The Power and Energy Minister, Kanchana Wijesekera, announced yesterday that the Petroleum Corporation has successfully repaid all loans owed to the Bank of Ceylon and the People’s Bank. This achievement has significantly bolstered the corporation’s financial standing, marking a milestone in its restructuring process.

Minister Wijesekera highlighted the ongoing restructuring efforts of the Petroleum Corporation and mentioned that the revised draft for the restructuring of the Electricity Board has been forwarded to legislators. Once received, it will be submitted to the Attorney General and subsequently presented to the Cabinet for recommendations. In this regard, there is a possibility of passing a new act to facilitate the restructuring process.

During a media briefing held at the Presidential Media Centre under the theme of “Collective Path to a Stable Country,” Minister Wijesekera addressed concerns related to the recent electricity price revision. He emphasized that the government provided substantial relief to 3.5 million out of the total 6 million consumers, resulting in a 55% reduction in electricity prices for them. The revision also included concessions for religious establishments and industries. Furthermore, the minister highlighted the favorable environment created for the initiation of new renewable electricity projects.

Regarding fuel supply, Minister Wijesekera announced that the first fuel shipment from one of the two newly contracted companies will arrive in Sri Lanka by the end of the current month. This marks the beginning of fuel distribution operations by the new suppliers. He expressed confidence in the government’s program, led by President Ranil Wickremesinghe, to promote financial stability in both the Electricity Board and the Petroleum Corporation. These entities have experienced financial crises in the past but are now on a path towards achieving stability.

The minister also provided updates on various initiatives, including the resumption of maintenance work by the electricity board, fulfillment of new connection applications, and the imposition of a fuel tax to address outstanding debts. Additionally, he discussed the cancellation of a tender call for renewable energy and the granting of permissions to the ‘Adani’ company for the construction of a renewable energy power plant.

Minister Wijesekera emphasized the importance of restructuring these institutions to ensure their long-term stability and efficiency. He addressed concerns regarding potential loss of trade union privileges and reiterated the government’s commitment to providing salary increments and bonuses based on productivity and profitability. The minister also mentioned plans for solar panel installations in government institutions and religious sites, as well as the exploration of nuclear energy options for the country’s future energy generation plan.

In a recent development, the Railway Department has announced that train services on the Up-country Railway Line have been severely disrupted following a derailment incident. The incident occurred between the Watagoda and Talawakelle railway stations, resulting in a halt in train operations along the affected line.

The exact cause of the derailment is yet to be determined, and the Railway Department is actively investigating the incident to ascertain the circumstances leading to the disruption. Prompt measures are being taken to restore normalcy and ensure the safety of passengers and railway personnel.

Passengers relying on the Up-country Railway Line are advised to seek alternative transportation arrangements until the necessary repairs and safety assessments have been completed. The Railway Department is working diligently to rectify the situation and resume train services as soon as possible.

The disruption caused by the derailment serves as a reminder of the importance of ongoing maintenance and safety protocols within the railway industry. The Railway Department remains committed to addressing such incidents swiftly and implementing necessary measures to prevent future disruptions and ensure the smooth functioning of train services across the country.

