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Importers to stop food imports over strict dollar restrict rules

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Sri Lanka is about to face a severe essential food crisis following the imminent decline in the importation of commodities like rice, sugar, dhal, chickpeas, coriander and other lentils etc as a result of the ban on imports via open account payment terms, essential food commodity importers and traders complained.

This catastrophic situation erupted due to the dollar crisis coupled with a socio-political calamity and indirect restrictions of the government by banning open account imports has become an unbearable stumbling block for food commodity importers, they pointed out.

The open account payment terms was a method frequently used by importers to bring down essential food commodities bypassing the formal banking channels due to procedural delays and dollar shortage, they pointed out.

This method has been followed by food commodity importers for urgent imports specially when there was sudden shortage of essential food item from a long time even before the dollar crisis, a leading commodity importer said.

The Finance Ministry issued a gazette notification with necessary guidelines recently banning the imports using open account payment terms with effect from May 20.

The Central bank recently announced that around 25 per cent of the country’s imports (US$1.6-1.8 billion dollars a month) were carried out by using open accounts and over 12 per cent through documents against payment (DP) terms and documents against acceptance (DA) terms.

The aim of banning the open account system which was in operation for a long period is to make all payments on imports to Sri Lanka through a banking system compulsory for local importers, it added.

An open account transaction is a sale where the goods are shipped and delivered before payment is due providing an advantage for the importer in terms of cash flow and cost and the extension of credit by the seller to the buyer is more common abroad.

The goods, together with all the necessary documents, are shipped directly to the importer who has agreed to pay the exporter’s invoice at a specified date under this method.

Sri Lanka imports around $200 million of food a month including onions, potatoes, sprats, lentils and cereals and rice to meet the needs of consumers.

The clampdown on the dollar buying from markets, open account food imports and forcing Pettah traders to open Letters of Credit (LCs) or set Customs authorities to crack down on food importers who do not fully settle bills through official channels will be creating an unprecedented food shortage within the next two months, traders said.

The noted that this will also create an unbearable price hike of food items until the authorities take remedial measures they added.

Before the dollar crisis, importers used to make payments for their overseas supplier’s via dollar transactions from banks and sometimes buying dollars from the market at a higher rate for emergency imports and delays in bank transactions,

P.M. Abeysekera, Consultant of Essential Food Commodities Importers and Traders Association said that several leading importers use open accounts for the importation of essential food commodities based on their relationships with suppliers.

This system is being used frequently in recent times as there is limited foreign exchange available to fund letters of credit (LCs), he disclosed

France Japan and India step in to tackle SL medicine shortage

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Sri Lanka’s health care system is close to collapse, under President Gotabaya Rajapaksa’s government of system change which instigated the island nation’s worst economic crisis triggred by dollar scarcity.

Shortage of vital drugs affected the public health system and some procedures and tests have been suspended, official sources said.

The lack of foreign exchange has left President Gotabaya Rajapaksa’s government unable to import essentials including medicines and fuel, causing severe power cuts and bringing thousands of protesters on to the streets demanding his ouster.

New administration headed by Prime Minister Ranil Wickremasinghe took up the respsonsibility to put the house in order in a mission impossible taking prpompt action to canvas foreign donor countries and international financial agencies to help the country overcome fuel food snf medicing shortage.

Responding to SL Prime Minister’s clarion call France , japan and india have stepped into to bring at least a temporary relief to the medicine shortage in such a difficult time.

The French Government has donated a stock of medicine worth of euro 300,000 (around Rs. 115 million) following the request made by the Government of Sri Lanka.

France expressed its goodwill to assist Sri Lanka at this moment as the country’s health service is in a serious crisis with shortages of drugs and essential items amid the worsening economic situation.

This stock of medicine worth around 300,000 euros arrived in Sri Lanka by SriLankan Airlines during the weekend. Ambassador of France to Sri Lanka Eric Lavertu will handed over the medicine to the Sri Lankan health authorities upon its arrival.

The Government of Japan is giving essential medicines to Sri Lanka through UNICEF to meet the urgent needs of the most vulnerable population as the country grapples with shortages due to an economic crisis.

