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Fuel price hike hits the country sparking countrywide protests

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Losses at the fuel stabilisation fund set up on March 30, 2020 by the Treasury to alleviate government finances when prices rise or fall in the world oil market, has raised many questions, official sources said.

This fund was established with an initial capital of Rs. 50 billion by issuing Treasury bills to the Central Bank, Finance Ministry documents revealed.

The fund was partly utilised to settle the dues of the Ceylon Electricity Board (CEB) to the Ceylon Petroleum Corporation (CPC) during 2020.

At least Rs. 48 billion was given to the CEB which in turn had repaid the CPC with the money. However continuing losses at the CEB and CPC resulted in the two institutions requiring more money from this fund which led to the Treasury pumping in more money.

This led to the account of the Fund being a negative Rs. 26.67 billion by end December 2020.

Sources said that more money was given to the CPC in anticipation that this money would be recovered from the sale of its products but that never happened.

The untimely end of the fuel pricing formula and fuel stabilisation fund introduced with good intentions to pass the benefits of international oil price fluctuations to the people has resulted in unrecoverable loss to the country at present, economic analysts said.

According to the widely debated fuel price formula introduced by the previous Government, fuel prices were supposed to be revised on the 10th of each month and a number of factors in addition to global oil prices were taken into consideration when formulating the formula.

However, the Government headed by President Gotabaya Rajapaksa discontinued these two systems.

Earlier the normal procedure was that the price revision of fuel is determined and announced in a gazette notification by the Finance Ministry with effect from midnight on the date of the notification of revised prices.

The price hike of the present regime has not followed this procedure on two occasions this year.

When asked to comment on this matter, former petroleum minister and MP Chandima Weerakkody noted that the Finance Ministry is the sole authority in the determination and announcement of the revision of fuel price as and when necessary according to the CPC Act.

The new Minister of Power and Energy Kanchana Wijesekera told parliament on Thursday that the decision to increase prices was taken after discussion with relevant ministry and CPC officials and with the consent of the President. He added that he contacted the Finance Minister over the phone and obtained his approval as well.

WB grants US$ 600 million to Sri Lanka to avert economic crisis

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The World Bank has agreed to provide US$600 million in financial assistance to the country amid the economic crisis, President’s Media Division (PMD) revealed in a statement on Tuesday (April 26) .

“World Bank Permanent Representative Chiyo Kanda during a meeting with President today (26) informed that World Bank has agreed to provide US $ 600 million financial assistance to Sri Lanka to overcome the current economic crisis, of which US $ 400 million will be provided promptly under the 1st phase,” PMD said in a statement.

As the country struggling to tackle high levels of debt and trim the fiscal deficit to mitigate the adverse impacts on citizens, World Bank recently warned that more Sri Lankans will slip into poverty this year.

The unprecedented economic crisis in Sri Lanka is caused in part by a lack of foreign currency. It means the country cannot afford to pay for imports of the staple, such as food and fuel.

The situation led to acute shortages and very high prices, leaving the economy in tatters with people protesting across the country. Sri Lanka has nearly $7 billion in foreign debt due for repayment this year and will need to repay $25 billion over the next five years.

“Around 11.7 per cent of people in Sri Lanka earn less than USD 3.20 per day, the international poverty line for lower-middle income countries, up from 9.2 per cent in 2019,” the Bank said in its Spring Update on the South Asian region.

Meanwhile, a senior International Monetary Fund (IMF) official on Tuesday (April 26) suggested that Sri Lanka must tighten monetary policy, raise taxes and adopt flexible exchange rates to address its debt crisis. The country of 22 million people has requested loans from the IMF.

The strategic Indian Ocean Island’s pathetic plight featured on major media and television channels that craft the global narrative, with images of people in queues amid food, fuel, and medicine shortages due to its crashing currency, soaring cost of living and ‘Arab Spring’ style protests.

