korean ship construction industry and that there are more opportunities for Sri Lankan skilled workers in that sector.

Minister Lee Jung-Sik further assured the fullest support to every step taken in the future to provide more employment opportunities to Sri Lankans in Korea by further strengthening the bilateral relations between the two countries.

The minister further stated that the agreement was made during a discussion held between the two parties

It had also been agreed to refer 600 people who are currently registered on the Korean job website after passing the Korean language proficiency test under the production sector category for jobs in the shipbuilding sector.

Priority will be given to job seekers registered on the website, whose period for securing a job will expire by December 31 this year.

Accordingly, these jobs are to be provided by shifting the job category from the production sector of the website to the ship construction sector.

Thus, candidates who are willing to change their job category from production to the shipbuilding industry should apply for it as soon as possible, he said.

Minister Nanayakkara also stated that the Korean Human Resources Department has also agreed to conduct examinations and recruit 900 welders and painters for jobs in the shipbuilding industry under the E9 visa category from next year.

He added that the Director of the Korean Human Resources Department has also informed that from next year, the Korean Language Proficiency Test will be conducted using the UBT system instead of the current computer-based CBT system.

By: Staff Writer

Colombo (LNW): The Monetary Board of the Central Bank yesterday declared that opting for the DDO was in the best interest of the members of the EPF based on the two options available, given that a large share of its assets is invested in Treasury bonds.

In a statement, the Monetary Board said it envisaged that of the two options, Debt Exchange (as opposed to Non-Exchange) is distinctly the better option considering the assessments made on the basis of several prudent and realistic assumptions.

Further, the Monetary Board was of the view that with the proposed Debt Exchange and the other reforms being implemented by the Government, the sustainability of public finance will be restored with its ability to service its debt.

The Monetary Board was also cognizant that unless debt sustainability is restored without undue delay, there is a high risk of the Government not being in a position to fully service obligations on the pre-exchange bonds held by the EPF leading to very serious adverse consequences to the EPF.

“Hence, opting for the DDO was in the best interest of the members of EPF based on the two options available, given that a large share of the EPF’s assets is invested in Treasury bonds,” the statement said. The face value of the Treasury bonds portfolio of the EPF is Rs. 3.2 trillion.

“It is also important to note that after the participation in DDO, current balances of EPF members will not be reduced and the Fund will be able to distribute at minimum 9% per annum return to members in the foreseeable future,” the statement added.

The Monetary Board of the CBSL as the custodian of the EPF, having considered the two options decided to opt for the Debt Exchange offer with a long-term view in the best interest of the members of the Fund.

“Accordingly, the EPF tendered Rs. 2., 67trillion face value of Treasury bonds for Debt Exchange, including an additional Rs. 1.49,trillion in excess of the minimum participation requirement considering its comparative benefits to the Fund.

The Government has accepted the same and issued new Treasury bonds to EPF with an equivalent face value,” the statement said.

Members representing the Colombo Port City Economic Commission have confirmed that food stalls within the Colombo Port City, deemed as leisure activities, will be phased out by March 2027. This decision was prompted by inquiries from the Committee on Public Finance regarding the legality of establishing such stalls in an area primarily designed to attract foreign investments.

The discussion transpired during a session of the Committee on Public Finance in Parliament, chaired by Dr. Harsha de Silva. The committee delved into the regulations under the Colombo Port City Economic Commission Act, No. 11 of 2021, slated for presentation in Parliament on Tuesday, September 19.

The committee sought clarification on the legal basis for permitting these food stalls and the rationale behind their removal by 2027. They also inquired whether the Attorney General had been consulted in this matter. Consequently, the committee instructed the Colombo Port City Economic Commission and the Attorney General’s Department to promptly furnish relevant information.

Additionally, the committee inquired about the revenue generated by government activities within the port city. They directed officials to provide comprehensive details for better understanding before approving the regulations.

Given that the Port City is being developed as a distinct landmass under the Smart City concept, the committee questioned whether elements like wastewater management, renewable energy, and proper sewage systems had been incorporated. The committee emphasized the importance of avoiding issues related to inadequate sewage and wastewater management seen in other parts of the country during Port City development.

