Sri Lanka is going for Paris Club talks and negotiations with China, India and other creditors to convince them on their debt restructure under extremely difficult and unfavorable conditions being created as a result of preemptive debt fault declaration made on April 12,several economic experts claimed.
This was the shortest sighted decision taken by the then government in a haste and the then Finance Minister Ali Sabri who has taken the responsibility for it without parliamentary approval, they pointed out.
In response to a statement made by his own government colleague at present Vajira Abey wardena who blamed the Central Bank Governor Nandalal Weerasighe for ill advised the then Finance Minister Ali Sabri told parliament recently that Dr. Weerasinghe gave him necessary advices to make the decision.
He noted that the government was in a dilemma whether debt should be serviced or the remaining amount of reserves should be used for essentials at that time and if someone wants to strip the Central Bank governor of the position, he is ready to step down instead.
His resignation will not help in coming out from the present economic abyss where the whole country had been pushed as the country will lose IMF bailout loan if a single creditor is opposed to debt restructuring process, they claimed.
Sri Lanka has taken this decision to declare preemptive debt default on April 12 at a time where the Central Bank had to pay around 50 percent of the total 2022 debt of US$ 7 billion in the first quarter of this year. The payment due for the second quarter was $ 600 million to China, Mahinda Pathirana former Chairman of Press Council revealed in statement published in his face book
At that time the Central Bank has finalized all arrangements to obtain a loan facility of $2.5 billion to settle this debt. China has insisted Sri Lanka from the inception not to default on their loans as they cannot agree to such arrangements.
Therefore the Chinese Ambassador in Sri Lanka has offered a low interest loan to service their loan and another $1.5 billion long term finance facility to import raw materials for local industries such as garment factories.
Further another $1 billion was in the pipeline by issuing green bonds via Credit Suisse Bank
Despite these debt repayment arrangements, Central Bank Governor Nandalal Weerasinghe has declared the preemptive debt default.
Sri Lanka has to service debts taken from the IMF, World Bank, ADB. At the time of default there was only $1 billion International Sovereign Bond to be matured in July 2022 and several other interest payments.
The country has a steady inflow of foreign exchange from exports amounting to around $ 1 billion, foreign remittances and tourism.
On the other hand the government was using the Indian credit line to import fuel food and medicine. Normally Sri Lanka is importing 70 percent of such items from India.
Under these circumstances the then Finance Minister Ali Sabri and the Sri Lanka delegation had left the island on an official visit to Washington on April 17 to negotiate a bailout loan from the IMF and they were in a weak position following the declaration of preemptive default of foreign debt on April 12 .
The IMF team has suggested the Sri Lankan authorities’ to engage in a collaborative dialogue with their creditors on debt restructuring as the debt sustainability was a prerequisite for the bailout loan.
Central Bank’s sudden declaration of pre-emptive negotiated default of external debt has been made at a time where there was an expected forex inflow of over US $ 10.7 billion in the pipeline as at April 4 to boost foreign reserves, a forex inflow status report showed.
According to the Central Bank’s weekly economic indicator report issued on May 27 2022, Sri Lanka had Foreign Currency Reserves amounting US$1.618 billion as at end April 2017 before the declaration of preemptive default.
This arbitrary decision was taken without the cabinet and parliamentary approval disregarding the healthy position of the forex inflows in the pipeline, a senior official of the presidential secretariat who wished to remain anonymous disclosed. .
Of the above pipeline, a sum of $ 4.5 billion was confirmed as being in the final stages by April 3 and a further amount of around $2.6 billion was very likely to materialize over the short term, he disclosed.
This forex receipts would have enabled the Government to settle the maturing payments due in 2022, while also rolling over several other existing loans, including Sri Lanka Development Bonds and Foreign Currency Banking Unit (FCBU) loans, he said.
SL to begin debt restructuring talks in a bad wicket created by debt default
A petition against lifting the glyphosate ban
A petition has been filed before the Supreme Court against the decision taken to withdraw the order banning the import of glyphosate herbicide.
The Finance Minister, the Pesticides Registrar, the Agriculture Minister, the Health Minister, the Director General of Health Services, the Central Environment Authority, the Consumer Service Authority and the Attorney General have been named as respondents in this petition, which has been filed by several parties including the Environmental Justice Centre.
Pointing out that due to the use of glyphosate, water sources, soil and plants are severely damaged in this country, the petitioners further say that through this, human health as well as fish and birds are also damaged.
The petitioners are asking the Supreme Court to rule that the basic human rights of the people are being violated by lifting the ban on the import of glyphosate, and to invalidate the order to lift the ban.
President invites all parties to unite for building the country
President Ranil Wickramasinghe says that he invites all parties to unite for building the country without any differences.
The President emphasizes that the people’s struggle to send the rulers home is over, and now there is the economic struggle to build the country. Ranil Wickramasinghe mentioned this yesterday (06) while addressing the 76th anniversary of the United National Party held at Sugathadasa Stadium.
