In a significant move aimed at curbing money laundering, terrorism financing, and illicit activities, the Cabinet of Ministers has granted approval to the Anti-Money Laundering and Countering the Financing of Terrorism National Policy for the years 2023 to 2028.

The Cabinet Paper outlining this pivotal policy was presented by President Ranil Wickremesinghe, who holds the portfolio of Finance, Economic Stabilization, and National Policies Minister.

This decision by the Cabinet sets the stage for the execution of strategic action plans, which delineate the responsibilities of respective institutions. These plans are designed to address identified vulnerabilities and enhance Sri Lanka’s capabilities in the prevention of money laundering and the combatting of terrorism financing.

The Financial Action Task Force (FATF), an intergovernmental entity that establishes global benchmarks to prevent money laundering and terrorist financing, has put forth 40 recommendations intended for adoption by all nations.

In line with this framework, the Asia Pacific Regional Group on Money Laundering, an arm of the FATF, is actively evaluating Sri Lanka’s adherence to these recommendations. A crucial development is the imminent commencement of the third mutual evaluation of Sri Lanka by the Asia Pacific Regional Group on Money Laundering, scheduled to commence in March 2025. This evaluation process will provide a comprehensive assessment of Sri Lanka’s progress and compliance in this critical domain.

In an official announcement, the US Embassy in Colombo has revealed that Richard Nephew, the US State Department Coordinator on Global Anti-Corruption, is embarking on a formal visit to Colombo from August 08 to 09.

The delegation accompanying Nephew on this important visit includes Dylan Aikens, the Anti-Corruption Analyst for the US Department of State, according to a statement released by the embassy.

During his time in Colombo, Nephew is slated to engage with a range of stakeholders, encompassing government officials, opposition figures, representatives from the International Monetary Fund (IMF), members of the private sector, and advocates from civil society.

The primary focus of his visit centers around gaining a comprehensive understanding of the ongoing efforts to combat corruption within the country. Moreover, Nephew’s discussions will extend to evaluating the prevailing political and economic circumstances in Sri Lanka. Additionally, the visit seeks to foster discussions about potential avenues for future collaboration between the two nations.

As Nephew and his team undertake these meetings, they aim to lay the groundwork for mutual understanding and collaborative endeavors aimed at addressing corruption and promoting transparency.

By: Staff Writer

Colombo (LNW): With its swift spreading across Europe, Asia and North America, a new Covid variant, called Eris is raising alarms about a potential surge in infections keeping health authorities in Sri Lanka also on alert, Health ministry sources warned.

Recent data from the UK Health Security Agency (UKHSA) reveals that Eris is responsible for one in seven Covid cases in the country, propelling it to the second most common strain, trailing closely behind Arcturus.

Initially flagged as a concern by the UKHSA in July, the Eris variant has now become a prominent epidemic in the Covid landscape. Reports indicate that the variant is gaining ground in Europe, Asia and North America, with Japan grappling with what has been dubbed a ‘ninth wave’ of Covid infections.

Recent statistics paint a concerning picture of the virus’s resurgence. Covid tests on individuals with respiratory illnesses have shown a significant uptick in positive cases, rising from 3.7 per cent to 5.4 per cent within a week, reports NottinghamshireLive.

Sri Lankan Health authorities said they keep a close eye on the new developments of the virus and are on alert.

A descendant of Omicron, Eris, or EG.5.1, was first flagged as a variant in the UK on 31 July, but now accounts for one in 10 Covid cases.

It is now the second most prevalent variant in the UK, after Arcturus which makes up almost half of all infection cases at 39.4 percent, according to UK Health Security Agency (UKHSA).

Sri Lanka COVID-19 Coordinator Dr. Anwar Hamdani said the Ministry has always been on alert on any new disease spreading in a foreign country as it could pose a threat to Sri Lanka.

“As far as the virus spreading in the UK is concerned, we are vigilant and monitoring the situation,” said Dr Hamdani.

As per the latest report by the UKHSA on August 3, COVID-19 cases continue to rise across the UK.

The five most common symptoms of Eris, a strain of Omicron, are runny nose, headache, fatigue, sneezing, and sore throat, as per health experts.

It appears to be spreading quickly and could be one reason why there has been a recent rise in cases and hospitalizations.

“We continue to see a rise in COVID-19 cases in this week’s report. We have also seen a small rise in hospital admission rates in most age groups, particularly among the elderly.

Overall levels of admission still remain extremely low and we are not currently seeing a similar increase in ICU admissions,” said Dr Mary Ramsay, UKHSA’s Head of Immunisation.