It was also revealed that government institutions such as the Road Development Authority, Urban Development Authority, and Water Board have allocated significant funds to facilitate Port City construction and development. In light of this, the committee pressed the Commission to elucidate the benefits that taxpayers would reap from these investments.

In response, the Committee on Public Finance instructed Commission members to provide a breakdown of government expenditures related to the Port City and its infrastructure, along with details on revenue streams.

The Committee meeting included the presence of State Minister Dr. Seetha Arambepola and MPs Chandima Weerakkody, Nimal Lanza, Major Pradeep Undugoda, Premnath C. Dolawatte, Madhura Withanage, and Sumith Udukumbura.

Urban Development and Housing Minister Prasanna Ranatunga is championing the revitalization of Minuwangoda city, envisioning it as a thriving commercial center poised to attract businesses, investments, and industrial growth.

During a recent discussion at the Urban Development Authority in Sethsiripaya, Battaramulla, Minister Ranatunga emphasized the need to employ advanced technology and modern urban planning to shape Minuwangoda city for the contemporary world.

The forthcoming Minuwangoda City Development Plan, crafted by Urban Development Authority engineers and architects, is expected to prioritize environmental preservation, ensuring the protection of natural assets such as paddy lands.

Proximity to the Katunayake Bandaranaike International Airport has spurred plans for a new road from the Ambagahawatta area, bypassing Minuwangoda for quicker airport access. As part of the development, the UDA plans to acquire nine acres within Minuwangoda city.

This ambitious endeavor will usher in private hospitals, parking facilities, shopping malls, playgrounds, and amusement parks, ushering in a vibrant transformation for the area.

Galoya Plantations (Pvt) Limited (GOPL) has poured Rs. 12 billion into the construction of a cutting-edge factory. This ambitious project is set to crush 4,500 metric tons of sugarcane daily and generate a whopping 8.75 MW of electricity, with 5 MW fueling their own operations.

The brain behind this visionary initiative, Danesh Abeyratne, the Executive Director of the Galoya Plantation Company, shared his enthusiasm for their endeavor. He highlighted the significance of this venture, which is set to surpass the power output of the Inginiyagala Senanayake Samudraya Reservoir’s power plant by generating a staggering 15 MW of electricity.

The foundation stone for this groundbreaking project was laid just last month, with an ambitious goal to have it fully operational by 2025. Abeyratne went on to reveal that GOPL, which resurrected the former Hingurana Sugar Industries Limited in 2007, had faced significant challenges. However, through determination and commitment, they have succeeded in revitalizing the once-faltering sugar industry, making a substantial contribution to the local sugar production landscape.

Their journey wasn’t without its hurdles. Initially unable to secure local bank credit due to the previous management’s financial mismanagement, GOPL sought funding within their own group. Moreover, they faced the delicate task of rebuilding trust among sugarcane growers who had been repeatedly let down in the past. Abeyratne and his team addressed this by entering into forward buying agreements, ensuring that farmers would indeed reap the rewards of their hard work.

The results have been nothing short of remarkable, with many sugarcane growers switching from paddy cultivation to sugarcane farming, lured by the promise of better returns and reliability. GOPL has paid out approximately Rs. 14 billion to farmers to date, solidifying their commitment to local agriculture.

In a nation where 87% of sugar requirements are met through imports, GOPL has emerged as a beacon of hope, contributing a remarkable 36% to the local sugar production landscape. Their adoption of modern technology, including mechanization and drones, has not only boosted production but also sparked a renewed interest among the youth in sugarcane farming.

With unwavering dedication and strategic collaborations, GOPL proudly reported a Profit After Tax (PAT) of Rs. 5.6 billion for the 2022/23 financial year and foresees an increase to Rs. 6.1 billion in the 2023/24 FY. They have also contributed significantly to the nation’s finances, paying approximately Rs. 1,430 million in taxes since their inception, including a notable Rs. 600 million as corporate income tax for the year 2022/23.

During his two-day visit to Sri Lanka, Korean Labour and Employment Minister Lee Jung-Sik assured Minister Manusha Nanayakkara of increased job opportunities for Sri Lankans in Korea.

The two ministers discussed amending the EPS system to facilitate more employment for Sri Lankan job seekers in Korea, with a focus on sectors like garment and caregiving.

Minister Lee Jung-Sik also expressed admiration for the productivity and dedication of Sri Lankan workers in Korea, pledging continued support for strengthening bilateral relations and providing more employment opportunities in the future.

