A meeting between Sri Lankan High Commissioner to India Milinda Moragoda and Indian Minister of Health and Family Welfare Mansukh Mandavia was held in New Delhi on the 8th. India’s Ministry of Chemicals and Fertilizers is also under Minister Mansukh Mandavia.

In the discussion between the Minister and Milinda Moragoda, attention was paid to many matters related to the health sector, including methods to expand the existing cooperation between Sri Lanka and India in the field of health.

Accordingly, it is stated that, it was discussed there to get support for Sri Lankan importers to speed up the process of purchasing medicines from India, to effectively and efficiently use the line of credit given by India to the country for purchasing essential medicines and to create a government-to-government transaction mechanism for buying medicines from India.

Also, the High Commissioner has asked the Indian Health Minister to look into the possibility of providing post-graduate study opportunities for Sri Lankan doctors in Indian medical colleges.

The opportunities for Indian companies to start joint ventures and bring investments to establish pharmaceutical factories in selected areas of Sri Lanka have also been discussed here.

In addition, High Commissioner Milinda Moragoda has thanked Minister Mansukh Mandaviya for the support given by the Indian Ministry of Chemicals and Fertilizers in obtaining a loan amount of US$ 55 million last year to purchase urea fertilizer for rice cultivation in the last spring season.

The President requested the political leaders to dedicate themselves to building the country, during the launching ceremony of the Hyundai Grand i10 car, assembled for the first time in Sri Lanka at the Colombo City Centre yesterday (10).

These investments confirm the belief that the country’s economy would recover very soon, he said.

President Ranil Wickremesinghe said that popular decisions would not serve to develop a country, adding that he believed political leaders would take difficult and unpopular decisions in the future, for the benefit of the country.

The President also mentioned that taxes were imposed with the full knowledge of the difficulties faced by the people and those decisions had to be taken to run the country’s economy. However, he also said that relief could be provided to the people very soon.

The president also said that the belief the country’s economy would reinvigorate soon is confirmed by introducing such a brand new vehicle to the market at a critical moment such as this.

The President further said that the positive confidence the foreign countries have placed in our country is obvious by introducing the locally assembled Hyundai Grand i10 vehicle to the market.

This vehicle is assembled in a factory equipped with sophisticated modern technology in Seeduwa in a cooperate venture by Abans Auto Company of Sri Lanka and Hyundai Motor Company of Korea. President Ranil Wickremesinghe further said that this was a huge step in the domestic vehicle assembling industry and vehicle spare parts manufacturing industry.

The statement made by the President is as follows:

Assembling the Hyundai Grand i10 in Sri Lanka is a tribute to the firm determination of Mrs. Pestanjee. I know how she initiated this journey when the economy was opened up in 1977. I still remember that there was an Abans Showroom on the fifth lane heading towards Galle Road. Thank you very much for having come this far from that point.

I hope that this step will be a good start for the arrival of other investors to Sri Lanka based on the cooperation between South Korea and Sri Lanka as well as the higher investment made by Korea here.

Today, the Hyundai Grand i10 vehicle is introduced to the Sri Lankan market further confirming the trust placed in our country.

I must extend my special thanks to Abans Company and Hyundai Company as well Mrs. Pestanjee for introducing a vehicle to the market, at a crucial time when our economy dropped.

The introduction of this vehicle takes place at a time when Sri Lanka’s economy collapsed. But the initiation was taken with the belief that the economy of the country would recover and I would again extend my heartiest thanks to you all for it.

We stepped into 2023 in the background of the complete collapse of our country’s economy last year. But now the country’s economy is recovering. Accordingly, it has been possible to provide solutions to the shortage of fuel, LP gas, and essential goods. In the same way, we have solved many other problems as well.

We anticipate a good harvest during the Maha Season. Furthermore, we have taken steps to purchase Rs.20 million worth of paddy and distribute it to low-income families.

We have taken numerous steps to strengthen the country’s economy. It has been possible to reach an agreement with the IMF organization. Negotiations with the Paris Club, India, and China are currently underway. We are attempting to reconcile their differences.

As a consequence, there is no doubt that a group of consumers in the country will be able to purchase cars again in the months ahead and there will be more economic progress than today.

A businessman will not invest money if there is no sale and you think the economy has collapsed, and there is a market. But, in this case, such investments are being made as our economy is growing.

Various decisions must be made as we work to build the economy. Among them, some difficult decisions must be made through those decisions could be unpopular.

I am aware of the hardships that people are experiencing as a result of the economic collapse. Also, I am aware of the difficulty caused by the tax increase. After paying taxes and debts, some people have very little money left over. This adversity will only last a short time. We must advance the country. However, if we had not made these decisions, the country would not be in this state today.

Furthermore, I believe that all of our political leaders will commit to considering the country and making decisions in the future. We have the ability to make popular decisions. But the country will not develop if only popular decisions are taken.

