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How did Sri Lanka default by not paying USD 78 mn, while working on a Forex inflows “pipeline” of USD 10,700 mn?

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There were many media reports (not contradicted by any official source) that stated that the Sri Lanka’s Central Bank Governor Dr. Nandalal Weerasinghe and Treasury Secretary Mahinda Siriwardena had announced “bankruptcy” because the Government was unable to pay a loan installment of USD 78 million to a creditor.

However, information is now surfacing that even while the “Default” was being announced by the above duo, the Central Bank and Ministry of Finance were working on a series of sources to obtain “bridging finance” and other inflows of a massive USD 10,700 mn.

The forex inflows in the “pipeline” for the year 2022 was as follows, (as per information at the end March 2022):

In addition, the CBSL was also expecting to absorb around USD 300 million per month through the “mandatory” surrender of the 25% of net export procedures being collected by the CBSL through the commercial banks. That would have meant that a further USD 2,700 million would have been available over the 9 months ending December 2022.

Unfortunately, the sudden “default” announcement completely disrupted all the above expected inflows, with the possible exception of the roll-over of the SWAPs that had been previously negotiated, and the surrender proceeds from the commercial banks. Of the above pipeline of items, the items marked with (*) totaling around USD 7,150 million were highly likely to materialize over the short term, and hence the decision to default payment was inexplicable and utterly reckless. That irresponsible and arguably illegal decision plunged Sri Lanka into a serious chasm of economic and financial isolation as a “bankrupt” nation, with severely damaging repercussions that will haunt the nation for many years to come.

Cricket is ‘mental healing’ for many in crisis-hit Sri Lanka

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Sport becomes a welcome distraction for Sri Lankans looking for a break from the effects of the economic crisis in the country.

The sport of cricket has become a welcome distraction for Sri Lankans looking for a break from the effects of the economic crisis in the country – long lines to buy fuel and cooking gas and school and work disrupted because there is little access to public transport.

The cricket-crazed South Asian island nation is facing its worst economic crisis in recent memory, enduring acute shortages of food, fuel and medicine. The government has shut schools and universities and has limited fuel supplies.

“Yes, there is a problem in the country – people have become poor and helpless with all kinds of problems. We have been living a monotonous life and sometimes spent five, six, seven days in fuel lines,” said Ujith Nilantha, who watched the first test between Sri Lanka and Australia with his 10-year-old son last week in the southern city of Galle.

“There is no happiness for children, and we can’t provide what the child needs. When we watch this [cricket] it brings a mental healing,” added Nilantha, whose livelihood in the tourism sector has been disrupted after arrivals fell with the energy crisis.

Nilantha said he had planned to suggest his son play cricket, an expensive game by Sri Lanka’s standards, but his life changed quickly with the economic crisis and his plans were shattered.

“We love cricket but we can’t spend all our time on cricket, with the employment problems and all of that. But I expect to get some relief from the pressures by watching cricket.”

‘Only have cricket in times of sadness’

Cricket, a legacy from British colonisers, has become part of the local culture in Sri Lanka as in many South Asian and Caribbean nations. It has been looked upon as a unifying factor in a country torn apart by racial, religious and political discord.

Even a bloody quarter-century civil war did not hamper the progress or the following of the sport in Sri Lanka.

The now-defeated Tamil Tiger rebel group which fought for an independent state silenced their arms for the 1996 World Cup final, when Sri Lanka beat Australia to win the title.

Teenager Theekshana Nethumaksila was at the scenic cricket ground in Galle, having travelled from the neighbouring city of Matara by train.

Sri Lanka economic crisis
People wait to buy fuel at a fuel station in Colombo [File: Eranga Jayawardena/AP]

The 16-year-old Nethumaksila is scheduled to sit for public exams this year but is unable to prepare properly because the schools are closed.

“We only have cricket in times of sadness,” he said. “We come here to watch cricket to get it off our minds.”

Before going ahead with the tour, the Australian cricket team had to contemplate whether it was ethical to travel to Sri Lanka and play when local people were struggling even for basic needs.

The tour involved a three-game Twenty20 International (T20I) series, won by Australia, and a five-match One Day International (ODI) series, won 3-2 by Sri Lanka.

The Australian team’s decision to go ahead with the tour earned them admiration from fans who turned up at the fifth one-day match last month dressed in yellow – the colour of Australia’s ODI uniform – to thank them for entertaining them and sending a positive message about Sri Lanka to the world.

Some of the Australian players returned the favour. Led by captain Pat Cummins, many used social media to say they appreciated the outpouring of support they had received from the Sri Lankan fans.

Australia won the first Test match by 10 wickets, leaving Sri Lanka with a chance to square the series when the tour concludes with the second Test starting on Friday, also at Galle.

Source: AP

Promotional Event on “Golden Paradise Visa Scheme and Other Visa Facilities in Sri Lanka”, held in Tehran

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The Sri Lanka Embassy in Tehran, in collaboration with the Department of Immigration and Emigration in Sri Lanka, organized a promotional event on “Golden Paradise Visa Scheme and Other Visa Facilities of Sri Lanka” at the Chancery premises on 27 June 2022.Over 50 invites including representatives from Chambers of Commerce, key investors, prominent business personnel, leading travel agents and tour operators, airline representatives, media personnel and other invitees attended. The objective of the event was to brief invitees on the “Golden Paradise Visa Scheme and Other Visa Facilities in Sri Lanka”.