In response to an invitation from Sri Lanka’s Financial Intelligence Unit, a high-level delegation from the Asia Pacific Group on Money Laundering (APG) visited Sri Lanka recently. The high-level delegation consisted of eminent personalities, including Mr. Julien Brazeau: APG Co-Chair and Associate Assistant Deputy Minister of Canada’s Department of Finance in Ottawa within the Financial Sector Policy Branch, Dr. Gordon Hook: Executive Secretary, APG and Mr. David Shannon: Director Mutual Evaluations, APG.

Their aim was to provide crucial insights ahead of the upcoming mutual evaluation of Sri Lanka’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Framework.

The APG, an integral regional monitoring body under the Financial Action Task Force (FATF), focuses on guiding member jurisdictions in implementing international standards to combat money laundering (ML), terrorism financing (TF) and proliferation financing related to weapons of mass destruction (PFWMD). FATF oversees about 200 countries through nine regional bodies.

Sri Lanka has faced “Grey List” designation twice by FATF, in 2011 and 2017, with the European Union also blacklisting the nation in 2017 due to non-compliance.
Sri Lanka’s 3rd Mutual Evaluation is set for March 2025. It’s crucial to achieve Technical Compliance with FATF’s 40 Recommendations and ensure effective AML/CFT framework results. The country is actively engaging 24 stakeholders in this effort, coordinated by the Financial Intelligence Unit.

During the 3-day visit, the delegation met with key Sri Lankan figures, including the President, Chief Justice, Foreign Minister, Attorney General and Central Bank Governor. Sri Lanka’s leadership recognizes the importance of the upcoming mutual evaluation for economic and societal security.

To prepare effectively and avoid economic consequences tied to FATF grey-listing, Sri Lanka prioritizes Focus on Effectiveness:

• Emphasize the ability of the AML/CFT system to produce operational results that address Sri Lanka’s specific risks effectively
• Enhanced Monitoring: Stakeholders should intensify monitoring of progress and operational outcomes to support the advancement of priority implementation plans and surmount any obstacles to effectiveness.
• Timely Legislation: Expedite the passage of critical AML/CFT-related legislation to ensure the availability of the necessary tools for achieving operational outputs.
• Resource Allocation: Allocate resources to agencies responsible to implement the AML/CFT framework to facilitate the achievement of operational outcomes.
• Inter-Agency Coordination: Sustain inter-agency coordination through effective leadership and well-supported mechanism for targeted planning and progress monitoring in line with implementation plans.
• Prosecutor: Enhancing the capacity and active involvement of prosecutors in money laundering and terrorism financing cases.
• Law Enforcement: Bolster implementation by law enforcement agencies, particularly through the clearance of backlogs in money laundering cases and increase in the scope of asset recovery and money laundering-related activities.
• Judiciary: Improve the capacity of the Judiciary for timely and effective adjudication of money laundering cases and terrorism financing cases
• Private Sector Engagement: Encourage active involvement of the private sector, fostering shared goals with the government for priority implementation of AML/CFT systems.
• International Cooperation: Strengthen and focus on international cooperation, recognizing its pivotal role in demonstrating effectiveness. Foster deeper collaboration with countries that share key money laundering and terrorist financing risks.

By diligently following these priorities, Sri Lanka aims to secure a positive outcome in its mutual evaluation and mitigate the economic consequences associated with FATF Grey-Listing. Stakeholders are committed to addressing AML/CFT Framework gaps effectively.

Minister of Agriculture Mahinda Amaraweera has provided reassurance that egg and chicken prices in Sri Lanka are anticipated to decrease next year and maintain stability thereafter. He also indicated that the country may no longer need to import eggs from the coming year.

Speaking at a press conference held at the Presidential Media Centre on September 14, Minister Amaraweera attributed the temporary decline in Sri Lanka’s poultry and egg production industry to reduced animal feed production caused by the COVID-19 pandemic and the economic crisis. He highlighted that the private sector currently manages the entire poultry and egg production, with the total chicken population on farms exceeding 3,420,000.

Minister Amaraweera noted that many of these chickens are expected to begin laying eggs by December, which is expected to significantly boost egg production in the country. Additionally, the government has allowed industrialists to import maize for poultry feed production, a move that is expected to benefit consumers in the future.