1. State Finance Minister Shehan Semasinghe says the first disbursement of USD 250 mn out of the USD 500 Mn for “budget support” from the World Bank has been received: analysts express alarm that the Govt is yet borrowing in Forex for “budget support” even after increasing taxes, utility prices and all govt charges by massive percentages.
2. Former Foreign Minister & MP Professor G L Peiris says the Govt’s claims that domestic debt restructuring efforts will have no impact on the EPF are false: also says the entire process of DDR is a “deception”: in the meantime, Govt issues the Gazette Notification on DDR.
3. Former CB Governor Ajith Nivard Cabraal says there’s no way that the debt crisis could be successfully overcome without growing the economy: laments there’s no govt strategy at present to stimulate the economy, and therefore the DDR plan would fail: reminds the GDP had a growth from USD 24 bn to 79 bn from 2006 to 2014, and consequently the Debt to GDP reduced from 91% to 69% during that period.
4. TNA MP M A Sumanthiran alleges that by the Govt & Central Bank excluding primary dealers, domestic private Bond holders & high net-worth money market players from the Domestic Debt Optimisation, those investors have benefited immensely: terms such investors as “vultures”: alleges that they are the ones who do bond scams and who fund the election campaigns of the Govt.
5. Colombo Stock Exchange’s ASPI increases significantly by 633 points or 6.71% to pass the 10,000 point mark to 10,076 points; Turnover records Rs 7.4 bn: T-Bill and Bond yields down substantially, leading to massive profits being booked by primary dealers, bond holders and money market players.
6. Fitch Ratings says complications may arise from a number of factors in the govt’s proposal for treatment of Domestic Debt, although the new effort marks a step towards resolving uncertainties around the impact of the sovereign’s debt restructuring on the local banking sector.
7. Govt’s budget deficit for the 4 months upto April 2023 expands by a staggering 57% from a year ago to Rs.824 bn (from 2.2% of GDP to 2.7%) driven by interest costs: exchange rate appreciates amidst non-payment of Forex debt, tight import restriction policies, massive contraction of consumer demand and negative economic growth.
8. Chinese Ambassador to SL Qi Zhenhong says many nations in the world, including China and Sri Lanka, are still suffering under the yoke of neo-colonialism and hegemonism: also says China firmly upholds international fair play & justice, advocates the practice of true multilateralism, takes a clear stand against all hegemonism & power politics, and unswervingly opposes any unilateralism, protectionism & bullying.
9. Former PUC Chairman Janaka Ratnayake stresses need for accurate data and fair practices in determining electricity tariffs, with a focus on minimising the burden on consumers and ensuring their rights: asserts the increase of the electricity tariff in February was based on inaccurate data.
10. Sri Lanka Women’s Cricket Captain Chamari Athapaththu becomes the first player from Sri Lanka to top the ICC Women’s ODI Player Rankings: climbs to the top spot in the batting charts.

Prevailing showery and windy condition over the south western parts of the island is expected to continue.

Showers will occur at times in Western, Sabaragamuwa and Central provinces and in Galle and Matara districts. Fairly heavy showers about 75 mm are likely at some places in the Sabaragamuwa province and in Kandy and Nuwara-Eliya districts.

Several spells of showers will occur in the North-Western province.

Showers or thundershowers may occur at a few places in the Uva province and in Ampara and Batticaloa districts during the evening or night.

Strong winds about (45-50) kmph can be expected at times in western slopes of the central hills, Northern and North-Central provinces, and in Puttalam, Hambantota and Trincomalee districts.

General public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.

By: Staff Writer

Colombo (LNW): Sri Lanka hopes that China will assist the country in its bid to restructure the external debt in the ongoing negotiations, Foreign Minister Ali Sabry said on Monday.

Sabry said negotiations have been progressing well with the Chinese as they are believed to hold over 50 per cent of Sri Lanka’s external debt.

“We have had several rounds of discussions with them,” Sabry, who was in China last week, said.

He said the Chinese were taking part as observers in the platform created by the Paris Club of Creditors along with India and Japan. “We are very confident that China will assist us in debt restructuring,” Sabry said.

Sri Lanka hopes to restructure its external debt of USD 41 billion along with its slightly higher domestic debt of USD 42 billion.

On Saturday, the government got its local debt restructuring plan approved in Parliament.

Both the restructuring processes should be complete by September in time for the International Monetary Fund’s first review of its USD 2.9 billion bailout programme extended in mid-March.

Sri Lanka approached the IMF for a bailout in April 2022 after declaring its first-ever debt default since independence in 1948.

Domestic debt restructuring (DDR) is a key condition in the IMF programme, through which a bailout package was approved for Sri Lanka.

The IMF programme unlocks more help from international funding agencies. Accordingly, the World Bank, earlier this week, approved USD 700 million in financing as budgetary and welfare support for Sri Lanka, which is facing its worst economic crisis.

The island nation is facing its worst economic crisis in history due to a shortage of foreign exchange reserves.

Sri Lanka’s economy has been hit hard by the pandemic, rising energy prices, populist tax cuts and double-digit inflation.

A shortage of medicines, fuel and other essentials also helped to push the cost of living to record highs, triggering nationwide protests which overthrew the government of President Gotabaya Rajapaksa in 2022.

