Central Bank Governor Nandalal Weerasinghe will be waiting for Godot as there was no signs of International Monetary Fund’s (IMF) approval for the US $ 2.9 billion bail out loan in January 2023 as well.
Sri Lanka has already missed the Central Bank Governor’s December deadline and it is about to miss his prediction of the January 2023 date of receiving IMF executive board‘s approval for the island nation’s extended fund facility (EFF), official sources said.
Central Bank Governor Nandalal Weerasinghe told a recent media conference if Sri Lanka misses the board approval in December it plans to appear before the IMF Board in January 2023 and is optimistic that it would shortly receive assurance from bilateral creditors including China and India.
The approval for Sri Lanka’s $2.9 billion bailout from the International Monetary Fund (IMF) is likely to go beyond January 2023, State Minister of Finance Shehan Semasinghe said.
Accordingly, the approval of the IMF’s Board of Directors is likely to delay further, despite recent claims that approval would be given in January 2023.
Semasinghe assured, however, that maximum efforts are underway to receive the Board’s approval in the first quarter of 2023.
The bailout was initially expected to be approved by the end of this year, however progress has been slow in recent months.
Sri Lanka will miss the January 2023 deadline for securing an IMF loan, as the main bilateral debtors, China and India were still to give assurance for debt restructuring
Under this setup, Central Bank Governor Nandal Weerasinghe’s assertion of getting IMF executive board approval in January will not become a reality for the second time, several economic experts said.
They noted that Nandalal should not jump the gun like his previous backfiring announcement of preemptive debt default by the country without parliamentary approval.
IMF officials working on Sri Lanka’s bail out loan package have not announced any dead line on its executive Board approval.
Peter Breuer, Senior IMF Mission Chief for Sri Lanka noted that the initial disbursement under the Extended Fund Facility (EFF) is available at board approval, which is contingent on the implementation of prior actions by the authorities and the progress with discussions with creditors on restoring debt sustainability.
CB Governor waiting for Godot with Jan IMF deadline in doubt
SLHRC warns of basic rights violation against electricity tariff hike
In the wake of Power and Energy Minister Kanchana Wijesekera’s confirmation on another electricity tariff revision once again, the Sri Lanka Human Rights Commission (SLHRC) has vowed to intervene if the tariff is increased violating the basic rights of the people.
“The necessary details and a report to revise electricity tariffs will be presented to the first Cabinet of Ministers meeting on 2 January 2023,” the minister told journalists yesterday.
SLHRC claimed that the electricity bill increase in January next year will be seen as a violation against basic rights of the people.
The commission noted that the government or its stakeholders have no right to further harass the people who are already burdened by the current economic difficulties.
Accordingly, if the Power and Energy Ministry or the Ceylon Electricity Board (CEB) acts to raise the electricity bill from January, the SLHRC will intervene against it, SLHRC Director Nihal Chandrasiri said.
Despite the growing protests of electricity consumers, Sri Lanka’s Cabinet approved a hike in electricity tariffs by 70 percent under two steps in January and June 2023.
A senior official of the ministry said that although the electricity tariff has been increased by 75 percent in August 2022, it is not sufficient to cover the loss of the electricity board and thus, the request to increase the electricity bill has received cabinet approval.
This was disclosed at the Sub Committee on Identifying the Short & Medium-Term Programmes related to Economic Stabilization of the National Council held recently.
Accordingly, the relevant measures are to be taken to obtain approval of the Public Utility Commission, said Rohan Seneviratne, Additional General Manager of the Electricity Board.
It was also disclosed that the Electricity Board currently owes nearly Rs. 650 billion as loans to various parties including banks and electricity suppliers.
The Electricity Board representative stated that out of the amount to be paid, nearly Rs. 35 billion are to be paid to the organisations that supplied renewable energy and Rs. 75 billion are to be paid to Thermal power suppliers.
Thus, it was said that it is expected to at least make part payment to the suppliers from the Rs.50-billion-rupee loan expected to receive.