Wickramasinghe states that today Sri Lanka is facing a crisis that has never been faced before in history, and everyone has no other option but to come together and find solutions. He says that a significant percentage of the country’s people are unable to eat three meals a day and unemployment has increased.
He can be called the fourth president representing the United National Party, but pointing out that he does not have a parliamentary group representing the United National Party, the President says that he has the support of several parties including Podujana Peramuna. However, Wickramasinghe states that his aim is to build the country with the support of all the parties represented in the Parliament, and he will not hesitate to make every effort for that.
Importers announce the dates that the shortage of wheat flour would end
It is believed that the current wheat flour shortage in the country will end after September 15, says the Importers of Essential Materials Association.
Nihal Senaviratne, the president of the association, said that the shortage will be over by that time as wheat flour is being imported from Turkey.
In the last few days, the Minister of Trade has mentioned to the media that there is no reason for the shortage of wheat flour, but currently wheat flour is being sold at various high prices in the market due to the shortage.
Motor Traffic Department goes digital in collecting Payments for services
The Department of Motor Traffic (DMT) launched the facility for all consumers to make their payments for all the services obtained from the department via electronic cards from today.
The announcement was made by the Commissioner of Motor Traffic (Development), Mrs. D. Kusalani De Silva at the media briefing at the Information Department.
The facility was introduced to increase the productivity of the services. Payments via electronic cards were introduced to the DMT Narahenpita head office and Werahera department.
Later, the facility will be introduced to other branches considering the progress of the system, DMT Commissioner Controller Susantha Jayathilaka said.
The motor vehicle regulator has suffered a setback in its revenue collections following the adverse impacts of the COVID pandemic and the ongoing economic crisis.
As a top agency that generates revenue for the Government, the Department of Motor Traffic’s monthly contribution to the Treasury has dropped from around Rs. 1 billion to Rs. 700 million at present given the multiple challenges.
“Following the adverse impacts of the pandemic and the ongoing economic crisis, the Department’s average daily income has dropped to around Rs. 35 million to Rs. 40 million,” Department of Motor Traffic Accountant Aravinda Samarakoon told journalists yesterday.
Closure of the department at the early stages of the COVID outbreak, import restrictions on motor vehicles, and high interest rates imposed on the transfer of vehicle ownership were outlined as key reasons for the revenue drop.
As per the Department, the total number of new vehicles registered up to May was 10,159, and of that 3,358 were motorcycles, whilst 2,694 were LV tractors and 1,653 LV trailers.
However, he said that the income generation of the Department has slowly picked up, as it had adopted digital payment systems and technology to boost efficiency.
Department of Motor Traffic Commissioner (Control) Susantha Jayathilaka also said they are short of driving license cards.
“The import restrictions impacted the issuance of new license cards and renewals as these cards are imported. However, to avoid any inconvenience to the motorists, at present we issue a document till the cards are sorted,” he explained.
Jayathilake also said the Department continues to operate a self-financing institution that manages the salaries and wages and maintenances of systems
Construction sector warns of workers upheaval if govt defaults their payments
The government’s move to halt the construction projects without settling the bills of the contractors would severely impact those dependent on the sector, a senior representative of the construction industry said.
Dr. Rohan Karunaratne, an industry veteran and President of the South Asian Lean Construction Association, commenting on the recent statement made by Central Bank Governor Dr. Nandalal Weerasinghe, where he stated that hyperinflation may bring people back to the streets, said a similar scenario is possible if the government continues to halt the construction projects and avoid settling the bills, as the livelihoods of thousands are affected.
The government’s decsion oF stopping the construction projects will also lead to a situation where the people without the means to feed their families flooding the streets, pleading for their livelihood,” said Dr. Karunaratne.
As the economic crisis worsened, the government halted the construction projects without settling the contractors’ bills. According to the industry stakeholders, the total amount due is over Rs.130 billion, while the contractors owe the banks around Rs.200 billion.
“Interest rates have skyrocketed to 25-28 percent and the temporary overdraft limits are 30 percent, both of which contractors cannot bear,” Dr. Karunaratne highlighted.
“The construction companies have been crushed under the boot of high bank rates and unpaid government bills, leaving them unable to take care of their vast workforce and supply chains.
Thus, as the governor advised Parliament, the contractors, in turn, advise the governor that the unpaid dues to the contractors may lead to hundreds of thousands of unemployed labourers and workers flooding the streets pleading for their survival. The contractors shall not be held responsible for this crisis,” he added
The local construction sector is a major contributor to the national economy, accounting for about 10 percent of the GDP.
In 2020, the sector contributed over Rs.300 billion to the GDP. There are over one million people involved in the construction industry.