The minister also mentioned that the mid-term Livestock Development Program has allocated Rs. 37 million to enhance livestock services in the Northern Province. Furthermore, the Small and Medium Scale Poultry Development Project, focusing on producing one-day-old country chicken chicks and improving egg production in rural areas, has received funding of Rs. 48 million.

Before the COVID-19 pandemic and the economic crisis, Sri Lanka’s annual chicken meat production stood at 230,000 metric tons, with a per capita chicken meat consumption of 11 kg per year. However, recent challenges and the pandemic have led to a 30% reduction in local chicken meat production.

Industrialists are optimistic that the production of chicken meat can rebound to pre-crisis levels by the end of this year, thanks to the addition of more broiler chickens to farms. Consequently, it is expected that chicken and egg prices will continue to decrease.

To achieve self-sufficiency in milk production, the Ministry of Agriculture has devised both short and long-term plans, including the National Dairy Policy for 2023 to 2028. Sri Lanka imported 82,087 metric tons of milk and milk-related products in 2021, highlighting the reliance on imports to meet domestic demand.

The government is also taking steps to improve grass and fodder cultivation, enhance breeding farms, and expand artificial insemination services to boost milk production. Additionally, a large-scale animal production farm has been initiated at the Polonnaruwa Farm, with an investment of approximately Rs. 250 million.

The Employees’ Provident Fund (EPF) has announced its proposal to exchange the portfolio of Treasury Bonds held by the fund as part of the Domestic Debt Optimization (DDO) program.

In a statement, the Central Bank of Sri Lanka revealed that this offer has been extended by the EPF Fund as an eligible participant, with the approval of the bank’s Monetary Board.

This decision aligns with an invitation extended by the Ministry of Finance following a Resolution passed by Parliament.

https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20230914_participation_of_the_employees_provident_fund_in_the_domestic_debt_optimisation_programme_e.pdf

Fitch Ratings has downgraded Sri Lanka’s Long-Term Local-Currency (LTLFC) Issuer Default Rating (IDR) to ‘RD’ (Restricted Default) from ‘C’The ratings on its local-currency bonds tendered in the domestic debt exchange have been downgraded to ‘D’ from ‘C’ while its other four local-currency bonds not tendered in the domestic debt exchange have been affirmed at ‘C’.

The Long-Term Foreign-Currency (LTFC) IDR has been affirmed at ‘RD’, and the ratings on Sri Lanka’s foreign-currency bonds have been affirmed at ‘D’.

All issue ratings have subsequently been withdrawn.

The global credit rating agency typically does not assign Outlooks to sovereigns with a rating of ‘CCC+’ or below.

Fitch has withdrawn the issue ratings of Sri Lanka’s foreign and local-currency bonds as these are no longer considered to be relevant to the agency’s coverage.

Key Rating Drivers

Distressed Debt Exchange: The downgrade of Sri Lanka’s LTLC IDR reflects the partial completion of an exchange of Sri Lanka’s T-bonds on 14 September as part of a broader domestic debt optimisation (DDO) launched in July 2023. The DDO also includes conversion of T-bills held by the Central Bank of Sri Lanka (CBSL) into treasury bonds (T-bonds), which has not yet been completed.

In Fitch’s view, the exchange of T-bonds constitutes a distressed debt exchange (DDE) under the agency’s criteria, given that the maturity extension of the tendered bonds represents a material reduction in terms versus the original contractual terms, and given that the exchange is needed to avoid a traditional payment default.

Reduction in Terms: Eligible bonds for which tenders were received and accepted have been exchanged into 12 new instruments of equal size and the same aggregate principal amount, maturing between 2027 and 2038. Accepted tenders reached about 37% of the outstanding principal amount of eligible bonds outstanding as of 28 June 2023. Accepted tenders were predominantly by superannuation funds, which will face higher tax rates on income from T-bonds if they did not meet a participation threshold.

Local-Currency Debt Service Continuing: Fitch believes that Sri Lanka has continued to service the T-bonds throughout the DDO process, and that T-bonds not tendered in the exchange will continue to be serviced as per their original terms, including but not limited to the entirety of the 12 series of T-bonds (out of 61 eligible series) for which no valid tenders were received. Four of these 12 series were rated by Fitch and were affirmed at ‘C’ prior to withdrawal.

