Colombo (LNW): Showers or thundershowers may occur at a few places in Western and Sabaragamuwa provinces and in Kandy, Nuwara-Eliya, Galle and Matara districts during the afternoon or night, the Department of Meteorology said in a statement today (13).
General public is kindly requested to take adequate precautions to minimise damages caused by temporary localised strong winds and lightning during thundershowers.
The statement added: On the apparent northward relative motion of the sun, it is going to be directly over the latitudes of Sri Lanka during 05th to 15th of April in this year. The nearest areas of Sri Lanka over which the sun is overhead today (13th) are Mannar, Periyamadu, Puliyankulam and Kokkilai at about 12:11 noon.
Marine Weather:
Condition of Rain:
Showers or thunder showers may occur at a few places in the sea areas off the coast extending from Puttalam to Matara via Colombo and Galle during the night.
Winds:
Winds will be easterly to south-easterly or variable in direction and wind speed will be (20-30) kmph.
State of Sea:
Sea areas around the island will be slight. Temporarily strong gusty winds and very rough seas can be expected during thundershowers.
Colombo (LNW): Police have arrested a pastor accused of sexually abusing four minors in an orphanage in Irupalai, Kopai area.
The suspect, 82, is reportedly the pastor in charge of the orphanage and is a resident of Mount Lavinia.
Three runaways from the orphanage was taken into Police custody recently, and a probe into the children’s home in question via the girls’ testimonies revealed the pastors actions.
The Mount Lavinia Police seized the suspect in Mount Lavinia area after obtaining a court order to make an arrest, and the pastor was produced before the Mount Lavinia Magistrate Court, later to be released on two sureties of Rs. 01 million each, with an overseas travel ban.
Many analysts express shock about the Central Bank misleading the Sri Lankan public with blatantly false statements regarding local debt restructuring: CB Governor Nandalal Weerasinghe now confirms that the local debt of the Govt will also be re-structured, after consistently insisting for nearly one year that the local debt would not be re-structured.
All liquor & wine shops islandwide to be closed on 13 & 14 April on account of the New Year.
University lecturers call off their strike temporarily and rejoin academic activities from 17th April: nevertheless they assert that they will not participate in the GCE AL Exam evaluation.
Sri Lanka Malay Assn expresses gratitude to PM Dinesh Gunawardena for re-naming “Slave Island” as “Kompanna Veediya” in English.
IMF MD Kristalina Georgieva says the IMF will “support” Sri Lanka at this difficult time: also says it’s important for everyone to “come together to do their part to overcome the crisis”: analysts point out that although the IMF gave similar assurances to Argentina, after 1 year in an IMF programme, Argentina’s inflation is now over 100%, and it’s Central Bank’s policy interest rate is at a staggering 78%.
Police initiate investigation into the “disappearance” of Rs.50 lakhs from the Central Bank vaults where bundles of cash placed inside a safe with high-security systems have gone missing.
Welfare Benefits Board Chairman B Wijayaratne says the welfare benefit payments will be made to eligible individuals starting from June ’23: asserts applications from nearly 3.2 million households are now being verified.
Several media reports emerge quoting SJB General Secretary Ranjith Madduma Bandara that SJB MP Rajitha Senaratne “has changed his mind” on crossing over to the Govt: MP Senaratne says his statements have been “misunderstood”.
Sports Minister Roshan Ranasinghe’s Technical Committee headed by top Cricketer Sanath Jayasuriya to probe the reasons behind SL’s failure to win automatic qualification for the ODI World Cup to be held in India later this year.
FIFA informs that the Football Federation of Sri Lanka’s Men’s team is not eligible to participate in the Men’s Olympic Football Tournament 2024, Asian qualifiers & AFC U23 Asian Cup Qatar 2024 qualifiers, due to it’s suspension.
DailyFT: IMF Senior Mission Chief for Sri Lanka Peter Breuer for Sri Lanka in a statement said recently the IMF Executive Board approved a 48-month extended arrangement under the extended Fund facility of 2.286 billion SDR, Special Drawing Rights, and that corresponds to about $ 3 billion to support Sri Lanka’s economic policies and reforms.
IMF Senior Mission Chief for Sri Lanka Peter Breuer
He went on to say, Sri Lanka, as you know, has been facing a severe crisis as a result of past policy missteps and economic shocks. One of the biggest policy missteps was the haphazard borrowings. To add to our list of debt restructuring challenges a court in the US denied a motion by the Government of Sri Lanka to dismiss a lawsuit brought by Hamilton Reserve Bank following the default by the GOSL on a sum of more than $ 257 million of bonds and interest that Hamilton had invested in.