The construction supply chain is easily one of the largest in Sri Lanka and includes around 4,000 small and medium enterprises, including sand suppliers, rubble suppliers and brick makers.
03 more arrested for damaging the property at Temple Trees
Three more people were arrested by the Colombo South Division Criminal Investigation Department for trespassing and damaging property at the Temple Trees on 09th July.
Three residents of Padukka and Watareka areas have been arrested.
Police say they are aged 35, 38 and 44 years.
CBSL Governor says that he cannot comment on debt restructuring due to sensitive issues (VIDEO)
Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, says that he cannot comment on debt restructuring due to sensitive matters regarding market affairs.
“In the next 4-5 years, on average, we have about 6 billion dollars of external debt to pay off. After that, four to five billion dollars and 27 billion dollars have to be paid within 4-5 years. When we announced our debt default, we only wanted to restructure external debt and resolve the foreign exchange crisis. That was the situation in April. As we moved forward, we reached an official level agreement with the International Monetary Fund and officially began the process of restructuring our debt. As officials, we are not in a position to talk about debt restructuring, because they are market sensitive. So I cannot comment on this. From the day we went into an officer-level agreement, we started negotiating with our creditors with financial agreement consultants. It is good to have transparency in the government’s dealings with the International Monetary Fund. But we can’t disclose certain market-sensitive information until it’s implemented.”
Weerasinghe said this while joining a television program.
Members appointed for 09 ministerial advisory committees
Speaker Mahinda Yapa Abeywardena announced to Parliament yesterday (06) that members were appointed for 09 ministerial advisory committees.
Accordingly,
Ministerial Advisory Committee on Defence
i. Honorable Anura Dissanayake
ii. Honorable Field Marshal Sarath Fonseka
iii. Honorable (Dr.) Sarath Weerasekera
iv. Honorable Arundika Fernando
v. Honorable (Dr.) Major Pradeep Undugoda
Ministerial Advisory Committee on Finance, Economic Stabilization and National Policy Affairs
i. Honorable Kabir Hashim
ii. Honorable (Dr.) Harsha de Silva
iii. Honorable Mr. Jagath Kumara Sumithraarachchi
iv. Honorable M. W. D. Sahan Pradeep Withana
v. Honorable (Professor) Ranjith Bandara
Ministerial Advisory Committee on Ports, Shipping and Aviation Affairs
i. Honorable Tissa Attanayake
ii. Honorable Pramita Bandara Thennakoon
iii. Honorable K Kader Mastan
iv. Honorable Sivanesathurai Chandrakanthan
v. Honorable Hesha Withanage
Ministerial Advisory Committee on Transport and Highways
i. Honorable Kabir Hashim
ii. Honorable Dilum Amunugama
iii. Honorable Kanaka Herath
iv. Honorable Ashok Abeysinghe
v. Honorable Lalith Varna Kumara
Ministerial Advisory Committee on Media Affairs
i. Honorable Imtiaz Bakir Makar
ii. Honorable Shanta Bandara
iii. Honorable Geetha Samanmalee Kumarasinghe
iv. Honorable S. M. Marikkar
v. Honorable Sanjeeva Edirimanna
Ministerial Advisory Committee on Agriculture
i. Honorable RM Ranjith Madduma Bandara
ii. Honorable Sivagnanam Sritharan
iii. Honorable Udayakantha Gunathilaka
iv. Honorable Kulasingham Thilipan
v. Honorable Upul Mahendra Rajapaksa
Ministerial Advisory Committee on Judiciary, Prisons and Constitutional Reforms
i. Honorable Thalatha Athukorala
ii. Honorable H. M. M. Haris
iii. Honorable Sisira Jayakodi
iv. Honorable G. G. Ponnambalam
v. Honorable Anupa Paskuval
Ministerial Advisory Committee on Power and Energy Affairs
i. Honorable Pavitradevi Vanniarachchi
ii. Honorable Duminda Dissanayake
iii. Honorable Kabir Hashim
iv. Honorable Nalin Bandara Jayamaha
v. Honorable Nalaka Bandara Kottegoda
Ministerial Advisory Committee on Labor and Foreign Employment Affairs
i. Honorable John Seneviratne
ii. Honorable Vadivel Suresh
iii. Honorable D. B. Herath
iv. Honorable Velu Kumar
v. Honorable (President’s Counsel) Jayantha Weerasinghe
were appointed to the relevant Advisory Committees.
An announcement from CPC about fuel distribution
The Ceylon Petroleum Statutory Corporation emphasizes that the reports that about 300 petrol stations have to be closed daily without fuel are completely untrue.
Even now, approximately 4000 metric tons of diesel and 3000 metric tons of gasoline are being released to the filling stations daily, which is a high figure compared to the previous fuel scarcity period, they point out.
Also, as reported by the media, no filling station has been closed based on the introduction of a priority register, restriction of check facilities, etc., the corporation said.
Below is the announcement they issued.