One of the wealthier nations in the South Asia region and listed by the World Bank in 2019 as an Upper Middle-Income County (MIC), Sri Lanka with a population of 22 million people had just defaulted on her debt payments—for the first time in the country’s history.

Global media imaging of the scenic island nation’s financial crisis served to affirm the relevance of the Washington Consensus and the Fund albeit as the “lender of last resorts”.

Sri Lanka’s total debt is USD 51 billion and the country must pay USD 7 billion this year to International Sovereign Bond (ISB) traders based in New York as noted by Senior Economist and Head of the Institute for Policy Studies (IPS), Dr Dushni Weerakoon.

Valuable funds misappropriated in SL’s 100,000 tasks initiative

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As the government grapples with massive budget deficits and perilously high debt, its recent programmes to improve the living standards of the people have become a burden to the Treasury due to a misuse of funds.

The ambitious island-wide development drive of 100,000 tasks initiative launched by former Finance Minister Basil Rajapaksa this year to improve the living standard of villagers has become a burden for the Treasury as a result of mishandling of funds and high spending without any financial records, an internal audit query revealed.

Massive sums of money are being defrauded by ruling party politicians appointed as members of pradeshiya sabhas in the planning and implementing of special tasks in rural areas by hoodwinking divisional secretaries and officials.

These fraudulent activities and pilfering of money granted for the programme in respective areas have been brought to the notice in writing to high officials including divisional secretaries, several members of Grama Niladhari and Samurdhi associations disclosed.

According to the internal audit report, necessary administration and financial procedures have not been followed as it was overruled by higher political authority.

Financial records and accounts of spending for these projects are missing and it has become a difficult task for the Finance Ministry to make a correct assessment of the amount of money spent from the 2022 budgetary allocation of Rs. 85 billion, a senior official said.

These 100,000 tasks initiative is now being implemented in 14,021 Grama Niladhari areas and each of these areas would carry out at least one project, or several multiple projects depending on the needs of the region.

According to plans, these projects could differ from livelihood support to small infrastructure projects to help uplift the living standard of these communities in those areas.

Moreover, these projects are also aimed at aiding current national issues such as food security, aiding the overall Sri Lankan community. Other projects aimed at solving the food security issue also include the promotion of home gardens for citizens to take control of their personal food security.

Under the initiative, 14,000 home shops are to be set up as one outlet each in all villages at Grama Niladhari divisions country-wide with the help of seed capital of Rs, 15 billion in total provided by the government by indirectly making use of an Indian credit line.

These home shops will fulfill the needs of food items and non food products, such as clothing and household items because villagers in rural areas had to travel to nearby towns located very far from their villages to buy their requirements from city groceries.

Although a part of money has already been allocated to this project, not a single home shop has been opened in rural areas, several Grama Niladharis confirmed.

Government decides to  restrict state expenses to tackle fiscal crisis   

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The Government has decided to strictly restrict state expenses owing to the grave financial crisis the country’s treasury was facing, the finance ministry said. 

The Secretary to the Finance Ministry on Tuesday (April 26) issued a circular to control the expenditures in the public service amidst dwindling revenue and sky rocketing of public spending. .

The circular has called for a project expenditure control system and the reduction of fuel usage and communication expenses, and suspending public sector recruitment.

The circular stated that the Sri Lankan economy has approached a highly critical juncture and with that, the requirement of providing an efficient and productive service for the public while using the public finance in the most responsible and economical manner has become a foremost priority than ever before. 

Enhancing government revenue is a crucial requirement to control this challenging situation. However, as it takes a certain time, public expenditure needs to be well-tightened, making it available only for the most essential services for a certain period, the Finance Ministry said. 

“Therefore, the restrictions already have been introduced by several circulars controlling the payment of fuel and communication allowances, restrictions of water and electricity expenditure, suspending the construction and hiring buildings.