Officials further say they are “closely” monitoring the situation as COVID case rates continue to rise.

In this context, WHO Director-General Tedros Adhanom Ghebreyesus said though people.

In a significant parliamentary moment, President Ranil Wickremesinghe is currently delivering a special statement, addressing key issues pertaining to the nation’s growth and future trajectory.

During his speech in parliament just a short while ago, the President underscored the vital importance of effectively implementing the 13th Amendment, tailored to suit the country’s developmental aspirations. The President’s Media Division (PMD) reported that he highlighted the need for a collective consensus among all members of parliament, emphasizing the necessity for comprehensive and open-minded discussions to achieve this goal.

President Wickremesinghe also advocated for a departure from the conventional paradigm of opposition solely critiquing the government. Instead, he called for an inclusive approach, one that actively integrates opposition viewpoints into decision-making processes, fostering a more balanced and cooperative political atmosphere.

The President’s address further echoed the significance of acting with confidence and responsibility in national governance. He stressed that the nation’s progress hinges upon the united pursuit of a new direction, inviting all stakeholders to embrace this novel approach.

Additionally, President Wickremesinghe urged parliamentary members to abstain from personal debates and, instead, channel their energies towards envisioning the nation’s future. He called for genuine unity among parliamentarians, stressing the imperative of joint decision-making that places the country’s long-term interests at the forefront.

Today (August 09), the Sri Lankan Rupee has exhibited a modest upturn against the US Dollar in comparison to the previous day’s rates at commercial banks within Sri Lanka.

Peoples Bank has noted a reduction in the buying and selling rates of the US Dollar, marking a decrease from Rs. 313.37 to Rs. 312.39 for buying and from Rs. 328.78 to Rs. 327.76 for selling.

Commercial Bank, on the other hand, has reported a decline in the buying rate of the US Dollar, showing a decrease from Rs. 313.51 to Rs. 310.77. Additionally, the selling rate has also observed a decrease, shifting from Rs. 328 to Rs. 326.

Meanwhile, at Sampath Bank, the buying and selling rates of the US Dollar have undergone a decrease, transitioning from Rs. 316 to Rs. 315 for buying and from Rs. 328 to Rs. 327 for selling.

1. CEB sources say one unit of the 270MW Norochcholai Coal Power Plant has broken down: out of the 3 power generation units at the Plant, only one unit is now in operation as a result of another unit being shut-down in June’23 to carry out maintenance work.
2. Minister of Energy Kanchana Wijesekara says the CEB will ensure an uninterrupted supply of power islandwide and has no plans for scheduled power-cuts: also says the CEB will procure necessary supplementary power needed to maintain 24-hour uninterrupted supply of power.
3. CB Governor Nandalal Weerasinghe says monetary policy transmission to the “real economy” is still incomplete: also says he “would like to see private sector interest rates come down further and at a faster pace”: analysts point out that the Central Bank is paying interest of nearly 20% per annum on T-Bills even now, and as long as that is done, it’s futile to expect private sector interest rates to reduce: since Weerasinghe assumed office, the economy has undergone massive contractions of 8.4%, 11.8%, 12.4%, & 11.5% in 2Q2022, 3Q2022, 4Q2022, & 1Q2023, respectively.
4. Police arrest 9 persons for “forcibly entering” the premises of the Central Bank: the group, said to represent the Joint Assn of Leasing and Debt Instalment Payers were demanding concessions for leasing facilities, and relaxation of “Parate actions” which were affecting them severely.
5. Cabinet approval granted to amend the EPF law to assure a 9% annual return for the 2023-2026 period: analysts point out that, in accordance with the very high interest rates since April’22 for Govt Treasuries, the returns of the EPF will easily be in excess of 20% from 2022 to 2026, and therefore a 9% return assurance is meaningless: analysts also say EPF returns to Members averaged over 10% from 2006 to 2014, when inflation was at single digits or near single digits.
6. Sri Lanka’s Women Parliamentarians’ Caucus led by MP Sudarshini Fernandopulle, receives a warm welcome at the New Zealand House of Representatives: the Caucus is on a “study tour”.
7. State Minister of Finance Ranjith Siyambalapitiya calls for an urgent report on the recent shooting incident which involved several officers of the Excise Dept: in that incident, 4 officers of the Excise Department were arrested for opening fire at a vehicle near a petrol filling station on Marine Drive, Bambalapitiya.
8. At least 60 students hospitalized after inhaling toxic smoke from a fire that erupted inside a chemical factory in Kandana: the students are from 3 nearby schools, St. Sebastian’s Balika Maha Vidyalaya, St. Sebastian’s Girls’ Primary School & St. Sebastian’s Boys Primary College.
9. Dept of Wildlife Conservation states the arrangement to provide water to animals in national parks around the country in view of the prevailing drought, is not aimed at ensuring the animals’ welfare, but preventing possible losses to the tourism industry: several parts of the country, including those where there are national parks such as Udawalawe and Yala, have been affected due to the extreme dry weather at present.
10. Owners of small-scale tea estates say they are facing numerous problems due to the serious drop in the price of tea leaves: explain that the price of a kg of green tea leaves, which had risen up to Rs.350-400 in the past, has now dropped to Rs. 160-165.