By: Staff Writer

Colombo (LNW): While external debt restructuring remains a top priority for the Sri Lankan government, domestic debt rework finalization gets underway but the Government securities and Sri Lanka Development Bonds will not be restructured, Central Bank and Finance Ministry officials confirmed dispelling fears of local banks and creditors.

Only T-Bills held by the Central Bank amounting to US$11.4 billion will be considered for treatment to create some fiscal space, two high officials of the monetary and fiscal authorities said.

A voluntary domestic debt optimization operation without compulsion is envisaged by Sri Lankan government and its advisors will initiate consultations with major T-Bonds holders of $ 24 billion, they reiterated.

The International sovereign bonds amounting $12.1 billion would be treated as and when necessary they stated adding that the country would not restructure Treasury bills outside of central bank holdings and would engage with major T-bond holders for voluntary ‘optimization.

According to CB high official, holders of Sri Lanka’s Treasury bonds who agree to participate in the voluntary Domestic Debt Optimization (DDO) will undergo a debt exchange process, where their old bonds will be replaced by new bonds.

Sri Lankan authorities will offer the option of debt exchange to T-bond holders who are willing to participate in the voluntary debt optimization. New bonds will be issued in exchange for old bonds, but this will be performed while ensuring the stability of the banking system.

The Central Bank has already reduced the stock of Sri Lanka Development Bonds (SLDBs) which are held largely by the banks by converting them to rupee bonds.

The Central Bank has announced the domestic debt optimization strategy pledging to protect the banking sector and without affecting the superannuation funds.

The banking sector has to bear tax burden as high as 50 percent making a significant contribution to government revenue and financial consolidation.

The Banks obtained a profit of 33 percent from the investment in government securities, while in the current situation, it has earned a profit of 17 percent.

Therefore the government has decided to absorb any additional impact on banks and ready to make financial infusion if necessary if there is any impact from the DDO, finance ministry sources disclosed.

Treasury bonds of superannuation pension funds are to be exchanged for longer maturity treasury bonds from 2027 to 2038, with a step-down coupon structure of 12percent until 2025 and 9 percent until maturity.

In order to encourage participation of superannuation funds, those that do not take part would be subject to an income tax rate of 30 percent versus the current 14 percent, according to the DDO strategy.

EPF and ETF are subject to a 14 percent tax rate, lower than the tax rate imposed on banks.it has been decided to optimize all existing Treasury Bonds from these funds and issue new bonds in return.

These bonds will get 12 percent interest until 2025 and 9 percent interest. The government assures that if there is any deficit, the treasury will cover it.

The stock of SLDBs was brought down to Rs. 282.5 billion by the end of March 2023 from Rs. 603.1 billion in April last year, he added.

Sri Lanka has launched the foreign commercial borrowing by the issuance of International Sovereign Bonds raising funds amounting $ 17.2 billion in 2001 an again $17.6 billion from 2007, central bank data shows.

However Sri Lanka’s bond holders have been demanding for domestic debt restructuring in the recent past. They claim that the government’s domestic debt – defined as debt governed by local law – will be reorganized in a manner that both ensures debt sustainability and safeguards financial stability.

By: Staff Writer

Colombo (LNW): Sri Lanka’s recent tremors have compelled the government to launch a program to gauge the resistance of buildings and new constructions against earth tremors is being conducted across Sri Lanka, the country’s Geological Survey and Mines Bureau (GSMB) said.

In response to an increase in seismic activity, Sri Lanka’s Geological Survey and Mines Bureau (GSMB) has embarked on a nationwide campaign to evaluate the resistance of both existing and newly constructed buildings against earthquakes. This effort aims to ensure the safety of infrastructure in the face of mounting geological instabilities and to provide reassurance to the country’s residents.

Over the past year, Sri Lanka has experienced a number of minor tremors. The country’s senior geophysicist at the GSMB, Mahinda Seneviratne, made these facts known during a television appearance. According to Seneviratne, these tremors have brought to light the critical need for a comprehensive assessment of building resilience against such geological events.

The focus is not only on assessing the current state of infrastructure but also on ensuring that new constructions meet safety standards to withstand potential earth tremors.