Measures will be taken to stop foreign study tours and trainings conducted using local funds, suspending the payment of various allowances made at ministry or institution level without the approval of the Cabinet of Ministers and avoiding any new commitments for various welfare/subsidy programmes and development programmes,

In addition, the circular says the stringent methods of controlling expenditure should be followed when incurring expenditure and implementing projects using domestic funds as well: 

Finance Ministry has already  informed the Cabinet that state revenue has decreased drastically as the economy faces a severe crisis. 

The revenue was not sufficient even for recurrent expenditure. The government has also decided to suspend all recruitment for state service”

Given the perilous state of the economy, the need to restrict and reduce state expenditure is mandatory. That it should have been done several decades ago by successive governments is to state the obvious. 

The salary cost of government employees and pensions is estimated to account for 80 per cent of government revenue. 

This expenditure at present is a fixed cost unless the government takes a bold step to enforce a pay cut on government servants. Although it might sound outrageous, many establishments struggling to survive have done it in the private sector. 

No doubt such a measure will be unpopular, particularly when the cost of living is increasing. For the government it is undoubtedly “The Hobson’s choice finance ministry claimed.

The ministry will examine every expense item and determine whether it belonged to the category of “Absolutely Necessary.” Any expenditure outside that definition will be eliminated.

Sri Lanka Coconut kernel products promoted in Belgium

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The Embassy of Sri Lanka in Brussels conducted a workshop titled “COCONUT WONDER – Truly Sri Lankan” to promote export of Sri Lankan coconut kernel products to Belgium, on 21 April 2022. The Sri Lanka Export Development Board (EDB), Ceylon Chamber of Commerce and Federation Chamber of Commerce and Industries coordinated the participation of the exporters of coconut products in Sri Lanka at the workshop on a virtual platform.

Ambassador Grace Asirwatham made an opening statement about the coconut industry of Sri Lanka and presented reasons why the importers of coconut products in Belgium should consider importing from Sri Lanka. Product samples and company profiles of Wichy Coconut, Adamjee Lukmanjee & Sons, Senikma Holdings, Cocolanka, E-Silk route ventures, Ceylon exports and trading (Pvt) ltd, Ceylon Coco Green Manufacturing (Pvt) Ltd., Renuka Foods, and Enrich Tea and Food Exports Pvt Ltd. were presented to the Belgian importers at the event.

The use of coconut products has been gaining more attention recently thanks to growing consumer interest in vegetarian, vegan and Asian cooking. Europe’s imports of desiccated coconut have been growing and Belgium is also among the leading importers of coconut products in the EU region.

The Belgian importers appreciated the quality of Sri Lankan organic coconut products, methods and technology used in production of coconut products and the zero tariff concessions provided for coconut products imports from Sri Lanka by the EU under the GSP Plus scheme.

The Belgian exporters also engaged in virtual discussions with the Sri Lankan exporters.  As the Belgian importers showed a keen interest to continue their interaction with the exporters in Sri Lanka, the Embassy promised to arrange B2B meetings between the interested parties in the near future.

A cookery video using Sri Lankan Coconut products as ingredients was played during the workshop which created awareness on the new and innovative coconut products that can be used in confectionery, bakery and chocolate industry, restaurants and hotels. Despite having a smaller population compared to other top European markets, Belgium imports 5.8 thousand tons of desiccated coconut to the value of Euro 11.7 million. Belgium also imports around 4% of its desiccated coconut from Sri Lanka.

The objective of the workshop was to increase Sri Lanka’s share of coconut product market by diversifying the product basket with introducing novel and state-of-the-art new products as per the evolving consumer needs and expectations in Belgium. Belgium is home to several large-scale producers of chocolate products, pastries, cookies and other desserts where desiccated coconut and other coconut products are used as ingredients.  

