It is reported that the staff of the Lady Ridgeway Children’s Hospital in Borella has decided to stage a protest today (18) against the government for endangering the lives of children due to the shortage of medicines and medical equipment.
Accordingly, a protest is to be held in front of the hospital from 12.00 noon to 02.00 pm today demanding the safety of the lives of the children and it is said that the entire staff of the hospital including the specialist doctors will participate in it.
Former Energy Minister Udaya Gammanpila says that he and his group will support the no-confidence motion against the government only if they accept two of their conditions.
“We have learned that the Samagi Jana Balawega, which has only 46 seats, is currently collecting signatures for a no-confidence motion against the government. In order to pass this, those 46 members need the support of another 87 members. But so far SJB has not discussed the matter with other political parties or groups. However, handing over a no-confidence motion without preparing 113 MPs would be to the advantage of the government. If this government which currently has 118 members defeats this no-confidence motion, the government would be strengthened by the opposition giving a huge victory in Parliament. In this situation we are ready to support the no-confidence motion under two conditions. First, before the no-confidence motion is tabled, it must be confirmed that it has the support of 113 members. Secondly, it should give the full support to our proposal to form an interim all-party government after the dissolution of the government. Only if these two conditions are agreed, the background will be prepared to defeat this government ”
Udaya Gammanpila stated this addressing a media briefing held in Colombo yesterday (18).
Moody’s Investors Service has downgraded Sri Lanka’s sovereign rating to Ca from Caa2 with a stable outlook, following a decision by the island to suspend debt payments.
Moody’s said the suspension would lead to “will lead to a series of defaults with the first coupon payments for the government’s international bonds coming due today, 18 April 2022.”
“..Moody’s assesses that private sector creditor losses stemming from the eventual debt restructuring is likely to be material and exceed the limited levels of loss consistent with the previous Caa2 rating.”
ECONOMYNEXT – Moody’s Investors Service has downgraded Sri Lanka’s sovereign rating to Ca from Caa2 with a stable outlook, following a decision by the island to suspend debt payments.
Moody’s said the suspension would lead to “will lead to a series of defaults with the first coupon payments for the government’s international bonds coming due today, 18 April 2022.”
“..Moody’s assesses that private sector creditor losses stemming from the eventual debt restructuring is likely to be material and exceed the limited levels of loss consistent with the previous Caa2 rating.”
Singapore, April 18, 2022 — Moody’s Investors Service (“Moody’s”) has today downgraded the Government of Sri Lanka’s long-term foreign currency issuer and senior unsecured debt ratings to Ca from Caa2. The outlook is stable.
The decision to downgrade the ratings is driven by the authorities’ announcement of debt servicing suspension [1] on external public debt repayments, which will lead to a series of defaults with the first coupon payments for the government’s international bonds coming due today, 18 April 2022.
Given the low level of foreign exchange reserves, compounded by the rise in balance of payment pressures with higher fuel and food prices and the slow recovery in tourism and foreign direct investment inflows, Moody’s assesses that private sector creditor losses stemming from the eventual debt restructuring is likely to be material and exceed the limited levels of loss consistent with the previous Caa2 rating.
This assessment further reflects governance weaknesses in the ability of the country’s institutions to take measures that decisively address the very low adequacy of foreign exchange reserves and very weak debt affordability, thereby contributing to loss given default, at least in line with precedents by other defaulting sovereigns.
Gemunu Wijeratne, President of the Ceylon Private Bus Owners’ Association says that the minimum bus fare is likely to be increased to Rs. 40 according to the annual price revision policy of the forthcoming bus fare revision policy.
Gemunu Wijeratne stated this addressing a media briefing held yesterday (18) afternoon. The Ceylon Petroleum Corporation had also increased fuel prices with effect from midnight yesterday.
Former Minister Wimal Weerawansa has said that Prime Minister Mahinda Rajapaksa and other Rajapaksas should step down while Gotabhaya Rajapaksa is in office, considering the possibility of a serious anarchy in the country if he steps down.
President Gotabhaya Rajapaksa has said that the people are suffering due to the current economic crisis and that he is deeply saddened by it.
Rajapaksa admitted that failure to deliver chemical fertilizer to the local farmers was also a mistake, and measures have been taken to deliver chemical fertilizer to the farmers at present.
The President said he believes Sri Lanka should have approached the International Monetary Fund much earlier, given the situation in the country.
President Gotabaya Rajapaksa said no matter what challenges are ahead, he would not evade his responsibilities.
