Colombo (LNW): Finance State Minister Ranjith Siyambalapitiya said the calling in of applications for the interest-free student loan scheme introduced by the government for students who have sat for the GCE Advanced Level examination in the objective of developing higher education in Sri Lanka will commence from tomorrow (04).
The new interest-free student loan scheme was introduced for 5,000 eligible students who have faced their ALs in the years 2019, 2020 and 2021 to pursue higher education in private universities.
Speaking to media, the State Minister emphasised that the Education Ministry will be announcing the availability of this new student loan scheme and students who wish to obtain it should be following job-oriented courses.
Accordingly, those who have faced the ALs in the said years can apply for this loan scheme from July 04 to July 07, he added.
The entire interest for this scheme is borne by the government of Sri Lanka, Siyambalapitiya noted.
Colombo (LNW): Sri Lanka must adopt new growth and/or industrial strategies to direct the country’s industries towards a growth path, emphasised Governor of the Central Bank of Sri Lanka (CBSL) Nandalal Weerasinghe, speaking at a conference yesterday (02).
The CBSL Chief noted that the country’s industrial sector must focus on export-oriented growth, in the necessity to revisit the National Industrial Development strategy in line with dynamics in international markets.
Sri Lanka should transform into an industrial sector of high-technological development, and the country’s entrepreneurs should be supported to gain access to global markets, Weerasinghe added.
Colombo (LNW): Four more dengue-related fatalities have been reported in Sri Lanka, having the death toll due to the outbreak up to 31, the Epidemiology Unit said.
As of now, 49,559 cases have been reported and the highest number of cases were found in the Gampaha District, which stands at 10,879, it added.
The Western Province reports 24,730 dengue cases this year, and the Epidemiology Unit has recognised 61 MOH areas to be vulnerable towards the disease.
Health Minister Keheliya Rambukwella says a crucial programme under the guidance of President Ranil Wickremesinghe to prevent future shortages of medicines in the country will be implemented; asserts the government has taken measures to enhance the efficiency of the procurement process for importing medicines, with a particular focus on “ensuring their quality.”
The Finance Ministry announces the government’s domestic debt optimisation strategy will be made public within the next two days; adds the DDO programme will also be submitted to the other parties including the Employees Provident Fund.
Trade Minister Nalin Fernando says the government is working to drop out from the Co-operative Service Programme, in the absence of a proposal from the Co-operative on what kind of intervention should the government be making for the moving forward of the service; adds if the Co-operative Service is affected by the government’s intervention, the government should refrain from intervening in its activities.
Social Empowerment State Minister Anupa Pasqual says the list of eligible persons for the welfare benefits entitled to the differently-abled, elderly and sick persons will be made public next week; adds there is still time to submit the appeals or objections pertaining to the “Aswesuma” beneficiaries list, if such submissions have not yet been made: Trade Unions Director General and provocative UNP advocate Saman Ratnapriya says anyone not interested with the appeals process can refer a copy of the relevant appeals to the Presidential Secretariat.
Archbishop of Colombo HE Cardinal Malcolm Ranjith urges the President not to consider appointing SDIGs Nilantha Jayawardena and Deshabandu Tennakoon as the IGP; reminds the final report of the PCoI on Easter bombings clearly sets out that SDIG Tennakoon had merely conducted himself as a messenger and had failed to discharge his duties in the given circumstances; adds SDIG Tennakoon had spearheaded the Police probe into the discovery of a hand grenade at All Saints Church in 2022, which led to the arbitrary and baseless arrest of workers of the church; stresses PCoI report also says that SDIG Jayawardena was the most responsible person for the inaction that resulted in the April 2019 bombings.
SLPP MP Rohitha Abeygunawardena calls JVP/NPP Leader Anura Kumara Dissanayake “a hypocrite” over his recent tour to Australia, accusing him of being accommodated “a business class flight” when his party speaks of Sri Lanka’s economy.
Sri Lanka reports four more dengue-related fatalities, rising the death toll to 31: According to the Epidemiology Unit, 49,559 cases have been reported so far, with the highest number from the Gampaha District which stands at 10,879: The Epidemiology Unit recognises 61 MOH areas most vulnerable to dengue.
Finance Secretary Mahinda Siriwardena to travel to Beijing soon to work out nitty-gritties, with China pledging to fully cooperate in the external debt restructuring process: China being the largest bilateral creditor to Sri Lanka to observe discussions among Japan, India and France regarding the island’s debt restructuring process: The Chinese government has authorised EXIM Bank to engage with the SL authorities on debt restructuring.