Dr. Lionel Bopage

An outline of the problem

Post-independent Sri Lanka (Lanka) has suffered from recurrent economic crises; the more notable ones being in August1953, in the late 1970s and most pertinently the current crisis which essentially bankrupted the country. The trigger for the current crisis was the prolonged pandemic that affected the world and the Russian – Ukrainian war in February 2022. The government’s misguided policies on agriculture, taxation and other sectors made the crisis worse. Post-independence, successive Lankan governments, regardless of their political hue and rhetoric have made more financial allocations to service its debt than it has allocated to education, healthcare, water, power and other essential social necessities. The advent of Covid-19 undermined trade and exacerbated this imbalance.

The pandemic resulted in a downturn in the Lankan economy, which is dependent on remittances from abroad, tourism and exports such as garments from the Free Trade Zones and agricultural products such as tea from the Malaiyaha areas. Global public debt as a percentage of GDP rose from an unacceptable 84 per cent at the end of 2019 to 100 per cent by the end of 2020. Even the world’s two largest economies China and the United States (US) were not immune. Their public debt ratio to GDP increased.

The conflict between Russia and Ukraine led to a spike in global commodity prices, particularly fuel, fertiliser and food. This adversely affected the poor and those who lived from one paycheck to the next. Furthering their misery was the strengthening of the US dollar – the “recognised” currency for world trade – thus making the defaults of low-performing economies like Lanka and Ghana a seeming inevitability. This becomes even starker when Lanka’s debt is looked at forensically.

Public Debt Situation

According to the IMF figures cited for March 2023, total public debt of the government of Sri Lanka was USD 83.6 billion of which the outstanding foreign debt was USD41.5 billion, i.e., 63.5 percent of the public debt. Of the GDP, multilateral debts were 17.6 percent and bilateral debts about 17.5 percent. About 52 percent of the bilateral creditors were Chinese, about 25 percent Japanese and 16 percent Indian.

This is sadly not something new. Sri Lanka’s economy since at least the early 1950s has failed to produce sufficient foreign exchange to meet the cost of imports. Add to this the fact that the vast majority of the population, given the informal nature of employment and business practices, do not pay tax. In addition, the largest share of government revenue is devoted to the military, dwarfing expenditure on health and education.

Successive governments were able to hide this underlying weakness in the economy and their incompetence, and corruption of the public purse when it came to accountability, the rule of law and transparency by evoking the spectre of the “other” usually in the form of minorities and they were thus able to shift the attention of the populace from their own and the economy’s shortcomings.

Hiding this fact that governments in the past, regardless of their political hue like in the present, have continued to borrow for non-productive and mostly wasteful and mismanaged projects leading to a huge external trade deficit, without being able to meet the country’s debt obligations; resulting in the country declaring bankruptcy. Lanka still produces few of its avidly sought-after consumer goods making the situation even more economically untenable. The top 20 per cent of the population enjoy 42 per cent of the island’s income while the lowest 40 per cent make do with 17.8 per cent.

“Free market” economy

The government as well as those in opposition are still advocating a free-market economy combined with a strategy of an export-led recovery process. So, the mantra of providing more and more incentives to attract foreign direct investment, promote tourism, and push local human resources abroad to make more foreign remittances continues. They conveniently forget that “free” market economics created the crisis in the first place and required the country to be bailed out by international financial agencies on numerous occasions.

Sri Lanka defaulted on its sovereign debt repayments last year and entered negotiations with the International Monetary Fund (IMF) for access to a loan package on the premise of implementing structural macroeconomic change. After obtaining USD 2.9 billion of financing from the IMF, Sri Lanka was required to initiate and complete its domestic debt restructuring process (reworded innocuously as debt optimization) in early July. As this process will lead to serious economic shocks, the government imposed a five-day bank holiday at the end of June 2023, to “facilitate” the market in absorbing those shocks and to avoid a run on banks.

