During Thursday’s parliamentary session, the Anti-Corruption Bill successfully cleared its Second Reading, marking a significant step forward in the fight against corruption. The next phase of the legislative process, the Committee Stage, is set to begin on 19 July, as decided in today’s proceedings.
The deliberations surrounding the Anti-Corruption Bill continued for a second day in Parliament, prompting Minister Susil Premajayantha to disclose that the bill’s passage is likely to face a delay. Minister Premajayantha emphasized that the final decision on the bill’s approval will be made when it is presented to Parliament on 19 July, along with proposed amendments.
Showers will occur at several places in Western and Sabaragamuwa provinces and in Kandy, Nuwara-Eliya, Galle and Matara districts.
A few showers may occur in the North-Western province.
Showers or thundershowers will occur at a few places in Uva province and in Ampara and Batticaloa districts during the evening or night.
Fairly strong winds about (40-45) 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.
Colombo (LNW): The country’s cinema industry is furious over the National Film Corporation’s (NFC) move to shut out the private sector by going back on the industry’s partial liberalisation and taking up a larger role in distributing films.
Cinema owners and private sector importers and distributors warned that the move would be disastrous and put millions of investments made since 2001’s partial deregulation, and those planned for the future, at risk
Worst, they added, that the public would be stripped of choice and a proper cinematic experience to enjoy.
The private sector also warned that the local film industry and artists too stand to lose in the long run.
The rebounding cinema industry has run out of quotas for imports of films, prompting calls for the National Film Corporation (NFC) to temporarily take over the issuance until restrictions are fully phased out.
Sri Lanka has five circuits for distribution and the collective quota comprises 65 English movies, 70 Tamil movies and 25 of any other language movies. Industry sources said each circuit is only allocated 13 English films, 14 Tamil and 5 other language movies including Hindi.
However with the number of cinemas increasing and the short running time of 2-4 weeks per movie, the industry said the present quota allocation is inadequate.
The crisis could delay the screening of latest blockbuster movies including upcoming biographical thriller “Oppenheimer” directed, written and co-produced by Christopher Nolan.
This movie, up for approval for release, is about J. Robert Oppenheimer, the theoretical physicist who helped develop the first nuclear weapons.
Other upcoming movies include “Teenage Mutant Ninja Turtles: Mutant Mayhem”, ‘Redemption’, ‘Whitebird, ‘GOLDA’, ‘The Exorcist’, ‘Hunger Games: The Ballad of Songbirds & Snakes’, ‘BARBIE’, ‘Blue Beetles’, ‘Equalizer 3’ and many more till end of 2023.
Sources pointed out that foreign film importers as well as domestic producers prefer to work with registered circuits of their choice based on confidence in their services and contracts with registered importers to distribute films to cinemas.
They are also responsible to ensure that the agreed share is correctly accounted for and paid in time.
With quotas exhausted and restrictions imposed on the cinema industry, the industry finds it difficult to operate.
The five circuits are Cinema Entertainments Ltd., Lanka Film Distributors Co Ltd., EAP Films and Theatres Ltd., Ridma Circuit – (under the National Film Corporation), Skyline Entertainments and Consultancy Ltd., and Liberty Cinemas Ltd.
The industry has made joint representation to the NFC to bring under it the issuance of quotas until a decision is made to abolish the quota system.
Having realised the ill-effects of the monopolistic nature of the NFC, including the number of cinemas coming down to 138 from 365 originally,
Post-partial liberalisation, the private sector began investing in cinemas, film imports and distribution, offering the latest movies and a better cinematic experience and choice for the general public.
Prior to the setbacks of the ongoing COVID pandemic and the 2019 Easter Sunday terror attacks, the industry was thriving, having increased the number of cinemas to over 200.
With several multiplexes planned, further growth was envisaged. Since liberalisation, the number of movie-going population has grown to over seven million.
The industry had drawn up plans to increase the base to 10 million by 2025. NFC as the de-facto regulator too benefitted, gaining 10% per ticket sold.
Colombo (LNW): The cement manufacturers have reached an agreement with the government to set a maximum retail price for a 50 kilogram bag of cement, announced Trade Minister Nalin Fernando.
Accordingly, the maximum retail price of a 50 kg bag of cement will be Rs. 2,300.
Colombo (LNW): Power and Energy Minister says proposals received from Russia, US, India, and European countries Says CEB’s 2023-2042 generation does not include nuclear power.
Power and Energy Minister Kanchana Wijesekera said yesterday that Sri Lanka is evaluating offers for nuclear power plants from various countries, including Russia, the United States, India, and several European nations.
Minister Wijesekera dismissed claims of a deal with Russian nuclear giant Rosatom, emphasising the need to determine the appropriate technology for the country and pre-plan various factors.
“Besides Rosatom, other companies and countries, including India, European nations, and the United States, have presented proposals with different nuclear power plant technologies deemed suitable for Sri Lanka.
The objective is to select the most suitable technology that aligns with the country’s needs,” he told journalists at the Presidential Media Centre titled ‘Collective path to a stable country’.
He said the Ceylon Electricity Board’s (CEB) 2023-2042 generation plan does not include nuclear power, adding the necessity of assessing when nuclear power generation will be required.