Aviation Minister Nimal Siripala De Silva chairs a special discussion between the civil aviation authorities of Sri Lanka and Israel regarding the commencement of direct passenger flights from Tel Aviv to Colombo: Civil Aviation Authority says a MoU between the two countries is to be signed soon.
Sri Lanka qualifies for the ICC Men’s Cricket World Cup 2023, after beating Zimbabwe by 09 wickets in Bulawayo, Zimbabwe and securing a place in the final of the ongoing qualifying tournament: Chasing a target of 166 (32.2 overs), SL were anchored by Pathum Nissanka, who scored 101 off 102: Spinner Maheesh Theekshana and left-arm fast bowler Dilshan Madushanka play well by sharing seven wickets between them.
Colombo (LNW): A crucial programme under the guidance of President Ranil Wickremesinghe to prevent future shortages of medicines in the country will be implemented, asserted Health Minister Keheliya Rambukwella, addressing a briefing held yesterday (02) at the Presidential Media Centre (PMC) under the theme ‘One Way to a Stable Country’.
The Minister highlighted that the government has taken measures to enhance the efficiency of the procurement process for importing medicines, with a particular focus on ensuring their quality.
The Minister further remarked that the health sector in the country has received significant attention, acknowledging Sri Lanka’s exceptional dedication to free healthcare at the international and regional levels.
Hence, the government is closely monitoring the steps taken to address the challenges faced by the health sector and how these steps will impact the sustainability of the country’s free healthcare system, he added.
“The COVID-19 outbreak posed a major challenge to the global health sector, and since then, the healthcare industry has faced a difficult journey. Normally, the medical supply department procures medications to last for at least a year, ensuring sufficient stock. At that time, there were no financial concerns in the country,” Rambukwella noted.
He went on: “Due to the COVID-19 pandemic, international trade came to a halt as air and sea transportation became inaccessible. Priority had to be given to dealing with the pandemic, resulting in a delay in medication storage.
Once the country successfully managed the challenge of COVID-19 and returned to a normal state, there were significant struggles. As a result, the country faced complete chaos, leading to delays even in the procurement of medications.
Irrespective of the chosen import procedures, the process itself takes a minimum of nine months to complete. Upon discussing the issue with the Cabinet, the current President understood the situation well and engaged with the Ministry of Finance to establish an immediate schedule for drug importation.”
The Minister further noted that despite certain flaws, the current drug situation is manageable, and that the Ministry has initiated a programme to address these issues and move forward, whilst a comprehensive report on this matter will soon be submitted to the Cabinet.
The government has taken several measures to tackle temporary shortages of medicines. Presently, we produce 19 different types of medicines, and our plan is to add 17 additional drugs to this list by the next quarter. Over the next two years, we aim to increase the production of domestically made medicines by 30% to 35%.
During the press briefing, Minister Keheliya Rambukwella responded to questions from journalists:
Q: The information system established in 2021 in the medical supply sector, which cost millions, is currently inactive. Why invest another 100 million to rebuild it?
A: Simply discarding the existing data system because the delete button was pressed is not possible. An inquiry is currently underway regarding this matter. The Ministry Secretary and Director General have been informed of the necessary steps, and the Parliamentary COPE Committee has been notified as well. If decisions need to be made, I will not hesitate to take appropriate action.
Q: Incidents of anesthetic drug-related issues were reported at Peradeniya Hospital and Ragama Hospital. It was mentioned that a committee will be appointed to conduct a study. What is the current status?
A: Different opinions exist regarding this matter. The Chief Doctor has provided an explanation of the incidents at Peradeniya Children’s Hospital and Ragama Teaching Hospital. According to doctors, this vaccination is not used at Peradeniya Hospital. The initial report on this incident has been received, and we are awaiting information regarding the situation at Ragama Teaching Hospital. The anesthetic drugs have been removed.
Q: According to the CEO of NMR, there is a lack of laboratory facilities and staff to analyse medicines upon their arrival in Sri Lanka. Was medicine from India provided to the public without being tested? Is there truly a shortage of officers? Have you investigated the reasons behind the lack of laboratory facilities?
A: Efforts are currently underway to gather expertise and establish laboratory facilities in collaboration with the World Health Organisation. Another group is exploring the possibility of partnering with the private sector. The President has instructed the establishment of these laboratory facilities by the end of this year.
