Five Covid-19 related deaths were confirmed by the Director General of Health Services yesterday (25) said the Department of Government Information in a statement, following months of silence living with the pandemic.
Accordingly, the spread of the virus has increased in Sri Lanka after a considerable period of time.
MIAP
Despite the fuel stocks received by the ships that have been paid for being manageable until the middle of next month, the purchase of fuel from then on could be uncertain, confessed Governor of the Central Bank of Sri Lanka (CBSL) Dr. Nandalal Weerasinghe speaking to Hiru TV.
“Speaking of fuel, actually we need at least US $350 – 400 million per month for vehicles alone (without electricity). With electricity, US $550 million. S0, allocating US $500 million (because our reserves are at a very low level) we may need the help of India or China, for it is the only way. If so, we may be able to solve this matter very easily. Nevertheless, now the situation is uncertain whether we will receive it. We have made a request, but it is still uncertain. If that happens, the worse case scenario is that we may not receive any. If we receive nothing, we may have used up our reserves. By the middle of next month, the fuel which we have paid for may arrive. Beyond the point, it is uncertain how to locate fuel for next month.”
Q: According to the current situation, how long have the fuel ships been paid without any problems?
“We have paid for three diesel ships and two petrol ships. They are to arrive as they have been paid. Those are the ones that arrive these days.”
“There was no fuel in the last few days, wasn’t it? Now, the diesel and petrol are arriving. We have paid the amounts we receive. These stocks may suffice – but not fully. The deficit will remain until the early days of next month.”
MIAP
A special ruling party meeting has commenced at the Finance Ministry under the patronage of President Ranil Wickremesinghe.
This would be the first ruling party meeting after Wickremesinghe’s swearing in as the head of state.
Parliament is set to be convened tomorrow (27) and matters such as the adoption of the emergency law and the formation of the all-party government will be discussed at the meeting, according to sources.
The Samagi Jana Balawegaya and its alliance, however, will not be endorsing the adoption of the emergency law.
MIAP
Are we barking up the wrong tree? We often target the politicians little realizing that most often they act on advice given to them. In such a scenario, have we omitted to look into the role of senior offilicials & questioned if they could have misled the governors & the govt? Did they suggest to take $12b ISBs? If they didn’t, have they made any notes of their objections? Did they negotiate debt repayment before opting to default? What are the options they looked at before declaring Sri Lanka would default repayment? The role of Finance Minister Sabry is also to be questioned.
Questions for Indrajit Coomaraswamy (IC)
The primary cause that made debt repayment unsustainable was the $12billion international sovereign bond loans taken by Central Bank Governor Indrajit Coomaraswamy (2016-2019) – did he do so on his own initiative or was he advised? If he did so on his own will, what was his intention?
Questions for Central Bank Top Management (CBTM)
Questions for present Governor Nandala & then Finance Minister Sabry
Did the CBTM & Governor & former Finance Minister lead Govt & Sri Lanka astray?
What the then Finance Minister Sabry & Central Bank Top Management were aware of
What top businessmen/women were ignorant of in pushing to default repayment
Why did they decide to take such a risky decision impacting entire country & its people & embarrassing the credibility of Sri Lanka too?
Either way it is not the Govt but CBSL Top Management and the CBSL Governor who are answerable along with the professional economists who also pushed for defaulting on loan repayment. Why are public not demanding accountability from them?
India has extended its wishes on Ranil Wickremesinghe’s election as the eighth President of Sri Lanka.
In a letter, Indian Prime Minister Narendra Modi said Wickremesinghe assumed office at a critical time for the country, expressing confidence that his tenure will nurture economic stabilisation as well as fulfill the aspirations of all citizens of Sri Lanka.
MIAP
Foreign capital flees poorer countries at the first sign of instability. The pandemic and Ukraine war ensure there is plenty of that around
This January, even before Sanjana Mudalige’s salary as a sales worker in a shopping mall in Colombo, Sri Lanka, was slashed in half, she had pawned her gold jewellery to try to make ends meet. Ultimately, she quit her job, because the travel costs alone exceeded the pay. Since then, she has shifted from using gas for cooking to chopping firewood, and eats just a quarter of what she did before. Her story, reported in the Washington Post, is one of many in Sri Lanka, where people are watching their children go hungry and their elderly relations suffer for lack of medicines.
The human costs of the crisis only really captured international attention when the massive popular upsurge earlier this month, known as Aragalaya (Sinhalese for “struggle”), led to the peaceful overthrow of President Gotabaya Rajapaksa. His family had ruled Sri Lanka with an iron fist, albeit with electoral legitimacy, for more than 15 years, and is now being blamed by both national and international media for the desperate economic mess the country is in.
But blaming the Rajapaksas alone is too simple. Certainly, the aggressive majoritarianism that they unleashed, along with the alleged corruption and major economic policy disasters of recent years (such as drastic tax cuts and bans on fertiliser imports), were crucial elements of the economic debacle. But this is only part of the story. The deeper and underlying causes of the crisis in Sri Lanka are barely mentioned by most mainstream commentators, perhaps because perhaps because they reveal uncomfortable truths about the way the global economy works.
This is not a crisis created by a few recent external and internal factors, it has been decades in the making. Ever since its “open economic policy” was adopted in the late 1970s, Sri Lanka has been Asia’s poster boy for neoliberal reform, much like Chile in Latin America. The strategy was the now-familiar one of making exports the basis for economic growth, supported by foreign capital inflows. This led to a significant increase in foreign currency debt, something the IMF and the Davos crowd actively encouraged.