The contribution of US$ 1.5 million will enable UNICEF to procure medicines for over 1.2 million people, among them 53,000 pregnant mothers and nearly 122,000 children in immediate need.

The medicines will be distributed to health facilities across Sri Lanka in coordination with the Ministry of Health,.Charge d’ Affaires ad interim of Japan to Sri Lanka. Katsuki Kotaro said adding that , this USD 1.5 million emergency grant will be used to procure most urgently needed 25 types of medicines within the next two months through UNICEF.

Meanwhile, a large humanitarian grant assistance consignment worth more than SLR 2 billion from the people of India is scheduled reached Colombo on Sunday 22, 2022.

The consignment, which consists of 9,000 MT of rice, 50 MT of milk powder and more than 25 MT of drugs and other medical supplies, was handed over by Indian High Commissioner Gopal Baglay to the senior leadership of Government of Sri Lanka.

The consignment was flagged off from Chennai port by Thiru M.K Stalin, Chief Minister of Tamil Nadu on May 18, 2022.

This is the first incoming consignment under a larger commitment of 40,000 MT of rice, 500 MT of milk powder and medicines by Government of Tamil Nadu. This commitment translates to more than SLR 5.5 billion

China to play positive role in easing SL debt amidst India’s massive relief

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China has softened its stance on massive debt resturing of Sri Lanka stating that it stands ready to play a constructive role in its steady economic and social development in the wake of India’s attitude of helping its neighbor, political analysts said.

China has avoided joining the London Club of government lenders, the forum for negotiating debt cuts.

Now instead of restructuring, China has offered a US$ 1 billion loan to repay loans already taken from it, plus US$ 1.5 billion as credit for buying goods from China.

China turned a sort of blind eye for what Sri Lanka urgently needed while being a close ally of Sri Lanka for decades, they said, adding that the Chinese response to repayment and revamping of debts was far from satisfactory.
Given the current crisis situation,

Sri Lanka now increasingly depends on its northern neighbor India for basic stuff like fuel, medicine, and food items.

India has already extended credit lines and currency swaps worth over $3 billion to Sri Lanka in order to help it come out of this economic mess. New Delhi also continues to defer seeking repayment of at least $2 billion in dues owed through the Asian Clearing Union.

The outpouring of support for Sri Lanka among common Indians is apart from the economic assistance by Government of India which has been to the tune of around US$ 3.5 billion since January this year.

An Indian ship with urgent relief supplies like rice, medicines and milk powder for the people of crisis-hit Sri Lanka, worth more than SLR 2 billion, reached Colombo on Sunday 22.

Sri Lanka owes $7 billion this year to Chinese banks and other lenders but suspended payment April 13 while it talks with the IMF. The government also owes $25 billion, or about half its total, to private sector bond investors.

China fully relates to the difficulties and challenges facing Sri Lanka and stands ready to play a constructive role in its steady economic and social development,” Chinese Foreign Ministry Spokesperson, Mr. Wang Wenbin said at a media briefing recently

. He also stated that China is prepared to work with relevant counties and international financial institutions and to continue to play a positive role in easing Sri Lanka’s debt burden and helping the island nation to achieve sustainable development.

Mr Wang Wenbin expressed the belief that Sri Lanka will work in the same direction and make independent efforts to uphold the legitimate rights and interests of foreign investment and financing partners and maintain stability and credibility of its investment and financing environment.

In a written response to questions, the Chinese foreign ministry said Beijing is ready to “play a positive role in easing Sri Lanka’s debt burden” but gave no indication whether the amount owed might be reduced.

“China is willing to support relevant financial institutions to negotiate with Sri Lanka,” the ministry said.

If China gives a concession to Sri Lanka, it will have to give the same concession to other borrowers,” said economist W.A. Wijewardena, a former deputy governor of the Sri Lankan central bank. “They didn’t want to get into that trouble.”

China ranks third among Sri Lanka’s creditors after Japan and the ADB and accounts for 10% of the debt,he pointed out.

Sri Lanka has been facing a severe economic crisis since the beginning of 2021 and was trying to cushion the effect of the financial instability by seeking help from almost all friendly countries.

Sri Lanka sought the intervention of the good offices of the political hierarchy of Bangladesh and Pakistan, apart from India, for much-needed assistance.