Colombo (LNW): Prevailing showery condition over the south western parts of the island is expected to continue, and showers will occur at times in Western, Sabaragamuwa, North-Western and Northern provinces and in Kandy, Nuwara-Eliya, Galle and Matara districts, the Department of Meteorology said in an advisory statement today (03).
Very heavy showers above 150 mm are likely at some places in Western and Sabaragamuwa provinces and in Kandy, Nuwara-Eliya, Galle and Matara districts, showers or thundershowers will occur at several places in Uva province and in Ampara and Batticaloa districts during the evening or night, it warned.
Fairly strong winds about (40-45) kmph can be expected at times in western slopes of the central hills, North-Central province and in Puttalam, Hambantota and Trincomalee districts.
General public is kindly requested to take adequate precautions to minimise damages caused by temporary localised strong winds and lightning during thundershowers.
Marine Weather:
Condition of Rain:
Showers or thundershowers will occur at times in the sea areas off the coast extending from Puttalam to Matara via Colombo and Galle. A few showers will occur in the other sea areas around the island.
Winds:
Winds will be south-westerly and speed will be (30-40) kmph. Wind speed may increase up to (50-60) kmph at times in the sea areas off the coast extending from Trincomalee to Pottuvil via Kankasanthurai, Mannar, Colombo, Galle and Hambanthota.
State of Sea:
The sea areas off the coast extending from Trincomalee to Pottuvil via Kankasanthurai, Mannar, Colombo, Galle and Hambanthota will be rough at times. Temporarily strong gusty winds and very rough seas can be expected during thundershowers.
Colombo (LNW): The government’s domestic debt optimisation (DDO) plan approved in Parliament yesterday (01) will be made public within the next two days, announced the Finance Ministry.
Secretary to the Finance Ministry Mahinda Siriwardena said the DDO strategy will be made public record on Monday (03) or Tuesday (04).
The DDO programme will also be submitted to the other parties including the Employees Provident Fund (EPF), the Ministry stated.
With the new DDO strategy being passed in Parliament, the President as the Minister of Finance and Economic Stabilisation will be vested in the power for the optimisation of domestic debt in Sri Lanka amidst the worst economic setback befallen the island nation since independence.
According to the media, the Parliament yesterday, 1st July 2023, has approved with 122-62 majority the resolution for granting the authority to the Minister of Finance, Economic Stabilization and National Policies, to implement a domestic debt optimization (DDO) to restore the sovereign debt sustainability.
However, official contents of the DDO considered under the resolution are still unknown to the public except the PowerPoint presentation made by the CB Governor to the Cabinet on 28 June 2023.
The purpose of this article is to shed some light on how the EPF has been victimized by in the Central Bank functions of debt management, monetary policy and fiscal agent and to call upon an independent inquiry before implementing the DDO to victimize the EPF again in a discriminatory manner.
Highlights on DDO – CB Governor’s PowerPoint presentation
Only concepts on DDO relating to Treasury bills held by the Central Bank, Treasury bonds held by superannuation funds and foreign currency debt in Sri Lanka Development Bonds (SLDB) and Foreign Currency Banking Unit (FCBU) have been presented.
Any amounts involved in those debt categories or modalities or financial impact on those creditors/investors were not presented.
Debt in Treasury bills and Treasury bonds as at end of 2022 was Rs. 4.1 tn and Rs. 8.7 tn, respectively, as at end of 2022. However, the amount of debt in SLDB and FCBU are not indicated.
The DDO in Treasury bills is limited to what is held by the Central Bank, i.e., 62.4% at the end of 2022.
The DDO in Treasury bonds is limited to what is held by the superannuation sector. The EPF held 36.5% of Treasury bonds at the end of 2022. The EPF’s holding of Treasury bonds is around 90% of its total investments. Further, any indication of the holding by ETF and other superannuation funds was not revealed.
Therefore, the Parliament has approved the DDO resolution without any knowledge on the exact debt amounts involved, the legal process and its financial impact on debt holders covered.
How EPF members have been punished for debt mismanagement
The Monetary Board is the manager of the funds belonging to the EPF. At the same time, the Monetary Board is the authority for the monetary policy, government debt management and fiscal agent since 1950.
Therefore, the inside information shows that the EPF has been used as the conduit by the Monetary Board/Central Bank to carry out all three national functions under one roof or conglomerate at a cost to the EPF.
Some of devices used are listed below.