His comments come after the meeting of Cabinet Ministers on Monday did not take up the proposal to hike power tariff which was mooted earlier
On 10 August, tariffs were increased by an average of 75 percent across the board, after a lapse of nine years. Nevertheless, the CEB maintains that the revision is inadequate due to the demand increase for power generation.
However, Minister Wijesekera categorically rejected that 10-hour daily power cuts will be imposed in January, noting the claims made by certain unions attached to the CEB has no basis to impose a 10-hour power outage from January.
CEB expects to get 38 coal ships containing 60,000 tons of coal by 15 April 2023 and the five shipments received so far are only sufficient till December 31. After April, seas off the Western coast are too rough to unload ships.
The appointment of new cabinet ministers delayed!
Political sources say that the appointment of new cabinet ministers has been delayed indefinitely.
The Sri Lanka Podujana Peramuna has forwarded a list of ministerial posts to President Ranil Wickremesinghe, but the President’s lack of agreement has caused the delay. Sources also said that since the budget was passed with a large number of votes in the budget voting, there is no need to provide new ministerial positions at this time.
Pohottuwa stalwarts who are hoping for ministerial positions have been complaining to Mr. Basil Rajapaksa in this regard, but it was reported that Mr. Basil Rajapaksa has told them that there is nothing he can do about it at the moment because the president has the full power to appoint ministers.
Also, the political sources further stated that the same situation that has arisen regarding the cabinet may also be implemented in relation to the upcoming elections.
A gazette notification related to the local government elections issued
According to the Local Government Elections Ordinance, a special gazette notice has been issued appointing Election Officers for all districts.
This extraordinary gazette notice has been issued with the signatures of all the members of the Election Commission.
Chairman of the Social Security Board removed from position with immediate effect
It is reported that the chairman of the Social Security Board, Saman Handaragama, has been removed from that position with immediate effect.
Accordingly, Engineer Shanta Dikwella has been appointed as its new chairman.
This appointment has been made by President Ranil Wickramasinghe.
SRI LANKA ORIGINAL NARRATIVE SUMMARY: 22/12
- State Minister of Finance Shehan Semasinghe says the IMF Board approval on the USD 2.9 bn loan package over 4 years (working out to USD 362 mn bi-annually) could extend even beyond Jan ’23: asserts all efforts will be taken to obtain the first tranche during Q1 of 2023.
- Bloomberg Newswires report Sri Lanka’s commercial creditors have stated the country must recast both foreign and local currency liabilities: previously, CB Governor Nandalal Weerasinghe had assured a domestic debt re-structure would not be done, although it was known that under a IMF-backed re-structuring scheme, all creditors except multi-laterals have to be given “equal treatment”: analysis shows Sri Lanka became vulnerable to default after increasing its ISB holdings by USD 10 bn from 2015 to 2019 while Weerasinghe was the CB Senior Deputy Governor.
- Cabinet Spokesman Minister Bandula Gunawardena says proposal to further increase electricity tariffs was not presented to the Cabinet: Energy Minister Kanchana Wijesekara says electricity tariffs will be definitely revised in January 2023 and a report will be submitted to Cabinet on 2nd January 2023.
- State Finance Minister Ranjith Siambalapitiya says vehicles confiscated by Customs for various reasons will be used for raids by the Sri Lanka Police for drug prevention.
- Chargé D’Affaires of the Chinese Embassy in Colombo Hu Wei meets President Ranil Wickremesinghe: the two parties have reportedly reviewed Sri Lanka’s debt issues, bi-laterally and multi-laterally.
- Headline inflation as per the NCPI drops to 65.0% in Nov’22 from 70.6% in Oct’22: inflation in Nov’22 mainly due to the higher price levels in both food and non-food groups.
- CEB Engineers’ Union President Nihal Weeraratne says operations at Norochcholai Coal Power Plant will halt in January 2023 as coal stocks will run out by 31st December 2022: conflicting reports & claims emanate from the Lanka Coal Co and CEBEU regarding the available stocks of coal.
- Minister of Energy Kanchana Wijesekara says the statement made by the Electricity Engineers’ Union of a 10-hour power cut due to lack of coal is false: also says legal and disciplinary action will be taken against them.