This sort of brutal restructuring is not new to Sri Lanka. Since independence, Sri Lanka has had to go to the IMF with cap in hand 17 times. This will be the tenth IMF loan Sri Lanka received since the country was made into a free-market economy in 1977. The last loan was in 2016. The question the country needs to ask itself is, are we going to be hoodwinked yet again as the panacea offered by the IMF has been a systemic failure?

Restructuring and austerity

The impact of restructuring will depend on what social layer one belongs to. To a majority, it will be austerity once again, and once more people will be forced to demand economic justice. Those who loudly advocate for the IMF-led restructuring have become conveniently blind to tax avoidance and evasion, illegal siphoning of funds and money laundering and corruption, mismanagement and wastage of resources in the state sector. They have also been muted on the vital need to restructure the economy to meet the needs of the populace, not a minority of very wealthy individuals and families. Austerity has historically made the majority of the population poorer and has increased income disparity.

This paper forcefully challenges the economic mantra that debt restructuring needs to accompany fiscal austerity. A blind obedience to the a priori dictates of neo-liberalism is a sure fire recipe for disaster. The way the neo-liberal economy is designed, tax evasion and avoidance have become a systemic issue. It allows the siphoning off of taxable profits that corporations earn in developing countries like Sri Lanka to tax havens around the world. In Lanka, the tax base is not wide enough due to its extensive informal economy, and the large human resource component in overseas employment, who make remittances.

Accepting the IMF package requires cutting down of vital public expenditure such as on education, healthcare and social safety nets. It will also promote direct and indirect tax hikes, selling state-owned enterprises as well as natural resources to the private sector, establishing public-private partnerships, liberalization of public procurement and trade, increasing labour market ‘flexibility’ to hire and fire and reduce wages and pensions, increasing interest rates etc. Nothing will be done about corruption, cronyism and economic mismanagement.

The next section will cast a critical lens at the neo-liberal approach the IMF has adhered to.

To be continued

The legislative proceedings within the parliament today (August 09) will focus on the Second Reading of the Appropriation (Amendment) Bill, as confirmed by the Committee on Parliamentary Business chaired by Speaker Mahinda Yapa Abeywardena. General Secretary of Parliament, Kushani Rohanadeera, relayed this information following the committee’s meeting held yesterday.

The proposed bill entails a significant alteration to the borrowing limit, suggesting an increase from Rs. 4,979 billion to Rs. 13,979 billion.

Simultaneously, aligning with the decisions made during the Parliamentary Business Committee meeting on July 21, the agenda for today’s session also encompasses the Second Reading of the Betting and Gaming Levy (Amendment) Bill, deliberations on Regulations under the Fisheries and Aquatic Resources Act, and the consideration of the Sri Lanka Institute of Taxation (Incorporation) (Amendment) Bill.

Following these legislative discussions, there is a scheduled adjournment from 5:00 p.m. to 5:30 p.m., during which time the Opposition’s Motion will be addressed.

The forthcoming activities of this week’s parliamentary sessions will adhere to the framework established during the Parliamentary Business Committee’s meeting on July 21, as emphasized by the General Secretary.

Moreover, a notable highlight of today’s parliamentary sitting will be a special address by President Ranil Wickremesinghe, centering on the current economic state of the country. This address is anticipated to provide valuable insights into the nation’s economic trajectory.

In a recent development, President Ranil Wickremesinghe has been apprised of intelligence reports outlining an impending effort to instigate public unrest reminiscent of the events that transpired on May 09, 2022. Minister Bandula Gunawardena, addressing the media during the customary weekly press conference held on Tuesday (August 08), disclosed that the Head of State had shared information from the State Intelligence Service (SIS) with the Cabinet of Ministers.

The Cabinet spokesperson disclosed that the intelligence reports have illuminated the intentions of certain factions associated with the Aragalaya movement, which is aligned with the opposition. These groups are purportedly orchestrating a resurgence of the incidents that unfolded on May 09 of the previous year, exploiting the ongoing drought, electricity crisis, and water scarcity as a pretext.

Minister Gunawardena highlighted that there have been deliberate efforts to besiege the residences of Agriculture Minister Mahinda Amaraweera and Power & Energy Minister Kanchana Wijesekera. In anticipation of potential attacks, heightened security measures have been implemented to safeguard against such threats.

Further revelations by Gunawardena brought to light the involvement of at least two media organizations in the scheme to foment turmoil anew on the streets, utilizing the water crisis induced by the drought and the agitation among farmers as a convenient guise.

The minister underscored that this calculated endeavor represents an endeavor to disrupt the stability of the nation. He asserted that these specific factions are aiming to provoke law enforcement into a retaliatory response, potentially escalating to violent clashes, and exploit resulting casualties for their own political gains.