The forcibly use of the EPF funds for private placements of Treasury bonds for funding the government with the objective of the lowest cost and risk. An examination of the Auditor General conducted under the section of 43(2) of the Monetary Law Act covering the period 2008-2015 is available with the relevant authorities and some evidence was produced at the Presidential Bond Commission 2017. Details on individual placements of each bond are available in the report. This will help estimate the amount of bonds dumped to the EPF to raise funds at the lowest cost and risk.
The modus operandi followed by the CB authorities was to announce bond auctions for small amounts like Rs. 1 bn or 2 bn in irregular manner and have a forced bid for the full auctioned amount from the EPF at a very low directed yield. Then, other bids are rejected and the placement window is opened for raising balanced funds from the auctioned bond as well as the re-issuance of any other bonds preferred by the dealers. The evidence is available that the the EPF was given lowers yields than yields given to others. As a routine, the government was pre-funded through the placement window. As a result, funding the government was a convenient job for the debt manager while killing the market development and fiscal discipline.
Private placement window was simultaneously used for the control of market interest rates or the yield curve for the monetary policy requirements. Leading monetary policy economists of the Central Bank including the present Governor testified at the bond commission that the private placement window was a powerful instrument to control interest rates in the economy. Therefore, this is simply the use of debt management for the monetary policy in violation of the relevant provisions of the Monetary Law Act. Private placement is a debt instrument and not a monetary policy instrument. As the private placement window was dominantly used on the EPF, the monetary policy was effectively run trough the EPF. The present CB Governor has resumed the private placement window for same purpose of interest rate control. The present President who was dead against the private placements in 2015 in good governance context is now silent on the practice.
In early 2017, the Monetary Board permitted the EPF to deposit its excess funds at the CB’s overnight standing deposit facility for a return until the next auction of the government securities. However, the EPF is not an open market operation participant under the monetary policy. Therefore, this is an unlawful attempt to use EPF funds for auctions of government securities.
In certain periods, the Monetary Board conducted its monetary policy open market operations through government securities borrowed from the EPF at a payment of a fee. This is against the Monetary Law Act that provides for the Central Bank to hold a short-term portfolio of government securities and to issue own securities for this purpose.
How the EPF was used as the financing conduit for driving the stock market and bond market is not a secret to the Monetary Board. In certain instances, high quality investments of the EPF were sold to foreigners to raise foreign currency for the foreign reserve under the national monetary policy of the Monetary Board.
Concluding Remarks
The Presidential Bond Commission 2017 recommended a forensic audit on private placements. However, relevant authorities have not taken any action so far.
A major cause for the present problem of domestic debt service burden is the arbitrary monetary policy implemented by the present CB Governor through red-hot interest rates on government securities around 30% in 2022 and 2023 so far. There is no macroeconomic rationale of such a monetary policy in a crisis economy caused by a supply side collapse.
In 2022, 24 bond auctions have been conducted to raise Rs. 2,377 bn at overall weighted average yield of 21.24% with an average maturity of 5 years. Only four Treasury bond auctions were held in 2023 so far to raise Rs. 368.4 bn at yield rates around 28%-29% whereas the primary market has now collapsed after the introduction of Treasury bond auctions in February 1997. Further, nearly Rs. 9,948 bn through Treasury bills was raised at an overall weighted average yield of 25.21% at 52 auctions. In addition, nearly Rs. 3,472 bn has been raised so far in 2023 through Treasury bills at around weighted average yield rates of 25%-30% at 26 auctions. Therefore, the present CB Governor is the key individual responsible for the domestic debt unsustainability at present.
In fact, he is responsible for foreign debt unsustainability too because his has been the front line decision-maker on issuance of all sovereign bonds, SLDBs and currency swaps solely for the purpose of the foreign reserve management of the Central Bank. He has served as the Chairman of the Foreign Reserve Management Committee.
Therefore, it is the monetary policy that is responsible for the present debt unsustainability where the present CB Governor managed the monetary policy for more than a decade.
The mandate of the Domestic Debt Management Committee (DDMC) of the Central Bank is to follow “a market-based strategy by considering market conditions, market appetite, monetary developments, inflation, government cash flow needs, the maturity profile, risks in the debt portfolio, etc.” https://www.cbsl.gov.lk/public-debt-management. Therefore, all those DDMC members have failed in their public duties. However, many were trained by the World Bank regular debt sustainability programme.