- President Ranil Wickremesinghe appoints former HNB and Commercial Bank Chairman Dinesh Weerakkody as the Chairman of the Board of Investment: Other board members to be Dr. Dushni Weerakoon, Chandani Wijewardena and Eraj de Silva.
- National Zoological Gardens Deputy Director Dinushika Manawadu announces the birth of twin baby nilgai (Boselaphus tragocamelus) and four blue & yellow macaw chics (Ara ararauna) at the Dehiwala Zoo: affirms both animal and bird species are in good health and ready for public viewing.
Dinesh Weerakkody appointed as the chairman of BOI
President Ranil Wickremesinghe appointed Dinesh Weerakkody as Chairman of the Board of Investment.
Other board members are Dr. Dushny Weerakoon, Chandani Wijewardena & Eraj de Silva
A former Chairman of Commercial Bank and Hatton National Bank, Dinesh Weerakkody is a board member of several other leading private institutions and has extensive experience in the financial and business fields. Previously, he also worked as the presidential adviser on treasury affairs.
Chamber of Tourism calls on govt. to develop domestic air travel services
The Chamber of Tourism and Industry has emphasized the need to develop domestic air travel services to effectively compete with its regional peers.
It pointed out that putting off the expansion and upgrading of domestic and international aviation services in the country will make it difficult for the tourism sector to reach its full potential.
Airlines, airport operators, airport on-site enterprises (restaurants and retail), and air navigation service providers employ 19,000 people in Sri Lanka. In addition,by buying goods and services from local suppliers the sector supported another 9,000 jobs.
On top of this, the sector is estimated to support a further 6,000 jobs through the wages it pays its employees, some or all of which are subsequently spent on consumer goods and services.
Foreign tourists arriving by air to Sri Lanka, who spend their money in the local economy,are estimated to support an additional 669,000 jobs. In total 703,000 jobs are supported by air transport and tourists arriving by air.
The local tourism sector experienced a near-collapse in the recent past following the interruptions of services by institutions providing domestic air travel using planes and helicopters.
As destination Sri Lanka is actively working towards reawakening the hard-hit sector, there is an urgent need to promote and further upgrade the aviation sector by luring more airlines to set up their serving offices in the country, said the Chamber in a statement to the media.
Given that active efforts have not been taken as yet to provide infrastructure facilities at domestic airports in the country, Tourism and Industry Chamber President A.M.Jaufer stressed that as a result the entire tourism sector has got affected.
To address the prevailing issues, the chamber called on the relevant authorities to start upgrading the domestic airports at Sigiriya, Koggala, China Bay and Batticaloa.
He noted that efforts must be taken to maximize the service opportunities and facilities at domestic airports to attract more passengers.
The chamber also stressed the need to establish flying training schools at Weerawila, Batticaloa and Jaffna airport complexes which will allow the educated youth to improve their skills.
To encourage the public to use domestic flying services, which will make the delivery financially viable, the chamber urged the authorities to introduce a fixed-price range for airline tickets, replacing the exorbitant charging system prevailing at present.
Further, efforts must be taken to introduce reforms to amend regulations in a speedy manner to fast-track revenue, the chamber said.
The air transport industry,including airlines and its supply chain, are estimated to support US $446 million of GDP in SriLanka. Spending by foreign tourists supports a further.
US $7.4 billion of the country’s GDP, totaling US $7.9 billion. In total, 8.9 percent of the country’s GDP is supported by inputs to the air transport sector and foreign tourists arriving by air.
BOC opens vostro account in India to conduct bilateral trade in Indian rupee
Sri Lankan bank has opened a vostro account in India with State Bank of India to conduct bilateral trade in Indian rupee, Indian High Commission in Sri Lanka said.
The High Commissioner discussed this and related matters with South Asia Regional Head of State Bank of India (SBI) Mr. Vikas Goel today, the Indian High Commission in Sri Lanka tweeted.
Bank of Ceylon (BoC) Chennai Branch has opened a Vostro account with the State Bank of India to carry out bilateral trade in Indian Rupees, official sources revealed.