16 million USD worth of assistance from people of India to start arriving

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A large humanitarian grant assistance consignment worth more than SLR 2 billion from the people of India is scheduled to reach Colombo on 22 May 2022. The consignment, which consists of 9,000 MT of rice, 50 MT of milk powder and more than 25 MT of drugs and other medical supplies, will be handed over by High Commissioner Gopal Baglay to the senior leadership of Government of Sri Lanka. 

2.     The consignment was flagged off from Chennai port by Thiru M.K Stalin, Chief Minister of Tamil Nadu on 18 May 2022. This is the first incoming consignment under a larger commitment of 40,000 MT of rice, 500 MT of milk powder and medicines by Government of Tamil Nadu. This commitment translates to more than SLR 5.5 billion. 

3.     The incoming consignment shall be distributed among beneficiaries across the country including Northern, Eastern, Central and Western Provinces by Government of Sri Lanka. These beneficiaries cover diverse sections of the society. 

4.      The assistance from people of India complements multi-pronged efforts undertaken by Government of India by standing with their brethren in Sri Lanka. Several private and social organizations from India have sent assistance to Sri Lanka to meet various urgent requirements. This outpouring of support for Sri Lanka among common Indians is apart from the economic assistance by Government of India which has been to the tune of around USD 3.5 billion since January this year. In addition, medicines, dry rations etc have also been sent by Government of India on grant basis. 

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Colombo

20 May 2022

Opposition Leader demands Ranjan’s release again! (VIDEO)

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Former MP Ranjan Ramanayake is a truthful public representative who had never betrayed his soul to anyone and even manages to save himself while imprisoned, said Leader of the Opposition Sajith Premadasa.

The Opposition Leader made this observation speaking to media today (22) after visiting the former MP, who is serving a prison sentence over contempt of court at the Welikada Prison.

Ramanayake’s famous quote, ‘Un Okkoma Yaluwo Malli!‘ (All Of Them Are Friends, Little Brother!) can be recalled again at this moment, the Opposition Leader stressed, adding that the former MP is serving his sentence for not being a friend to ‘Them‘.

SJB MP Mujibur Rahuman also joined the occasion.

MIAP

If kerosene misused, supply will be limited: Energy Minister rings siren again

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The supply of kerosene will have to be limited in the future, said Power and Energy Minister Kanchana Wijesekara said, in what he described as a move to prevent the kerosene stocks being seriously misused.

Due to the kerosene stocks being misused, parties who require kerosene as an essential necessity are not receiving enough stocks, the Minister stressed, revealing that actions will be taken to restrict the issuance of kerosene.

Accordingly, kerosene will be supplied to only essential services including the fisheries industry, Wijesekara added.

However, the consumers have a very different opinion regarding the issuance of kerosene, stating that the supply has highly been restricted already. Several rural areas had not received kerosene for the last few months, they disclosed.

MIAP

Submission of 21A to Cabinet tomorrow ceased on President’s instructions

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The tabling of the proposed 21st Amendment to the Constitution at the Cabinet meeting tomorrow (23) has been delayed on the instructions of President Gotabaya Rajapaksa, sources said.

The proposed 21st Amendment to the Constitution revoking the existing 20th Amendment to the Constitution for the reenactment of the 19th Amendment to the Constitution was about to be tabled at the Cabinet by new Justice, Prison Affairs and Constitutional Reforms Minister Wijedasa Rajapaksa tomorrow.

However, President Rajapaksa during a meeting with the members of the Ruling Party SLPP stated that the tabling of the proposed amendment shall not take place, in what he described as the ‘necessity’ to have it reviewed by the Department of Legal Drafts via the Attorney General, according to sources.

The draft 21A should be referred to former Justice Minister Ali Sabry PC for further study, the President emphasised during the meeting.

Accordingly, the President’s suggestion has been approved by the SLPP and the submission of the proposed 21A to the Cabinet, therefore, will further be delayed.

MIAP

Inside the collapse of the Rajapaksa dynasty in Sri Lanka: The Washington Post report

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COLOMBO, Sri Lanka — The mob was bashing on the gates of the Sri Lankan prime minister’s official residence, its size and fury swelling dangerously.