Embassy of Sri Lanka

Brussels

26 April, 2022

SRI LANKA: The absence of the will to do justice

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By Basil Fernando

Within a few days after the Rambukkana Police shooting, a large body of information has become available to the public about this incident. The attempt by the Government and also a section of the Police to give their own version about the incident has revealed a very routine pattern that exists in Sri Lanka whenever shocking revelations are being made about such extremely serious violations of human rights. However, as the people have come forward in large numbers to give eyewitness accounts of the events, attempts for such coverups have got badly exposed. However, what comes out clearly is that neither the Government nor the law enforcement agencies have demonstrated any serious willingness to do justice even after such a serious crime has got exposed. The absence of the will to do justice has almost become a very entrenched cultural habit in Sri Lanka.

The Archbishop of Colombo and Cardinal, Malcolm Cardinal Ranjith, in his speech at the third anniversary of the Easter Sunday killings, made a serious expose of the manner in which the Government as well as basic public institutions such as the Attorney General’s Department, the Police Department and the Intelligence services are involved in the attempt to cover up one of the most heinous crimes that has happened in recent times on that fateful Easter Sunday. In fact, coming from the Head of the Catholic Church in Sri Lanka, this expose of the manner in which the system of justice has got undermined in Sri Lanka needs to be taken very seriously by anyone who cares about the protection of the security of the people in Sri Lanka. When the prominent institutions are openly involved in covering up serious crimes, then there is hardly any ground for people to trust that not only their Government but even to have any trust about the society that they live in. The existence of an environment in which people can move around with a sense of security is the most basic requirement of any peaceful and decent society. While all this takes place, people in Sri Lanka, throughout the country, have shown a remarkable capacity to engage in peaceful protests for reasons that everybody accepts as legitimate and just. In fact, the people are protesting against the serious deprivations which have threatened the possibility of leading a normal life within the social context of their society. Despite such hardships, people have shown that they are capable of enormous sacrifices in order to make their voices heard to those who are ruling the country and also to all others who are capable of intervening under these circumstances to make a difference. Despite the failure to achieve any remarkable success as a result of their protest, the people have still maintained their capacity for discipline and their capacity for the respect of other people’s rights in the process of participating in perhaps the most dramatic protest movement that has ever existed in Sri Lanka in its recent history.

Further, a remarkable factor about these interventions is that people are fed up of almost all political parties and are making demands on everyone, irrespective of party loyalties.

All that shows that the people still have faith in the possibility of arriving at a trusted and fair solution to their pressing grievances. Such a belief demonstrates that societally, the expectation for justice is well rooted within the consciousness of the people of Sri Lanka.

That is what makes the situation even worse for the Government as well as for the public institutions which have failed to carry out their obligations to create an environment within which the possibility of achieving justice still exists. The Government as well as public authorities are disappointing the people all the time, when it comes to the issue of the administration of justice.

The existence of a criminal justice system that is efficient and just, is an essential precondition for the maintenance of a civilized society. When the criminal investigation function fails, that is a matter of utmost serious concern for the people. The criminal justice system rests on the capacity of the criminal investigators to conduct credible inquiries into crimes efficiently. Efficiency is at the heart of a successful investigation as well as the successful prevention of crimes. It is this area that is most haunting in Sri Lanka. The history as to how the tradition of investigation into crimes came into such a crisis as it exists in Sri Lanka now has a long history. The link between the politicians developing a political culture that is conducive to the abuse of power and corruption and the linkage between the undermining of the criminal justice system is a story that is well documented in Sri Lanka. From the beginning of the British administration in the 19th Century, there was a consistent attempt to develop a policing system that could protect the people from serious crimes and also create a secure environment for peaceful living. That tradition which was created with an enormous amount of sacrifices and efforts was abandoned for petty political reasons and also for the making of various kinds of gains for people who were willing to undermine the rule of law for their own benefits.