In the period after the 2008 global financial crisis, as low interest rates in advanced economies led to the availability of cheap credit, the Sri Lankan government relied on international sovereign bonds to finance its own spending. Between 2012 and 2020, the debt to GDP ratio doubled to around 80%, with a growing share of this inbonds. The payments due on these debts kept rising in relation to what Sri Lanka could earn from exports and the money sent back home by Sri Lankans working abroad. The disruptions caused by the pandemic and the war in Ukraine made matters much worse, by causing export earnings to fall and sharply increasing the price of essential imports including food and fuel. Foreign exchange reserves plummeted – but the government had to keep paying interest even when it could not import essential fuel.
Looked at in this light, it is clear that Sri Lanka is not alone; if anything, it’s just a harbinger of a coming storm of debt distress in what economists call the “emerging markets”. The past period of incredibly low interest rates in the advanced economies meant that more funds flowed to “emerging” and “frontier” markets from the richer world. While this found cheerleaders in the international financial institutions (IFIs), it was always a problematic process. This is because, unlike in places such as the EU and US, capital leaves low- and middle-income countries (LMICs) at the first sign of any problem.
And these countries were much more battered economically by the pandemic. Advanced economies were able to provide massive countercyclical measures – think of the UK’s furlough programme – because financial markets effectively allowed and even encouraged them to do so. By contrast, LMICs were prevented from increasing fiscal spending by much – because of those same financial markets, which threatened the possibility of credit downgrades and capital flight as government deficits grew larger. Plus they faced significant declines in export and tourism revenues and tighter balance of payments constraints. As a result, their economic recovery has been much more muted and economic conditions remain mostly dire.
The half-hearted attempts at debt relief, such as the moratorium on debt servicing in the first part of the pandemic, only postponed the problem. There has been no meaningful debt restructuring at all. The IMF bewails the situation and does almost nothing, and both it and World Bank add to the problem through their own rigid insistence on repayments and the appalling system of surcharges imposed by the IMF. The G7 and “international community” have been missing in action, which is deeply irresponsible given the scale of the problem and their role in creating it.
The sad truth is that “investor sentiment” moves against poorer economies regardless of the real economic conditions in specific countries. Private credit rating agencies amplify the problem. This means that contagion is all too likely, and it will affect not just economies that are already experiencing difficulties, but a much wider range of LMICs that will face real difficulties in servicing their debts. Lebanon, Suriname and Zambia are already in formal default; Belarus is on the brink; and Egypt, Ghana and Tunisia are in severe debt distress.
Many countries with lower per-capita income and significant absolute poverty are facing stagflation. Billions of people are increasingly unable to afford a basic nutritious diet, and cannot meet basic health expenses. Material insecurity and social tensions are inevitable.
The situation can still be resolved, but it requires urgent action, especially on the part of the IFIs and G7. Speedy and systematic debt resolution actions to bring in private creditors and other creditors, such as China, are needed, as is IFIs doing their own bit to provide debt relief and ending punitive measures such as surcharges. In addition, policies to limit speculation in commodity markets and profiteering by big food and fuel companies must be put in place. Finally, the recycling of special drawing rights (SDRs) – essentially “IMF coupons” – by countries that will not use them to countries that desperately need them is vital, as is another release of SDRs equating to about $650bn to provide immediate relief.
Without these minimal measures, the post-Covid, post-Ukraine global economy is likely to be engulfed in a dystopia of debt defaults, increasing poverty and sociopolitical instability.
Cabinet Spokesman Minister Bandula Gunawardena speaking to the briefing held in announcing Cabinet decisions today (26) said further discussions are being held in the objective of forming an all-party government.
At a preface to the formation of such a coalition, Leader of the United National Party Ranil Wickremesinghe was elected as the President and Leader of the Mahajana Eksath Peramuna Dinesh Gunawardena as the Prime Minister, he noted, stressing that entering an all-party agreement is mandatory to solve the national economic crisis at the moment.
Gunawardena added that in everyday practical matters, there are problems that need answers and especially in public finance matters, such agreements are necessary.
MIAP
The Opposition has formed a National Assembly to address the problems faced by the people of Sri Lanka and provide solutions.
The National Assembly was formed at the Opposition Leader’s Office in Colombo this morning (25) and was endorsed by many multi-people unions, trade unions and civil movements.
The Assembly was formed under the instructions of Leader of the Opposition Sajith Premadasa, in the aim of presenting the progressive proposals to Parliament.
MIAP
The Cabinet has concluded to table an amended budget in Parliament next month. The decision was announced by Cabinet Spokesman Minister Bandula Gunawardena during the briefing held in announcing Cabinet decisions today (25).
The budgets of all the ministries have been revised and completed by now and the revised budget will be prepared and tabled in Parliament very soon, Gunawardena said.
MIAP
The first assault on the democratic struggle of the people of this country was launched on May 09, 2022 through state-sponsored violence, leading to the forcible stepping down of the then Prime Minister and the chain of events led to the expulsion of the President from the country thereafter, said Leader of the Opposition Sajith Premadasa, addressing a meeting of the National Reform Movement at the Opposition Leader’s Office in Colombo yesterday (25).
The event was held to collect positive ideas and suggestions for creating a more progressive country and was attended by a number of political party leaders, public representatives in Parliament and professionals of various fields.
Addressing the meeting, Opposition Leader Premadasa emphasised that all those who were hoping for a new journey had to experience state-sponsored violence and the same violence has now been enforced on a magnified scale against the protesters.
An appointed dictatorship must not be allowed to violate democracy and spread barbarism and the rulers should set an example of unity and fairness, he added.
MIAP