Local-Currency Restructuring Incomplete: Under Fitch’s rating criteria, the LTLC IDR will remain in ‘RD’ until the debt exchange is completed in its entirety. Fitch deems the process incomplete, as the exchange of T-bills held by CBSL is still pending. Fitch regards the T-bills as public debt securities, and they are also held by private investors.

Foreign-Currency IDR in Default: The sovereign remains in default on foreign-currency obligations and has initiated a debt restructuring with official and private external creditors. The Ministry of Finance had issued a statement on 12 April 2022 that it had suspended normal debt servicing of several categories of external debt, including bonds issued in international capital markets, foreign currency-denominated loans and credit facilities with commercial banks and institutional lenders.

ESG – Governance: Sri Lanka has an ESG Relevance Score of ‘5’ for Political Stability and Rights as well as for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model (SRM). Sri Lanka has a medium WBGI ranking in the 45th percentile, reflecting a recent record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and a moderate level of corruption.

ESG – Creditor Rights: Sri Lanka has an ESG Relevance Score of ‘5’ for Creditor Rights, as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. The affirmation of Sri Lanka’s LTFC IDR at ‘RD’ and downgrade of LTLC IDR to ‘RD’ reflect a default event.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

– The Long-Term IDRs are at the lowest level, and cannot be downgraded further

– The Short-Term Local-Currency IDR will be downgraded to ‘RD’ on the completion of the exchange of T-bills

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

– Following completion of the debt exchange with CBSL, Fitch will assign Sri Lanka’s LTLC IDR based on a forward-looking assessment of its willingness and capacity to honour its local-currency debt

– For the LTFC IDR, completion of the foreign-currency commercial debt restructuring that Fitch judges to have normalised relationship with private-sector creditors may result in an upgrade

Sovereign Rating Model (Srm) and Qualitative Overlay (QO)

In accordance with the rating criteria for ratings in the ‘CCC’ range and below, Fitch’s sovereign rating committee has not used the SRM and QO to explain the ratings, which are instead guided by the agency’s rating definitions.

Fitch’s SRM is the agency’s proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LTFC IDR. Fitch’s QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the LTFC IDR, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.

Country Ceiling

The Country Ceiling for Sri Lanka is ‘B-’. For sovereigns rated ‘CCC+’ or below, Fitch assumes a starting point of ‘CCC+’ for determining the Country Ceiling. Fitch’s Country Ceiling Model produced a starting point uplift of zero notches. Fitch’s rating committee applied a +1 notch qualitative adjustment to this, under the balance of payments restrictions pillar, reflecting that the private sector has not been prevented or significantly impeded from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments.

Fitch does not assign Country Ceilings below ‘CCC+’, and only assigns a Country Ceiling of ‘CCC+’ in the event that transfer and convertibility risk has materialised and is affecting the vast majority of economic sectors and asset classes.

References for Substantially Material Source Cited as Key Driver of Rating

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Sri Lanka has an ESG Relevance Score of ‘5’ for Political Stability and Rights as WBGI have the highest weight in Fitch’s SRM and are highly relevant to the rating and a key rating driver with a high weight. As Sri Lanka has a percentile rank below 50, for the respective governance indicator, this has a negative impact on the credit profile.

Sri Lanka has an ESG Relevance Score of ‘5’ for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as WBGI have the highest weight in Fitch’s SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Sri Lanka has a percentile rank below 50 for the respective governance indicators, this has a negative impact on the credit profile.

Sri Lanka has an ESG Relevance Score of ‘4’ for Human Rights and Political Freedoms, as the Voice and Accountability pillar of the WBGI is relevant to the rating and a rating driver. As Sri Lanka has a percentile rank below 50 for the respective governance indicator, this has a negative impact on the credit profile.

Sri Lanka has an ESG Relevance Score of ‘5’ for Creditor Rights as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. Sri Lanka’s LTFC & LTLC IDRs are ‘RD’ as the sovereign is in default on its foreign- and local-currency debt obligations.

The highest level of ESG credit relevance is a score of ‘3’, unless otherwise disclosed in this section. A score of ‘3’ means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch’s ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision.

–Fitch Ratings