The President was addressing the newly sworn-in Cabinet yesterday (18).
Sri Lanka’s headline inflation measured by Hanke’s Annual Inflation Index hit a staggering 74 percent in the year through April 15, 2022 as prices from energy to staples to discretionary items received a jolt last month from the botched rupee float.
Prof. Steve Hanke, an Economist at John Hopkins, a private research university in Baltimore, Maryland in the United States, measures the inflation in countries with currency troubles, taking the true underlying factors such as the opportunity cost and other associated costs one has to undergo when a good or service is purchased.
Hanke’s inflation is more than thrice the official headline inflation of 18.7 percent measured by the Colombo Consumer Price Index for March.
The Central Bank on April 8 forecasted the official inflation at 28 percent in the next three months as Sri Lanka has entered into an era of runaway prices due to global commodities prices boom, Russia & Ukraine crisis and the float of the rupee on March 7 which caused the currency to lose more than 60 percent of its value in a month.
However, some economists disagree with Hanke’s index of inflation as it is based on the idea of what is known as purchasing power parity, a concept, which measures the ability of a person who earns in rupees to buy stuff versus a one who earns in dollars.
Hence, it incorporates the loss of one’s ability to purchase something into the increase in the official index of inflation measured using the changes in the prices of basket of goods and services.
Therefore, those who disagree with his index of inflation say that it is misleading as Sri Lankans deal in rupees and not in dollars.
However, Hanke, a neo-classical economist is widely known as a proponent of what is called as currency boards in place of central banks, which will effectively cap the amount of money printing to the amount of foreign currency reserves one has.
Hence his galloping inflation index makes a stronger case for a currency board, as he believes money is the only determinant, which causes inflation.
Therefore, those who oppose Hanke’s inflation say his index driven inflation must be looked at in that context to push through his idea of installing a currency board in Sri Lanka.
But, economists and analysts are vastly divided over the concept of currency boards as Sri Lanka doesn’t have adequate foreign currency reserves at present nor it allows the Central Bank to support its own banking system for liquidity and the economy when it wants to accelerate growth.
Sri Lanka is tottering on the edge of an energy crisis leading to extension of current power cut duration as a result of failing to clear 120,000 metric tonnes of coal for the Norochcholai Lakvijaya coal-fired power plant , Ceylon Electricity Board(CEB) sources said.
Two shipments of Coal have already anchored at the Colombo Port awiting to unload stocks of coal ordered by CEB since April 12 due to lack of funds amounting US$34 to pay for the, CEB Chiarman M.M.C Ferdinando disclosed.
If the relevant payment is not made by April 18, the ship owners have informed that they would sail off without unloading the cargo.
Thus, the CEB will be liable to pay the demurrages for six days in addition to a hefty penalty.
.There was a difficulty in unloading the Coal power stocks at present during the current high-tide season (April to October) and therefore the calling for new tenders will have to be delayed till May next year, he revealed.
The annual requirement of coal to this power station is in the region of 2 million tons and 50 percent of it is purchased by following annual tender procedure and the other 50 percent by emergency spot purchasing system, Mr Ferdinando explained.
CEB Engineers Union has also warned of an imminent power crisis due to coal shortage, price hike in the international market and the reluctance of bidders in applying for coal tenders , US dollar shortage and various other issues in awarding tenders,a spokesman of the union said. .
“As per the terms of the contract, 80% of the payment has to be released upon the submission of shipping documents.
This payment has not been made so far. All unloading operations of the Lakvijaya Power Plant need to be completed by the fourth week of April due to onset of the monsoon winds. Further, it is not possible to unload any other cargo until the next unloading season starting from September 2022,” the union said.
The existing stock is adequate only up to mid September 2022. If two coal shipments return without unloading the coal consignment before end of April, even with the already planned 75 days outage of unit 2 from June 2022.
Therefore, the CEB will be compelled to shut down one unit of 300 MW at Lakvijaya Power Plant at least for 25 days to utilize the available coal in hand till next coal unloading season commences.
This will severely affect the generating capacity and therefore, extending the existing duration of power cuts would then become inevitable, the union added.
Advocates of Occupy Galle Face (OGF) are calling on the private sector to intensify the pressure for the Rajapaksa regime to step down.
A group of good governance activists over the weekend issued a formal notice to the private sector which is also the engine of growth.
The specific actions sought from the private sector includes CEOs or Chairpersons of respective entities issuing a statement of commitment to stand with the people and align and contribute to stand with core objectives of resistance at OGF which has gathered momentum and sustained itself for over a week winning widespread commendation.