Minister Wijesekera clarified that no agreement has been reached with any company or country regarding the construction of Sri Lanka’s first nuclear power plant by 2032.
Russia has expressed its willingness to build a nuclear power plant in Sri Lanka if granted permission by the Government, but concerns have been raised locally and internationally regarding such projects.
He stressed that opting for a nuclear power plant requires a well-considered decision, citing there are many aspects to be considered.
“We need not be fearful, as numerous nations worldwide have successfully embraced nuclear energy. Even our neighbouring countries such as India, Pakistan, and Bangladesh have opted for nuclear power plants,” he added.
Colombo (LNW): The buying and selling prices of the US Dollar are Rs. 300 and Rs. 315.10 as revealed by the official exchange rates of the Central Bank of Sri Lanka (CBSL) today (06).
Colombo (LNW): More than 14,000 power outages were reported yesterday (05) and today (06) due to the adverse weather conditions in the country, revealed Power and Energy Minister Kanchana Wijesekara, speaking to Parliament today.
He added that more than 50,000 connections have been disconnected due to the breakdowns, and most cases were reported in the Nuwara Eliya and Kandy districts and in areas close to reservoirs.
Measures are being taken by the Ceylon Electricity Board (CEB) to resolve the issue as soon as possible, Wijesekara noted.
The Colombo Stock Exchange (CSE) has facilitated the adoption of two ambulances for the 1990 Suwa Seriya Foundation.
This is in response to the programme, ‘Adopt an Ambulance’ which has been launched by the Board and Management of the 1990 Suwa Seriya Foundation.
Suwa Seriya is a pioneering ambulance service launched by the Government of Sri Lanka to provide emergency medical care to those in need, especially in rural and remote areas.
Recognising the importance of this service, the CSE came forward to support the continuation of providing a lifesaving emergency medical assistance in Sri Lanka.
Commenting on the donation, the CSE Chairman Mr. Dilshan Wirasekara stated, “We believe that, it is our responsibility to support and empower the communities in which we operate.”
“We are happy that our donation to adopt two ambulances for the 1990 Suwa Seriya Service will undoubtedly help to maintain their services to save lives and provide much-needed healthcare access to remote areas in the country. We are honoured to be a part of Suwa Seriya’s noble mission of providing free pre-hospital care services to all Sri Lankans.”
The CSE, which is represented countrywide through a branch network, will continue to support and empower the communities in which it operates.
Fitch Ratings – Hong Kong – 05 Jul 2023: FitchRatings has downgraded Sri Lanka’s Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) to ‘C’ from ‘CC’. The issue ratings on local-currency bonds have also been downgraded to ‘C’ from ‘CC’. The Long-Term Foreign-Currency (LTFC) IDR has been affirmed at ‘RD’ (Restricted Default) and the Country Ceiling at ‘B-‘.
A full list of rating actions is detailed below.
Fitch typically does not assign Outlooks to ratings of ‘CCC+’ or below.
Key Rating Drivers
Domestic Debt Restructuring Proposal Announced: The downgrade of Sri Lanka’s LTLC IDR reflects Fitch’s view that a sovereign local-currency debt restructuring process has begun, as parliament approved the government’s domestic debt restructuring plan on 1 July. On 4 July, the authorities launched a formal exchange offer to bondholders for those bonds that are eligible for the restructuring.
Restructuring Plan Outlined: The debt restructuring announcement outlines a domestic debt optimisation (DDO) strategy, which includes treatment of Sri Lanka’s domestic debt as well as domestically issued foreign-currency debt. The key elements of the DDO includ: conversion of CBSL’s T-bills and provisional advances to the government into treasury bonds (T-bonds); exchange of superannuation funds’ T-bonds into longer maturity T-bonds; exchange of outstanding Sri Lanka development bonds (SLDBs), which are US-dollar denominated but governed by local law, into new US dollar or Sri Lankan rupee instruments; and, restructuring of local-law foreign-currency denominated bank loans of the government.
The debt restructuring excludes banks’ holdings of Sri Lankan rupee-denominated treasury securities, but bank holdings of SLDBs will be affected.
DDO Qualifies as DDE: In Fitch’s view, the proposed DDO will qualify as a distressed debt exchange (DDE) under our criteria, as it entails a material reduction in terms and is needed to avoid a traditional payment default. We will downgrade the LTLC IDR to ‘RD’ upon closing of the exchange offer and following confirmation that the exchange will be executed. The government plans to complete the exchange within July.
Foreign Currency IDR in Default: The sovereign remains in default on foreign-currency obligations and has initiated a debt restructuring arrangement 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 loan agreements 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’ reflects a default event.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
The LTLC IDR will be further downgraded once the government executes its domestic debt restructuring.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Following completion of the DDE, the sovereign LTLC IDR will likely be lifted out of ‘RD’ to a rating that appropriately reflects its prospects.
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 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.
Best/Worst Case Rating Scenario
International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from ‘AAA’ to ‘D’. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
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 IDR is ‘RD’ as the sovereign is in default on its foreign-currency debt obligations.
Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). For more information on Fitch’s ESG Relevance Scores, visit www.fitchratings.com/esg.