For weeks, Mahinda Rajapaksa, the 76-year-old prime minister, had been under pressure to resign as the economy imploded and protests erupted. The brother of the president, Gotabaya, and a patriarch of his own political dynasty, Mahinda was once hailed as appachchi, the beloved father of the people. Now he was huddled in his second-floor bedroom, accompanied by relatives who frantically called army officers, pleading to be rescued.Are you on Telegram? Subscribe to our channel for the latest updates on Russia’s war in Ukraine.

Outside the gates, anti-government protesters who had been attacked earlier by Mahinda’s supporters were taking their revenge — rioting, burning buses and torching hundreds of homes owned by allies of the Rajapaksas. A lawmaker from their party was beaten to death, his body dragged through the streets.

That day, May 9, was one of the most violent andchaotic in recent Sri Lankan history. But it was precipitated by years of turmoil inside the house of Rajapaksa.

The Rajapaksa brothers have dominated politics here for most of the last 20 years. After helping Mahinda win the presidency in 2005, his brothers Chamal, Gotabaya and Basil took over ministries that controlled three-quarters of the national budget and built popular support despite allegations of human rights abuses and corruption. But by 2019, when Gotabaya became president, the family was marred by infighting and dysfunction that would drive South Asia’s most developed nation into ruin.

In interviews, current and former ministers, foreign diplomats and Rajapaksa confidants, some of whom spoke for the first time as they saw the family splinter, said Gotabaya and Mahinda, and their respective factions, clashed over ministerial appointments and agricultural policies, investment deals and political favors. As the economy went into free fall this year, Mahinda, backed by several Rajapaksa scions, resisted Gotabaya’s wish that he step aside.

Distrust deepened to the point that members of Mahinda’s inner circle, besieged in his compound May 9, felt that the president had abandoned them. Udayanga Weeratunga, a cousin who was with the prime minister, and another family aide who was present, told The Washington Post that they suspect Gotabaya’s supporters in the army purposefully delayed coming to their aid for six hours.

Gotabaya is clinging to power after replacing his brother with a new prime minister, who revealed this week that Sri Lanka has less than $1 million in foreign reserves, dwindling medical supplies and almost no fuel.

Sri Lanka faces “total destruction,” former president Maithripala Sirisena said. “The country has learned a lesson about dynastic politics.”

From left, brothers Prime Minister Mahinda Rajapaksa, Chamal Rajapaksa, who was appointed Cabinet minister of irrigation, and President Gotabaya Rajapaksa in Kandy, Sri Lanka, on Aug. 12, 2020. (Tharaka Basnayaka/NurPhoto/Getty Images)

The family business

When Mahinda, the son of a wealthy rice and coconut farmer who was active in politics, ran for parliament in 1970, he was following in the tradition of the few elite families that dominate Sri Lanka, a lush teardrop-shape island off the coast of India.

“You cannot win [in politics] if you’re not from an established family,” said Razeen Sally, a professor at the National University of Singapore. “So the system is left to established insiders who can pillage the state.”

The second of nine children, Mahinda was charismatic, loved crowds and stuck close to his younger brother, Basil, who is considered the family’s political strategist. Their middle brother, Gotabaya, was always different: aloof, politically inexperienced, a teetotaler and vegetarian who spent 21 years in the military. “He would visit the ancestral home only during New Year,” recalled Weeratunga, their cousin who is close to Mahinda.

The Rajapaksas ran the country like a family business during Mahinda’s 10-year presidency, starting in 2005. He named Gotabaya defense secretary while Basil and their oldest brother, Chamal, were placed in charge of irrigation and economic development. Sri Lanka enjoyed years of growth, fueled by a mountain of foreign debt.

Mahinda enjoyed the adulation of voters, who approved of his bloody but decisive victory in a 26-year civil war against Tamil rebels and his frequent appeals to Sinhalese Buddhist nationalism.

But allegations of corruption, including questionable deals with Chinese state companies and officials, swirled around Mahinda. Gotabaya was also implicated, though to a lesser extent, and faced scrutiny over the 2006 purchase of MiG fighters from Ukraine.