However, the EPF is again victimized through the DDO for domestic debt unsustainability proposed by same officials including the present CB Governor. He and Secretary to the Treasury and several senior CB officials who were involved in debt management and monetary policy and enjoyed with high ranking IMF positions had the opportunity to resolve the debt unsustainability problems well in advance with the help of the IMF, especially under two latest IMF programmes 2009-12 and 2016-20. In fact, nobody cared for implementing the Active Liability Management Act that was passed in 2018 for debt restructuring purpose. However, the Monetary Board unlawfully used the additional 10% borrowing limit permitted under this Act to raise more debt to finance the budget deficit.
Therefore, it is in the interest of both public and EPF members to conduct an independent inquiry as to how the EPE members were victimized by the Monetary Board/CB top ranking officials before EPE members are again victimized through the DDO as proposed by the CB Governor to the Parliament.
Ample documentary evidence is available that the present CB Governor is the most top ranking officer who has been involved in abuses in debt management and monetary policy. Therefore, the proposed inquiry is urgent because Parliamentarians were not aware of these facts and ground realities at the time of approving the DDO resolution yesterday.
Any steps taken to implement the proposed DDO without an inquiry as proposed will be unfair and discriminatory under the Constitution as the cause of the unsustainable Treasury bond debt stock is not the EPF or the superannuation sector.
Further, the employment of same officials who mismanaged and abused debt and caused debt unsustainability without any clearance from an independent inquiry is a major issue in the government’s policy governance.
The crisis resolution is possible only if the crisis is investigated and ground level lapses and errors are accepted without the greed for remaining in the power.
(This article is released in the interest of participating in the professional dialogue to find out solutions to present economic crisis confronted by the general public consequent to the global Corona pandemic, subsequent economic disruptions and shocks both local and global and policy failures.)
P Samarasiri
Former Deputy Governor, Central Bank of Sri Lanka
(Former Director of Bank Supervision, Assistant Governor, Secretary to the Monetary Board and Compliance Officer of the Central Bank, Former Chairman of the Sri Lanka Accounting and Auditing Standards Board and Credit Information Bureau, Former Chairman and Vice Chairman of the Institute of Bankers of Sri Lanka, Former Member of the Securities and Exchange Commission and Insurance Regulatory Commission and the Author of 10 Economics and Banking Books and a large number of articles published.
The author holds BA Hons in Economics from University of Colombo, MA in Economics from University of Kansas, USA, and international training exposures in economic management and financial system regulation)
Colombo (LNW): The government is working to drop out from the Co-operative Service Programme, in the absence of a proposal from the Co-operative on what kind of intervention should the government be giving for the moving forward of the service, said Trade Minister Nalin Fernando.
However, if the Co-operative Service is affected by the government’s intervention, the government should refrain from intervening in its activities, the Minister added.
The government’s intervention would only be necessary if the Co-operative suggests itself on what kind of intervention should it need and how should it be implemented, he emphasised.
Fernando further noted that the Prime Minister and himself were thinking of taking decisions in this regard in the near future.
Colombo (LNW): Parliament has been scheduled to convene again from July 05 to July 7, 2023, announced Secretary General of Parliament Kushani Rohanadeera.
The Secretary General further stated that on 30.06.2023, the Committee on Parliamentary Business, which met under Speaker Mahinda Yapa Abeywardana finally decided that there will be no parliamentary meetings held on the 4th Tuesday.
Accordingly, on Wednesday, the 05 th of July time from 9.30 a.m. to 10.30 a.m. has been allotted for Questions for Oral Answers. Eight (08) Motions regarding the Annual Reports of various Statutory Institutions are scheduled to be passed without debate at 10.30 a.m.
From 10.30 a.m. to 5.30 p.m. Adjournment Debate on Delays in Judicial Proceedings in Courts and Reasons Involved Thereon by the Government and the Oppositions have been scheduled.
On Thursday, the 06 th of July, time from 9.30 a.m. -to 5.00 p.m has been allotted for the continuation of the Second Reading of the Adjourned Debate on the Anti-Corruption Bill and Assistance to and Protection of Victims of Crime and Witnesses Bill.
Moreover, time from 5.00 p.m. to 5.30 p.m. has been allotted for Question at the Adjournment Time. On Friday, the 07 th of July, Questions for Oral Answers will be taken up from 9.30 a.m. to 10.30 a.m. the Secretary General said. Thereafter, Time has been allotted from 10.30 a.m. to 5.00 p.m. for the Second reading of the Carriage by Air (Amendment) Bill and Order under the Extradition Law to be taken up for debate.
Furthermore, from 5.00 p.m. to 5.30 p.m. Motion at the Adjournment Time by the Opposition is scheduled to be taken up.