Several other commercial banks are currently negotiating with leading corresponding banks in India for similar arrangements.
Indian High Commissioner Gopal Baglay announced the new development without naming the Sri Lankan bank.
“Happy to note that a Sri Lankan bank has opened a vostro account in India with State Bank of India to conduct bilateral trade in INR.
The High Commissioner discussed this and related matters with South Asia Regional Head of SBI. Vikas Goel,” tweeted Baglay yesterday.
The Indian government has opened five special vostro accounts for trade in rupee with Sri Lankan banks with a view of facilitating trade with the island nation, official sources said
SBI Mauritius Ltd and People’s Bank of Sri Lanka opened an SVRA with State Bank of India (SBI). In addition, Bank of Ceylon opened an account in its Indian subsidiary in Chennai recently.
Union Bank of India has opened spec opened special rupee account of Ros Bank Russia while Chennai-based Indian Bank has opened such accounts of three Sri Lankan banks, including Colombo-based NDB Bank and Seylan Bank
These special vostro rupee accounts (SVRA) with banks of Sri Lanka rationalizing the rupee trade arrangement.
Under the rules, any surplus in these rupee accounts can be invested in treasury bills and government securities. Banks want to understand how these securities will be transferred to the buyers.
Under the arrangement announced by the RBI on July 11, an authorized bank in India can open special rupee vostro accounts of correspondent banks of any partner trading country.
India is the biggest source for Sri Lanka’s imports. Sri Lanka’s exports to India increased by 13.24% YoY to $ 642.03 million in the first nine months of 2022.
Growth in Exports to India was mainly supported by increased exports of animal feed (14.69%), areca nuts (69.85%), woven fabrics (77.45%), and wood pulp (33.85%) %) from January – September 2022.
A vostro account is an account a correspondent bank holds on behalf of another bank. These accounts are an essential aspect of correspondent banking in which the bank holding the funds acts as custodian for or manages the account of a foreign counterpart.
Sri Lanka has agreed to use Indian rupee (INR) for international trade. It comes days after the Government of India said it is looking at ways to bring countries that are particularly short of dollars into the ambit of Indian rupee trade settlement mechanism.
UN WFP rapidly accelerates emergency operations in Sri Lanka.
The United Nations World Food Programme (WFP) is rapidly scaling up its emergency operations in Sri Lanka.
This was disclosed by Dustin Shiau, Senior Regional Program Officer of the U.S. Agency for International Development (USAID)’s Bureau for Humanitarian Assistance (BHA),who was on a visit to Sri Lanka recently.
He met with food-insecure communities and heard first-hand accounts of the difficulties they are facing and how USAID and WFP support has helped provide regular meals for their families.
During his visit, Shiau met with communities from Mullaitivu in the North of Sri Lanka, who are among those worst affected by the economic crisis – including pregnant and breastfeeding mothers and people with disabilities – to better understand their nutritional needs.
During his visit, Shiau participated in a live demonstration of a mapping exercise in Moratuwa – an area susceptible to weather-related natural disasters – to understand the process by which authorities use Geographic Information System (GIS) software to identify where the most vulnerable communities may be hardest-hit during an emergency.
This year, the US has provided a record total US$20 million (approximately LKR 7.3 billion) to support WFP’s response to the economic crisis in Sri Lanka.
Of that, USAID’s most recent contribution of US$13 million (approximately LKR 4.7 billion) is providing cash assistance and food rations to families hard-hit by the economic crisis across the country. USAID also donated funds to WFP to help feed children enrolled in the national school meal programme.
“The United States of America is a significant contributor to WFP’s emergency operation in Sri Lanka and the single largest donor to WFP globally,” said Abdur Rahim Siddiqui, WFP Sri Lanka’s Representative and Country Director. “
USAID’s long-time support to WFP and the Government of Sri Lanka includes disaster risk reduction initiatives related to floods and landslides.
With support from donors like the US, WFP is rapidly scaling up its emergency operation – which commenced in June – with plans to provide food and nutrition assistance to 3.4 million people.
WFP has so far reached over one million people with cash, food and vouchers and through the national school meal programme.