Sankhitha Gunaratne, deputy executive director of Transparency International Sri Lanka, said Mahinda and Basil have faced numerous accusations, including diverting tsunami relief aid and using public funds to buy land, but many cases have stalled or been withdrawn. “The alleged Rajapaksa corruption is like a large tree that provides shade to many people,” she said.

In 2021, a leaked trove of financial documents known as the Pandora Papers revealed that a niece of the Rajapaksa brothers had millions of dollars hidden in offshore accounts.

Amid growing anger over the Rajapaksas’ alleged cronyism and corruption, Mahinda lost a bid for a third term in 2015. Almost immediately, an eclectic coalition of pro-Western business executives, military hard-liners and Buddhist monks identified a new candidate: Gotabaya Rajapaksa.

Sri Lanka’s current president, Gotabaya Rajapaksa, at his swearing-in ceremony on Nov. 18, 2019. (Lakruwan Wanniarachchi/AFP/Getty Images)

The middle brother

It quickly became apparent that Gotabaya, backed by new political sponsors, would clash with Mahinda. The men rarely confronted each other directly, yet they disagreed on everything, including high-stakes political gamesmanship and petty corruption, family confidants said.

Dilith Jayaweera, a media magnate who is widely credited with launching Gotabaya’s candidacy, remembers an incident from 2018 when he was called by Mahinda to Gotabaya’s home. Mahinda had put Gotabaya’s name on the title to an illegally built resort so that a powerful monk, a political ally, could get free electricity. The scandal was about to leak and, as was often the case, Mahinda was reluctant to tell his brother, so he nudged Jayaweera to break the news to him.

Gotabaya was “livid,” Jayaweera said, and stormed off to a Buddhist temple, refusing to share a car with his brother.

In October 2018, a constitutional crisis erupted when Sirisena, then president, fired his prime minister, Ranil Wickremesinghe, and replaced him with Mahinda,who he had defeated at the polls just three years earlier. The capital was tense as both men made claims on the country’s No. 2 job and rumors swirled that Wickremesinghe might be removed by force. Fearing Mahinda and Basil were trying to outflank him and engineer their own return to power, Gotabaya secretly met Wickremesinghe to pledge his support.

Soon after, the Supreme Court ruled against Mahinda’s claim, and he backed down. The family had no option but to support Gotabaya.

In the run-up to elections, terrorist attacks by Muslim extremists rocked Sri Lanka, galvanizing Sinhalese Buddhist support around the former military man. On the campaign trail, Gotabaya spoke of security, good governance and development, pitching himself as a technocrat, and Colombo, with its emerging skyline of Indian- and Chinese-funded skyscrapers, as the next Singapore. He won in a landslide.

On the day of his swearing-in on Nov. 19, 2019, Gotabaya signaled a break from his family. He refused to wear a red “sataka,” the Rajapaksa clan’s signature scarf, favoring a short-sleeved shirt. Unlike Mahinda, who printed his own image on 1,000-rupee notes while he was president, Gotabaya prohibited government offices from hanging his official portrait.

But the next day was “the beginning of the downfall,” said Nalaka Godahewa, a former financial executive who was later Gotabaya’s minister of mass media.

Gotabaya’s pro-Western business-sector backers had recommended a list of appointments, but when the president unveiled his first Cabinet, it was led by Mahinda as prime minister and stocked with Basil and Mahinda loyalists. They enacted steep tax cuts and argued against seeking aid from the International Monetary Fund despite mounting debt. Gotabaya personally pushed through a ban on chemical fertilizers that hurt crop yields, just as global food prices soared.

Mahinda’s supporters said they had shaped the Cabinet only to be undermined by Gotabaya’s appointments. In several instances, the government issued trade policies that were retracted within 24 hours. “You had ministers fighting secretaries,” Weeratunga said. “Fighting permeated the administration.”

The Rajapaksas were united on one issue: A constitutional amendment passed in 2020 that weakened commissions investigating corruption and granted the president far-reaching powers over the courts.

A man runs for cover amid tear-gas smoke fired by police to disperse students protesting Sri Lanka’s president, Gotabaya Rajapaksa, in Colombo on May 19. (Ishara S. Kodikara/AFP/Getty Images)

The fall

By early 2022, the economy was in free fall. Foodstuffs like rice doubled in price from a year prior. Gasoline and electricity were in short supply. Foreign currency reserves were running out.