Seneviratne highlighted the city of Colombo as an area of particular concern. Colombo, the nation’s capital and most populous city, boasts a high density of structures. The robustness of these structures against seismic activities has thus become a top priority for GSMB.

Recent geological events have accelerated the urgency of this resilience assessment program. Notably, a significant 5.8-magnitude earthquake was reported off the southeast coast of Sri Lanka this past Saturday.

This tremor, although originating from the depths of the ocean and located approximately 1,260 kilometers from Colombo, was reportedly felt by residents in both Colombo and Galle districts.

The occurrence of this earthquake led to an influx of inquiries to GSMB regarding the safety of buildings, especially in the wake of Saturday’s tremor. This public concern further underscores the relevance and necessity of the GSMB’s ongoing campaign to gauge building resistance to earth tremors.

This initiative is a critical step in ensuring Sri Lanka’s infrastructure can withstand such geological events. The results will not only help to potentially save lives and reduce property damage in the event of future earthquakes but will also provide peace of mind to Sri Lankan residents.

As the GSMB continues this essential work, it is clear that the safety of Sri Lanka’s people and the resilience of its infrastructure remain top priorities

Several small tremors have been felt in the country in the past year, said senior geophysicist of the GSMB Mahinda Seneviratne on TV.

Seneviratne said they are paying special attention to buildings in Colombo due to the high density of structures in the city.

He added that a 5.8-magnitude earthquake was reported in the seas off the southeast coast of Sri Lanka on Saturday, and the GSMB has received many inquiries about the safety of buildings, especially following Saturday’s tremor.

The tremor was located around 1,260 km from Colombo and took place in the deep seas, the GSMB official said, adding that residents of Colombo and Galle districts reported feeling the tremor.

By: Staff Writer

Colombo (LNW): Sri Lanka’s Central Bank claims the island nation’s trade deficit widening for four years including 2023, despite the recent lifting import ban on certain items., a top official said, as the crisis-hit nation is compelled to relax its import barriers.

Since the country declared an unprecedented sovereign debt default last year after the $77.1 billion economy fell short of foreign currency, the Central Bank has imposed strong restrictions on imports.

The deficit in the merchandise trade account amounted to US dollars 447 million in May 2023, compared to US dollars 403 million recorded in May 2022, recording a year-on-year expansion for the first time since February 2022, central bank announced.

The cumulative deficit in the trade account during January to May 2023 was US dollars 1,926 million, a sizeable decline from US dollars 3,528 million recorded over the same period in 2022

Reflecting the ongoing recovery in economic activities, Sri Lanka’s imports expanded moderately in May, marking the first year-on-year increase since February 2022.

Earnings from merchandise exports declined by 2.7 per cent in May 2023, year-on year, to US dollars 1,019 million, while increasing notably compared to April 2023.

The decline in earnings from industrial exports mainly contributed to the decline in export earnings amidst improved agricultural exports. Meanwhile, cumulative export earnings during January to May 2023 recorded at US dollars 4,866 million, a decline of 7.7 per cent over the same period in the last year.

Earnings from the exports of industrial goods declined in May 2023, compared to May 2022, mainly due to the lower exports of garments to most of the major markets (the USA, the EU, and the UK).

Similarly, a sizeable decline was recorded in the exports of petroleum products (led by lower export volumes and prices of bunker fuel exports), textiles (primarily, cotton fabric), printing industry products and transport equipment.

However, earnings from animal fodder (mainly, wheat residues); machinery and mechanical appliances (mainly, mechanical appliances parts); food : Expenditure on merchandise imports increased marginally to US dollars 1,466 million in May 2023, compared to US dollars 1,451 million in May 2022, recording the first year-on year increase since February 2022.

As per the latest data from the Central Bank, imports in May increased to $ 1.46 billion, indicating the first increase in 15 months.

Noting that the ongoing recovery in economic activities played a crucial role in driving the increase in import expenditure, the Central Bank said the rise in import expenditure was primarily driven by higher spending on consumer goods, offsetting the decline in expenditure on intermediate and investment goods imports.

However, cumulative import expenditure from January to May plunged by 22.8% YoY to $ 6.79 billion from the corresponding period in 2022.