Lending to Sri Lanka between 2007 and 2022 was often marked by an absence of due diligence, opaque conditions and aggressive lobbying with politicians and bureaucrats. Interest rates charged which were in the range of 6.3% were “exorbitant” given that the effective LIBOR (London Inter-Bank Offered Rate) was much lower (just 2% in 2009 and even lower in 2018) and could be construed as predatory lending. This is when commercial banks were borrowing at much less.
Generally, Predatory lending is lending with “severe conditions” and can be some or all of the following.
Aggressive sales/lobbying tactics by lenders
Very high- interest rates,
Overcharging for administrative costs, to mask introducer commissions, third-party facilitation fees and many such opaque elements
Non-disclosure of risk factors and associated risk premiums by the lender and the absence of Integrity Due Diligence on the borrower.
Failure to carry out due diligence with regard to the technical feasibility and/or financial viability of a particular project,
High collateral requirements, spurious events of default, stringent penalties in the event of default, or a combination of the foregoing.
Critically, Sri Lanka’s capacity to repay was also not factored in. Herein lies our problem. These borrowings must be investigated to prevent a future catastrophe. The findings must be discussed at the highest levels of Government to prevent repetition. Accountability is easy to pin with such disastrous results more than evident now.
Criticism
The high-pitched soundbites, particularly in the western press and that too in relation to the debt owed to China masks the true nature of the rest of the debt, both Foreign and Local. Of the former, the multilateral debt is not labelled as predatory as it does not meet the definition above. Governance structures are also very high.
The bilateral debt restructuring has largely come onboard with haircuts and moratoriums, particularly the Paris Club and India. China is in the political dimension at present and will hopefully be negotiated to a satisfactory conclusion to all parties concerned, given their willingness according to the newspapers.
Commercial Borrowings
The commercial foreign debt, aka ISBs, have signalled their willingness to come on-board with haircuts and moratoriums. Most holders for the time being have acquired them in the secondary markets at deep discounts and have room for negotiating such concessions.
Sri Lanka’s Domestic debt also has almost all the characteristics of “predatory” lending to the GOSL over the years, principal among which are:
Aggressive lobbying tactics, via private placement of Treasuries in the 2007 to 2015 period
High-interest rates vis-à-vis policy rates and the backdrop of policy rate volatility by fiat
Lender risk factors being downplayed or ignored by the borrowers like the twin macroeconomic deficits, the managed exchange rates, burgeoning state expenditure and shrinking fiscal revenues, money printing and expanding M2, sovereign rating downgrades and many more.
Sovereign guarantees taken to mask the failure to carry out due diligence with regard to the technical feasibility and/or financial viability of a particular project related lending
Here again, GOSL’s capacity to repay nor service the debt was notably not factored in.
Sustainable Future
Experts say Sri Lanka has been the target or victim if you may, of predatory lending over the years, both foreign and domestic and sauce for the goose is sauce for the gander. Our domestic public debt too must therefore be subject to significant restructuring, haircuts and interest discounts. Here too, most holders for the time being have either acquired them in the secondary markets at deep discounts and have room for negotiating such concessions and/or have recognised significant capital gains and even realised such gains.
The earlier the holders for the time being abandon holding out, the less pain for them and the smoother the overall debt restructuring, unlocking Sri Lanka’s trajectory to the next level of recovery and normalcy.
Moreover, given that in today’s extraordinary conditions of a sovereign debt default and sovereign rating downgrades most or all of the lender risks of predatory lending have either crystallised or will soon. The banking regulator should proactively stop the distribution of such unrealised gains and manage these elevated expectations for the greater good of the nation.
The banks and holders of treasuries for the time being will most likely cry foul and lean on the lobbyists to negate this and we can expect an increase in the protestations, threats and whining of their apologists among the ranks of their tax and financial advisors and their shareholder lobbies.
Some licensed deposit-holding financial institutions have, in the recent past in relation to this measure, audaciously even hinted at enforced haircuts on the FDs they hold, in the expectation that this uncorroborated notion that it will derail the entire debt restructuring and the consequent recovery to a semblance of normalcy. The nation’s savers are not to blame for the recklessness of the financial institutions in their mission to increase shareholder distributions.
Here again, the regulatory authorities should not countenance such moves on savers, let alone approve them (as only they can) and manage all expectations firmly, for the greater good of the nation. Offering a few sellable options to our lenders may go a long way in closing the debt restructure.