Singapore is a good example. Singapore Prime Minister Lee Kuan Yew never made popular decisions. He made decisions on behalf of the country. People accepted his decisions and cooperated with him. The rulers of South Korea also made difficult decisions for the country. In Europe, the situation is similar.

Specifically, Prime Minister Boris Johnson of the United Kingdom stated that if the United Kingdom left the European Union, he would be able to gain new markets and improve healthcare services with the money saved. They walked away from the EU. There was no funding for health care. The available market decreased even more.

Then Prime Minister, Liz Truss, worked to lower taxes. The value of the Sterling Pound collapsed. Perhaps the rupee crashed, but the pound crashed more quickly. She resigned as Prime Minister, and a new Prime Minister has been appointed in her place. The country’s current Prime Minister is making wise decisions.

We must make these decisions for the sake of our country’s future and for the sake of creating a good country for the youth. I believe that the country’s economy will be rebuilt before long.

Minister of Plantation Industries Ramesh Pathirana, Korean Ambassador to Sri Lanka Santhush Woonjin Jeong, Chairman of the Board of Investment Dinesh Weerakkody, Directors of Abans Group of Companies Saroshi Dubash and Rusi Pestonjee attended the event.

It was good news for Sri Lanka when Paris Club members at their meeting on January 25, 2023, in the presence of representatives from Hungary, Saudi Arabia, the Kuwait Fund for Arab Economic Development and India, as well as from the International Monetary Fund and the World Bank, agreed to provide financing assurances to support the approval by the IMF Executive Board of the envisaged IMF program for Sri Lanka, which would allow to restore the country’s macroeconomic stability. The Paris Club, formed in 1956, is an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by borrower countries. Paris Club members are Japan, France, Korea, Germany, the United States of America, Spain, the Netherlands, Russia, Sweden, Austria, Canada, the United Kingdom, Den-mark, Belgium, and Australia. Non-Paris Club members include China, India, Saudi Arabia, Kuwait, Hungary, Iran, Pakistan, and Bangladesh. 

The members, according to the media, examined the macroeconomic and financial situation of Sri Lanka, including its long-term debt sustainability, and the need for a debt treatment by all bilateral creditors to both fill the financing gap and to ensure Sri Lanka’s debt sustainability is in line with the proposed Extended Fund Facility. 

They noted “We acknowledge that the Sri Lankan authorities had the opportunity to present Sri Lanka’s economic and financial situation to their creditors, which underscored the need for debt treatment from all creditors. They also presented their reform program that will be supported by an IMF arrangement requiring a debt treatment to restore debt sustainability, as well as the prior actions already implemented. Paris Club members as well as Hungary, Saudi Arabia and India continue to look forward to working together along with all bilateral creditors and to engage with other key stakeholders in order to proceed with a comparable debt restructuring as soon as possible.” 

Further the members noted “To support the implementation of the envisaged IMF supported program and the Sri Lankan authorities’ efforts with other official bilateral creditors, Paris Club members, jointly with Hungary, expressed their full commitment to negotiate with Sri Lanka, in accordance with the comparability of treatment principle among all bilateral creditors, and with the goal of restoring debt sustainability with due regard to targets and overall macroeconomic goals under the Extended Fund Facility. 

According to reports Saudi Arabia expressed its support for the process and acknowledged the importance of offering financing assurances in the near future. Members further expressed appreciation for the specific and credible financing assurances issued by India on January 16, 2023 and its coordination with the Paris Club. The Paris Club members as well as Hungary and Saudi Arabia urged other official bilateral creditors, including China, to do the same in line with IMF program parameters as soon as possible.

Next steps

Given that a staff-level agreement has been signed between Sri Lankan authorities and the International Monetary Fund staff for a 48-month arrangement under the Extended Fund Facility (EFF) over 4 months ago, the next steps for Sri Lanka would be to get China also to agree to similar terms . Sri Lanka will also need to get commitments from its commercial creditors and other official bilateral creditors to a debt restructuring structure on some favourable terms and to hold all creditors together until an equitable debt treatment is agreed by a majority. The private creditors are a more challenging subset to deal with.

This is why many top experts are challenging the former government’s arbitrary decision to default without consultation with the lenders. Some termed it a soft default. Anyone doing a business would know the consequences of defaulting to a financial institution – soft or hard. This is why borrowers approach the financial institution way before the deadline to restructure their loans and agree on a new payment plan.  As a result of the default Sri Lanka now cannot borrow and secure any borrowing against our assets in the way we were doing pre default. So this is a mess of our own making. Unfortunately as a result the private sector is saddled with crazy interest rates and high taxes.  