One time, the Attorney General’s Department was looked up to as a success story in the attempt to build an independent prosecutorial branch in Sri Lanka. The Department itself was jealous in safeguarding its independence and refused to succumb to any pressures from outside. Institutional independence was proudly safeguarded for a considerable period. However, since the 1970s, this tradition again was gradually undermined to an extent that it had reached the point of having lost its former reputation. These factors and several others associated with the undermining of the will to ensure justice is a threat to the entire social fabric of Sri Lanka. The impact of this undermining was far beyond its political impact and has a direct bearing on the running of basic institutions of the country’s economy and all other social institutions. The maintenance of a strong criminal justice system is the backbone of maintaining discipline in all areas of life including in the institutions that are essential to the running of the economy. When the criminal justice system is undermined, one of the direct results is that the country’s financial discipline itself is exposed to a serious threat. We have already experienced in Sri Lanka how far that impact could affect the country’s economy. The country today is faced with the worst economic crisis ever.

An economy cannot be resolved only by taking various measures relating to the economy only. If the economy is to be sustained, it is essential to create an environment within which all activities including the activities which are essential to the economy could take place in an environment where the law is respected and where peace can prevail. However, if the overall environment is one in which crimes can take place in every possible form, then like in all areas of life, the economy will also be affected.

The absence of the will to uphold justice is at the heart of the Sri Lankan crisis. However, in the political debate, this issue does not come out sharply. While various amendments to the Constitution are being talked about, the issue of how to develop a sustainable system of the administration of justice has not received the attention it should deserve.

So long as Sri Lanka lacks the will to ensure that justice is done, it will not be able to make serious progress in any area of life including that of the economy.

It is not enough for people to demand end of this mis-rule. They need also to demand the restoration of an effective system of justice that can safeguard their security.

Criminal investigation system needs to be radically reformed. Prosecutor’s role played by the Attorney General department needs drastic change and judicial institution need to function efficiently. Unless such changes takes place, prevailing mismanagement of all public institutions will become even worse. As a result, neither the IMF interventions nor constitutional amendment will bear much fruit.

Asian Human Rights Commission

Finance Ministry issues circular severely restricting government expenditure including subsidies

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The Ministry of Finance has issued a circular severely restricting government expenditure allowing them to be used only for essential services.

LP Gas prices to soar from midnight today. Price of 12.5kg cylinder nears Rs. 5000

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The price of LP gas will increase from midnight today (26) the LITRO Gas Company announced.

Accordingly, the price of a 12.5 kg domestic gas cylinder will be Rs. 4860, revealing a sudden surge of Rs. 2185, reportedly for the first time in history.

In addition, the new price of a 5 kg cylinder will be Rs. 1945, a surge of Rs. 874.

The new price of a 2.3 kg cylinder will be Rs. 910, a surge of Rs. 407.

When the current regime came to power, the price of a 12.5 kg domestic cylinder was Rs. 1495.

MIAP

MR reiterates he will not resign!

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Mahinda Rajapaksa reiterated he will not be resigning from his post as the Prime Minister of Sri Lanka.

This has been confirmed by a statement issued by the Prime Minister’s Office, revealing that Rajapaksa made this sentiment addressing a meeting of government ministers and MPs and the collective of provincial councilors held at Temple Trees today (26).

The collective of provincial councilors of the Sri Lanka Podujana Peramuna (SLPP) has unanimously passed a resolution stating that Mahinda Rajapaksa should not resign from his post as the Prime Minister. In response, Rajapaksa has told the group, “No, I will not resign, no need to be afraid.”

MIAP

Accepting changes to 20A, Government already admitted defeat: Mano

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Proposing amendments to the Constitution the government has already admitted its defeat said Samagi Jana Balawegaya (SJB) MP Mano Ganeshan speaking to a briefing called in by the Tamil Progressive Alliance (TPA) today (26).

The SJB already handed over a proposal for a 21st Amendment to the Constitution to the Speaker and the change required may be expedited should such an amendment be tabled from the government within, he pointed out.

Nevertheless, the 20th Amendment to the Constitution must be abolished immediately, the MP emphasised, urging the people to back the all-island strike action scheduled for April 28.

MIAP