In April, nightly demonstrations took root in the capital demanding that the Rajapaksas leave politics, and some turned violent. Gotabaya’s entire Cabinet — which included Basil, the finance minister; the elder brother, Chamal; and Mahinda’s son — resigned, giving Gotabaya a chance to form a new government. Sri Lanka needed a stable image to present to foreign lenders and negotiate an urgent bailout.

But Mahinda, the prime minister, resisted calls from the opposition and even signals from the president to quit.

Gotabaya didn’t force the issue. “G.R. would say, ‘He knows what I want,’ ” said Godahewa, who joined the Cabinet after several Rajapaksas departed. “He felt he needed the support of Basil and Mahinda.”

With pressure mounting on Mahinda, his supporters organized a May 9 rally at Temple Trees, the prime minister’s compound. The patriarch, feeling deflated and mulling resigning, suddenly seemed energized, according to two family insiders and videos of the event.

“As a leader who has always listened to the people, I now ask you: What needs to be done?” Mahinda said to thousands of supporters sitting cross-legged in a chandelier-lit hall. “You must stay!” the crowd roared. “Does that mean I shouldn’t resign?” he asked again, soaking in calls to fight on.

When the rally ended, supporters streamed out of Temple Trees with steel rods and wooden sticks, beating anti-government protesters and sparking a bloody backlash that shocked the nation.

Holed up in Temple Trees with his sons, who had urged him to stay, Mahinda told his speechwriter at 4 p.m. that he was resigning. The speechwriter spread the news to the media, but that didn’t stop the violence, said two people inside the compound. Despite the family’s pleas, the army didn’t send reinforcements until 11 p.m., after protesters had already breached a gate. At 4 a.m., Mahinda was evacuated by soldiers to a military base.

“Mahinda understood this stalling was deliberate,” said Weeratunga, who accused Gotabaya of trying to intimidate his brothers. But two ministers who were by the president’s side that day said he furiously called military officers to no avail.

“He could neither control the army nor police,” Godahewa said.

Godahewa and foreign diplomats said army commander Shavendra Silva — who has been in frequent touch with Western officials — was reluctant to deploy his forces for fear of being seen as ordering a military crackdown.

The absence of the military that day widened the fissures among the brothers. In a speech to parliament this week, Chamal chastised Mahinda for not leaving politics in 2015. And at a recent meeting of the Rajapaksas’ party members, family allies angrily askedwhy they were not protected on May 9 in a rare display of discord. “How Gotabaya treats the party now will decide the direction of the people’s wrath,” Weeratunga said.

On May 12, an embattled and isolated Gotabaya named a new prime minister: Ranil Wickremesinghe, the man he secretly met with in 2018 when he first jockeyed for the position against his brother.

Four years later, Sri Lanka’s most powerful family was crumbling — maybe for good, said Jayaweera, the media magnate.

“The Rajapaksas, and Sri Lanka, ended in tragedy,” he said. “It ended because of their own doing.”

The Washington Post

CBSL Chief sets Manusha a target to boost foreign remittances

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A special discussion to boost foreign remittances received to Sri Lanka has been held between Labour and Foreign Employment Minister Manusha Nanayakkara and Governor of the Central Bank of Sri Lanka (CBSL) Dr. Nandalal Weerasinghe yesterday (21).

The CBSL Chief has set the Minister a target on foreign remittances, stating that if they could be increased up by US$ 500 million within a few months, the money could be allocated to supply petrol, diesel and medicines essential to the country.

Nanayakkara without hesitation has accepted the challenges of boosting foreign remittances to such a high level within three months, according to sources.

MIAP

Ceylon Private Bus Owners’ Association Chief says buses will run tomorrow for O/L students, urges public not to block roads

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Private buses will continue to operate as usual tomorrow (23) despite the severe fuel crisis in the country, revealed Gemunu Wijeratne, President of the Ceylon Private Bus Owners’ Association.

The private buses will operate for the benefit of the students who are sitting for the G.C.E. Ordinary Level Examination tomorrow, Wijeratne noted.

Accordingly, 8000 private buses will operate islandwide tomorrow, the Union President went on, kindly urging the public not to block the roads.

MIAP