Where applicable, the private sector is asked to include commitment to help with logistics at the Galle Face with clear branding, committing to be apolitical henceforth, and disassociate the company from any collectives that are refusing to take a stance.
Physical support requested include for all those willing to commit, to come to GotaGoGama (GGG) with company banners or visual optics, encourage and provide space and opportunity for employees to protest outside office premises; support regional protests through company networks and infrastructure, organise industry protests such as the IT industry and HR sector recently and pressurise chambers of commerce industry to take collective action.
The rationale for this course of action by the private sector is that the country needs political and social stability in order to work towards economic stability.
“This is an inflection point in the history of Sri Lanka and an opportunity for the business community to take a stand and show solidarity with their employees, their families and the people of Sri Lanka,” the notice for action by the good governance activists said.
“Answer the call of millions of Sri Lankans. Answer the call of your people. Answer the call of your consumers and customers,” it said in urging the private sector to show that it is ready to stand united with this cause and are willing to support in the best way it can.
The private sector has also been asked to commit to stand by the overarching core objectives of the ongoing people’s movement. They are 1) President and Prime Minister must resign; 2) 20th Amendment repealed and replaced with the 19-plus; and 3) Say “No” to portfolios for the Rajapaksa family members in an Interim Cabinet.
Analysts noted that the private sector has already lent support in many ways to the OGC protest from day one but emphasised that formal participation in person by employees will make the people’s protest vociferous. In parallel, activists in the public sector are also marshalling State sector employees to join the OGF as well as professionals.
The World Bank is deeply concerned about the uncertain economic outlook in Sri Lanka and the impact on people as the country is facing unsustainable debt and Balance of Payment challenges. World Bank Country Director for Maldives, Nepa, and Sri Lanka Faris Hadad-Zervos.said
The Bank suggested urgent policy measures to tackle unsustainable debt and Balance of Payment challenges for the country to overcome the current economic crisis. .
“It is working on providing emergency support for poor and vulnerable households to help them weather the economic crisis and it remains committed to the wellbeing of the people of Sri Lanka, and to a narrative of sustainable and inclusive growth that will require concerted and collective action, ” he added.
According to the World Bank, Sri Lanka needs to address the structural sources of its vulnerabilities. This would require reducing fiscal deficits especially through strengthening domestic revenue mobilisation. Sri Lanka also needs to find feasible options to restore debt sustainability.
The financial sector needs to be carefully monitored amid high exposure to the public sector and the impact of the recent currency depreciation on banks’ balance sheets.
The necessary adjustments may adversely affect growth and impact poverty initially but will correct the significant imbalances, subsequently providing the foundation for stronger and sustainable growth and access to international financial markets. Mitigating the impacts on the poor and vulnerable would remain critical, he pointed out.
The World Bank last week said “Sri Lanka’s economic outlook is highly uncertain due to the fiscal and external imbalances.
Urgent policy measures are needed to address the high levels of debt and debt service, reduce the fiscal deficit, restore external stability, and mitigate the adverse impacts on the poor and vulnerable,” says the World Bank in its twice-a-year regional update.
The latest ‘South Asia Economic Focus Reshaping Norms: A New Way Forward’ projects the region to grow by 6.6% in 2022 and by 6.3% in 2023. The 2022 forecast has been revised downward by 1.0% age point compared to the January projection, mostly due to the impacts of the war in Ukraine.
Countries in South Asia are already grappling with rising commodity prices, supply bottlenecks and vulnerabilities in financial sectors. The war in Ukraine will amplify these challenges, further contributing to inflation and deteriorating current account balances.
In South Asia, though GDP growth continues to be solid during the recovery, all countries in the region will face challenges ahead. On a positive note, exports of services from the region are on the rise as the pandemic subsides.
The war and its impact on fuel prices can provide the region with much-needed impetus to reduce reliance on fuel imports and transition to a green, resilient and inclusive growth trajectory.
The report recommends that countries steer away from inefficient fuel subsidies that tend to benefit wealthier households and deplete public resources. South Asian countries plan to move towards a greener economy by gradually introducing taxation that puts tariffs on products which cause environmental damage.
Another challenge the region faces is the disproportionate economic impact the pandemic has had on women.
The report includes in-depth analysis of gender disparities in the region and their link with deeply rooted social norms, and recommends policies that will support women’s access to economic opportunities, tackle discriminatory norms and improve gender outcomes for inclusive growth.