Colombo (LNW):Indonesia is set to enhance cooperation in the field of employment with Sri Lanka. Indonesian Manpower Minister Ida Fauziyah disclosed on Tuesday.
The two countries have enjoyed bilateral relations for more than 70 years, she noted in Jakarta. Currently, bilateral cooperation between the two countries is increasing, especially in the fields of economy, trade, and investment, as well as people-to-people.
“Even though Indonesia and Sri Lanka specifically do not yet have a cooperation in the field of manpower, we are open to exchanging information and perspectives on employment,” she said while receiving a visit from the Ambassador of the Democratic Socialist Republic of Sri Lanka to Indonesia, Jayanath Siri Kumara Colombage.
Fauziyah revealed that Ambassador Colombage’s visit to the Ministry of Manpower was in the context of increasing cooperation between Indonesia and Sri Lanka in the labor sector.
“It is hoped that the meeting with Ambassador Jayanath will provide information and views regarding employment developments in the two countries,” she said.
While speaking to Ambassador Colombage, Fauziyah also expressed concern over the ongoing economic crisis in Sri Lanka due to the ongoing COVID-19 pandemic.
She expressed the belief that by expanding international relations to gain support, Sri Lanka can gradually recover from the difficult situation caused by the pandemic.
Indonesian Ambassador to Sri Lanka Mrs. Dewi Gustina Tobing, has said that her country will support the Sri Lankan government’s program to rebuild the country’s collapsed economy.
The Ambassador said that her country would support the government’s program to rebuild the economy of Sri Lanka and that she would work to further improve the political and cultural relations between the two countries in the future.
Negotiations on the Indonesia-Sri Lanka Preferential Trade Agreement (ISL-PTA) will begin soon as both countries see the enormous potential to boost bilateral trade, said Ambassador of the Republic of Indonesia, Dewi Gustina Tobing recently.
Referring to a timeline Tobing said discussion on the PTA hopefully will start this year as both countries have shown great eagerness on the trade agreement.
“The PTA is vital for both countries to enhance cooperation especially in the economic sectors, including trade and industry,” the Ambassador said.
Trade between Sri Lanka and Indonesia has been in favour of Indonesia with the value of trade between both countries being around US$ 473 million in 2021.
Sri Lanka’s exports were around $ 53 million while imports from Indonesia were at $420 million. Indonesia was the ninth export destination of Sri Lanka in the same year with fabrics accounting for around 26.4 percent of the total exports to the East Asian nation.
Indonesia will explore future cooperation not only on trading but also partnerships and joint ventures by investing in Sri Lanka.
Fertilizer is one major area that we could look at investing in Sri Lanka while enhancing collaborations in the industrial sector, the Ambassador said, adding that Indonesia as done in the past will continue to support Sri Lanka especially during the present tough times to overcome the economic crisis.
Ambassador Tobing conveyed Indonesia’s interest to share expertise to boost the Sri Lankan agriculture sector, especially vegetable oil plantations.Indonesia provided USD 1.6 million worth pharmaceutical aid to Sri Lanka in March this year.
Colombo (LNW):The Central Bank of Sri Lanka (CBSL) has announced that it is considering criminal action against a group that ran a crypto investment scheme dubbed Sports Chain.
The Criminal Investigation Department’s Commercial Crime and Financial Crime Investigation Unit has now launched a probe into complaints regarding Sports Chain, a senior police officer confirmed.
In a notice published on March 21, the monetary authority declared that the investment venture had been run as a pyramid scheme, which is prohibited under Sri Lanka’s Banking Act.
Sports Chain had been established in Sri Lanka in February, 2020. It was in villages in areas such as Polonnaruwa, Anuradhapura, Trincomalee and Kurunegala that the scheme was first popularised.
It subsequently moved to urban areas, including Colombo. Seminars were held in five-star hotels and conference venues to “educate” investors on the platform.
While investors were told they could earn a passive income with their money alone, they were also allegedly encouraged to bring in others to the scheme as the more investors they brought in, the bigger their returns would be.
Victims who have fallen prey to the scam include professionals such as doctors, lawyers, teachers and armed forces personnel. Exactly how many have fallen victim to the alleged scam is still unclear.
The Central Bank (CBSL) issued notices to the public in 2018, 2021 and again in July this year warning them to be wary of trading in Virtual Currencies.
“The CBSL has not given any licence or authorisation to any entity or company to operate schemes involving VCs, including cryptocurrencies, and has not authorised any Initial Coin Offerings (ICO), mining operations or Virtual Currency Exchanges,” a CBSL statement said in July.