Way forward

Overall Sri Lanka is far from bankrupt. It is estimated that SL has over $450 billion of assets and $50b of debt. So it is not bankrupt as people claim. Sri Lanka can pay its debt on the due dates had we proactively worked out a repayment plan way before we defaulted . With exports doing over a $ 1 billion a month, FDI climbing and Remittances improving to $350-$400 a month and tourist arrivals increasing, Sri Lanka only needs a good Team to hammer out a debt restructuring plan with the private creditors based on our forex flows despite our pathetic ratings . In its absence what we need the IMF to do for us is to help us negotiate with our lenders and restructure our debt. Meanwhile we have to fix the trade deficit and the negative current account balance. Otherwise we will have a persistent forex problem. Also it is very important to continuously explain to the people that we will have to make the hard decisions to get out of this mess and we have to pay our way to come out of the crisis. Importantly our tax net from 500,000 files needs to expand. No creditor is going to help us until we help ourselves. President is on the right track, but needs to sell the story more effectively.

Sources

https://www.ft.lk/top-story/Chinese-credit-conundrum-for-Sri-Lanka/26-745032

https://www.ft.lk/front-page/Paris-Club-Creditors-provide-financing-assurances-to-support-IMF-bailout-of-SL/44-745042

https://youtu.be/jrN6HRiT0UY

Minister of Foreign Affairs Ali Sabry met former Secretary General of the United Nations and President of the Assembly and Chair of the Council of the Global Green Growth Institute (GGGI) Ban Ki-moon at the Ministry of Foreign Affairs on Tuesday, 07 February 2023.

Foreign Minister Ali Sabry thanked Mr. Ban Ki-moon for his visit to Sri Lanka to strengthen cooperation between the Government of Sri Lanka and GGGI and to support Sri Lanka’s green growth aspirations. The Minister highlighted the importance of working together with the GGGI to gain expertise and enhance the capacity of stakeholders working towards the implementation of the government’s green initiatives related to environment and development. Minister Sabry invited the GGGI to organize a brainstorming session for officials of the stakeholder ministries engaged in reaching out to international green-blue financing and renewable energy projects.

Elaborating on GGGI’s active engagement with Sri Lanka Mr. Ban Ki-moon expressed his commitment to continue his support for President Ranil Wickremesinghe and Sri Lanka’s efforts towards economic progress and environmental sustainability. He noted the current economic downturn and challenges faced by many countries including those in the developed world and the negative spillover on Sri Lanka. He expressed confidence that Sri Lanka will overcome the present economic challenges soon under the able leadership of the President and the government.

The former UNSG was accompanied by the Ambassador of the Republic of Korea Santhush Woonjin Jeong, CEO of GGGI Dr. Frank Rijsberman, and officials of the GGGI office in Sri Lanka. Foreign Secretary Aruni Wijewardane and senior officials of the Foreign Ministry were associated with the meeting.

Ministry of Foreign Affairs

Colombo

It is reported that Japan’s Mitsubishi Corporation, which was a major stakeholder in many infrastructure projects in Sri Lanka, has decided to end its operations in Sri Lanka. Accordingly, Mitsubishi Corporation has decided to shutdown the Colombo office by March 31, 2023.

Mitsubishi Corporation’s Sri Lanka office was one of the company’s first overseas offices. It also played an important role in the bilateral relationship between Japan and Sri Lanka.

Sri Lanka’s adverse international ratings and economic outlook and foreign debt default are the main reasons behind this decision of Mitsubishi Corporation.

Mitsubishi Corporation was the main partner in several major Japanese infrastructure projects funded by the Japan International Cooperation Agency (JICA) implemented in the country. However, goodwill between Sri Lanka and Japan had been damaged recently due to the cancellation of several major projects, including the light rail project and the LNG plant project, which were proposed by Japan.

The Assistant Defence Advisor to the High Commission of India, Lieutenant Colonel Puneet Sushil had a meeting with the Commander of the Army, Lieutenant General Vikum Liyanage on Monday (6) at the Army Headquarters.

The cordial meeting that ensued at the Commander’s office shared views on matters of bilateral importance particularly on Army to Army staff talks and training matters. They also recalled sound and historic relations that exist between both militaries and underlined the need to further foster such relations.

At the end of the cordial interactive meeting, the Commander of the Army presented a memento to the visiting Assistant Defence Advisor. The gesture was reciprocated.
SL Army

The National Election Commission’s proposed schedule for the 2023 Local Government Election has been approved by Sri Lanka’s Supreme Court.

The National Election Commission is required by law to defend the right of the people to vote, the Supreme Court emphasized. The Supreme Court further emphasized that because the National Election Commission had previously committed to holding the Local Government Election in accordance with the Law, no directives were required in this case.

In a recent affidavit to the Supreme Court, Saman Sri Ratnayake, the commissioner general of the National Elections Commission, asked the court to urge the concerned factions to give all essential financial and other facilities for the Local Government Election.