The statement also noted that VCs were considered unregulated financial instruments and had no regulatory oversight or safeguards relating to their usage in Sri Lanka.
The CBSL said it has sought the advice of the attorney general – the chief legal adviser to the government – on pressing criminal charges against those responsible.
Under Sri Lankan law, running pyramid schemes can result in imprisonment between three to five years. Offenders also have to pay a fine of 2 million Sri Lankan rupees ($6,222) or twice the amount received from the participants in the scheme, whichever is higher.
In August 2022, Al Jazeera revealed that as the economy around them cratered, thousands of Sri Lankans, including professionals like doctors, politicians and security personnel, fell prey to the fake crypto scheme.
Some gave up their jobs in the hope of high returns while many pawned their jewellery, mortgaged their property and sold their vehicles to invest all they could in the cryptocurrency introduced to them as Sports Chain.
Despite being promised a five-time higher return, they had barely received what they had invested and many did not even get that.
What they did not know at the time was that the cryptocurrency named Sports Chain never existed in the virtual currency market.
Sri Lanka’s Financial Crimes Investigation Division (FCID) began investigations to find out perpetrators and file legal action.
If found guilty under the Money Laundering Act, the suspects will be liable to pay the state a fine of up to three times the value of the defrauded property. They can also face between five and 20 years of jail time.
But for the investors to retrieve their money, Sri Lanka’s central bank will have to charge the suspects under the Banking Act for running a pyramid scheme.
Colombo (LNW):India, Japan, and France on Thursday will announce the launch of the debt restructuring negotiations process on Sri Lanka while the creditor countries have been closely working toward a coordinated debt rearrangement process.
Sri Lanka’s debt obligations for India was US $ 1.652 billion, Japan $2.464 billion and France $411 million which were also included in the total amount of bilateral debt, finance ministry data shows.
The announcement of Finance Ministers of the three countries will be via a press conference in the side lines of the on-going World Bank-IMF Spring Meetings in Washington DC, USA.
Sri Lanka and the International Monetary Fund will also join the press briefing, the Japanese Ministry of Finance said.
President Ranil Wickremesinghe is expected to attend online while State Minister of Finance Shehan Semasinghe, who is currently in Washington, is also likely to attend
Sri Lanka’s sovereign lenders have yet to inform the Government how they will engage with the country to restructure its $7.1 billion of debt and whether they will form an official committee or engage in bilateral talks, the Central Bank Governor Nandalal Weerasinghe said.
The island nation aims to formally engage in debt negotiations with overseas creditors that include China, India and the Paris Club group of nations in May, after concluding a debt rework with holders of its domestic debt.
“It’s up to the creditors to decide. We are happy if there is one platform, as it would be easier to discuss and share information,”he said. .
“Whether they are coming together or on a separate bilateral basis, we will have comparable debt treatment,” Weerasinghe said on the sidelines of the World Bank and International Monetary Fund spring meetings in Washington.
As per Finance Ministry sources, Sri Lanka’s ISBs account for a significant 66% share or $ 20.3 billion of commercial FX denominated public debt, excluding ECA-backed debt and SOEs’ payables and including arrears, as at end-2022. Outstanding amount to bonded private creditors was $ 14.5 billion.
ISBs holders have organised around two committees. ISBs international bondholders have formed an ad-hoc creditor committee and this group is said to represent more than 55% of ISBs non-domestic holdings. The group is advised by Rothschild and White and Case.
Separately a consortium of local private banks holding ISBs has formed another group which has reported holdings in around $ 1.5 billion across all series of ISBs (around 12% of outstanding ISBs). The group is advised by Baker and Mckenzie.
As per Government’s plans on external debt restructuring, next steps with private creditors included engaging on a technical basis with bondholder committees’ advisors and other private creditors to ensure further sharing of information and data, under NDAs.
It will conduct the required restructuring discussion channels with all private creditors and their advisors; reach agreements with private creditors and their advisors that are (i) compliant with the IMF DSA targets and (ii) comparable across different creditor categories and ensure the legal implementation of the agreements reached with all parties.
Colombo (LNW):Sri Lanka Finance Ministry has swiftly moved in to submit the country’s legal submissions on April 7 in defence following a United States District Court’s denial Sri Lanka Government’s motion to dismiss the case filed by Hamilton Reserve Bank on behalf of certain holders of International Sovereign Bonds (ISBs).
US Court will take up this matter on April 20-The Case filed by Hamilton Reserve initially sought damages for alleged non-payment of bonds, as well as injunctive relief based on the alleged violation of a clause on public or private international unsecured debt obligation.
Issuing an update on the US court case between Hamilton Reserve Bank (HBR) and the Sri Lanka Government, the Finance Ministry said on 24 March 2023, the U.S. District Court denied Sri Lanka’s motion to dismiss the Amended Complaint in Hamilton Reserve Bank Ltd. v. The Democratic Socialist Republic of Sri Lanka,
Following Sri Lanka’s motion to dismiss that initial complaint, Plaintiff filed an Amended Complaint on 13 October 2022, which dropped the debt obligation claims and asserted a single claim for non-payment.
On 4 November 2022, Sri Lanka filed a motion to dismiss the Amended Complaint, which the Court denied on 24 March 2023, the Finance Ministry said.
“As a result of the Court›s decision to deny Sri Lanka’s motion to dismiss, the case continues. There has been no judgement on the merits of the claim.
On 7 April 2023, Sri Lanka filed an Answer, in which Sri Lanka denied liability on Plaintiff’s claim. The Court has set a status conference for 20 April 2023. Sri Lanka looks forward to discussing the case with the Court on that date. We cannot comment further at this time,” the statement added.
Hamilton Reserve Bank is the beneficial holder of bonds issued by Sri Lankan Government which according to the judgement, is currently experiencing an economic and humanitarian crisis –defaulted on the bonds and Hamilton brought this breach of contract action to recover the principal and accrued interest owed.
Sri Lanka moved to dismiss on the grounds that plaintiff lacks contractual standing.Hamilton owns over $ 250 million in principal amount of the ISBs. Sri Lanka in mid-April announced a moratorium on foreign debt repayments including the Bonds and since then has made no payments on the Bonds.
The Bonds matured on 25 July 2022. Hamilton alleged that as a result of Sri Lanka’s default, it is owed $ 250.19 million in principle and $ 7.349 million in accrued interest (before accounting for pre and post-judgement interest).
Hamilton initiated this action on 21 June 2022 after which on 21 September Sri Lanka filed a motion to dismiss the complaint.
Sri Lanka is deeply concerned over the recent escalation of violence in the Occupied Palestinian Territories, including the incidents at the Al-Aqsa Mosque in the holy month of Ramadan.
Sri Lanka calls on all parties concerned to exercise restraint, maintain calm and take sustained measures to address the worsening humanitarian situation.
Sri Lanka reaffirms its unwavering support for the right of the Palestinian people to statehood in accordance with the provisions of the UN Charter and the relevant UN resolutions. Sri Lanka remains committed to supporting a negotiated settlement in line with internationally agreed parameters of two states living side by side on the basis of the 1967 borders, which is key to achieving long term security, peace and prosperity.
Growing uncertainty about the dollar’s dominance in global markets is largely misguided, and it’s unlikely alternative currencies can take over, venture capitalist Chamath Palihapitiya said.
“This whole thing is a huge nothingburger,” the so-called SPAC King said on a Friday episode of the All-In Podcast.
Speculation that the dollar is a waning has grown as Western sanctions cut off Russia from its foreign currency reserves after Moscow’s forces invaded Ukraine last year.
That spurred other countries to rethink their reliance on the US currency. In the past two months, the yuan surpassed the dollar as the most traded currency in Russia, while China also signed an agreement with Brazil to use renminbi for cross-border transactions. Beijing has also pushed the yuan as currency to settle oil deals as well.
But news like that is not enough to signal the end of the dollar’s role, especially as the yuan is still linked to the greenback to some extent, Palihapitiya said.
The yuan isn’t strictly pegged to the dollar. Rather, it trades in a 2% range around a midpoint against the greenback, fixed daily by the People’s Bank of China.
And although the PBOC usually aims to maintain a rate of 7 yuan per dollar, the tight control gives China some leeway to pull the yuan’s level into desired directions, if need be.
“Until [the yuan] is unpacked in a free floating currency, we will never know what the real market clearing price is,” Palihapitiya said. “China has been very effectively able to manipulate this currency since they were brought into the WTO, in order to engender that trading partner status.”
He later added that, in moments of financial crises, the dollar will remain the “canonical” flight to safety, outside of commodities such as gold.
Similar to Palihapitiya’s take, a Carson Group note from last week outlined that the US dollar would remain the central currency as there was no other good alternative.
Not only that, but trust in the dollar has a historic backing, as the US is a top international trading partner that would be difficult to dislodge while the market for US Treasurys remains attractive.