In his opening remarks, the Ambassador of Sri Lanka to the Islamic Republic of Iran, Vipulatheja Wish wanath Aponsustated that Sri Lanka welcomes foreign investors and business people to invest in Sri Lanka and provides them with the required infrastructure. He highlighted the investments and diverse tourism opportunities offered by Sri Lanka. The Sri Lankan Envoy said that the Government of Sri Lanka was focused on promoting the investment and tourism sectors through infrastructure development and liberalization of visa regimes. Contributions by foreign investors and businessmen will help rebuild the economy of Sri Lanka.

During the comprehensive presentation on visa facilities in Sri Lanka, the Ambassador stated that Sri Lanka has recently launched the “Golden Paradise Visa Scheme” for interested foreign investors and business personnel to invest, live and study in Sri Lanka. He highlighted that the “Golden Paradise Visa Program” is a long term residence visa scheme dedicated to investors and their family members to enjoy the benefits of Sri Lanka and under the Visa Scheme.

At the interactive session, the Ambassador expressed that Iranian business partners in humanitarian trade could bring their business engagements beyond Iran and West Asia to South Asia, particularly Sri Lanka, by utilizing the “Golden Paradise Visa Scheme” and other visa facilities. He also thanked all stakeholders of the Iran tourism sector for their support to retain tourist arrivals from Iran to Sri Lanka.    

While thanking the Sri Lanka Ambassador for his invitation to participate in the visa promotional event at the Embassy, prominent Iranian investor and businessman Alireza Bardaei expressed that the event was an opportunity for interested investors and tourists to sort out their issues and obstacles. On behalf of all participants, he assured to disseminate the Sri Lanka’s visa liberalization regimes among the relevant sectors in Iran encouraging them to utilize the Golden Paradise Visa.

The participants were treated to a high tea while a documentary titled the “Best Destination in Asia” was also screened.

Sri Lanka Embassy

Tehran

06 July, 2022

Global dismay as supreme court ruling leaves Biden’s climate policy in tatters

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Joe Biden’s election triggered a global surge in optimism that the climate crisis would, finally, be decisively confronted. But the US supreme court’s decision last week to curtail America’s ability to cut planet-heating emissions has proved the latest blow to a faltering effort by Biden on climate that is now in danger of becoming largely moribund.

The supreme court’s ruling that the US government could not use its existing powers to phase out coal-fired power generation without “clear congressional authorization” quickly ricocheted around the world among those now accustomed to looking on in dismay at America’s seemingly endless stumbles in addressing global heating.The US supreme court has declared war on the Earth’s future | Kate Aronoff

The decision “flies in the face of established science and will set back the US’s commitment to keep global temperature below 1.5C”, said Saleemul Huq, director of the International Centre for Climate Change and Development in Bangladesh, in reference to the internationally agreed goal to limit global heating before it becomes truly catastrophic, manifesting in more severe heatwaves, floods, droughts and societal unrest.

“The people who will pay the price for this will be the most vulnerable communities in the most vulnerable developing countries in the world,” Huq added.

The “incredibly undemocratic Scotus ruling” indicates that “backsliding is now the dominant trend in the climate space,” said Yamide Dagnet, director of climate justice at Open Society Foundations and former climate negotiator for the UK and European Union. António Guterres, the secretary general of the United Nations who has called new fossil fuel infrastructure “moral and economic madness”, said via a spokesman that the ruling was a “setback” at a time when countries were badly off track in averting looming climate breakdown.

In the 6-3 ruling, backed by the rightwing majority of justices, the supreme court did not completely negate the US Environmental Protection Agency’s (EPA) ability to regulate emissions from coal plants. But it did side with Republican-led states in stating that the government could not set broad plans to shift electricity generation away from coal because of the nebulous “major questions doctrine” that demands Congress explicitly decide on significant changes to the US economy.

“The court appoints itself, instead of Congress or the expert agency, the decision-maker on climate policy,” wrote justice Elena Kagan in an unusually blunt dissenting opinion. “I cannot think of many things more frightening.”

Al Gore, the former US vice-president said the ruling was the “result of decades of influence and coordination by the fossil fuel lobby and its allies to delay, obstruct, and dismantle progress toward climate solutions”.

For Biden, who called the ruling “devastating”, the court’s decision is just the latest crushing jolt to what was billed as a “climate presidency” when he was elevated to the White House.

Landmark legislation to bolster clean energy has stalled in Congress, largely due to the opposition of Joe Manchin, a centrist Democrat who has a coal-trading firm, and is perilously close to not being resurrected in time before midterm elections later this year in which Democrats are expected to lose their tenuous hold on Congress. The US, almost uniquely among major democracies, still has no national climate or energy policy in place.

Biden’s promise to end oil and gas drilling on public land has been unfulfilled, while Russia’s invasion of Ukraine has caused gasoline prices to leap, prompting the president to urge oil companies to ramp up production, to the horror of climate campaigners.

The president has vowed that the US will cut its emissions in half by 2030 but this goal, and America’s waning international credibility on climate change, will be lost without both legislation from Congress and strong executive actions. Both of these factors remain highly uncertain, with the supreme court’s ruling sharply restricting the latter option. Gina McCarthy, the White House’s top climate adviser, has admitted the administration will have to get “creative” in forcing down emissions.

“Congress acting on climate was important before this decision, now it’s even more important,” said John Larsen, partner at Rhodium group, a climate and energy analysis organization. According to Rhodium, the supreme court ruling is not fatal to US climate targets but there are still 1.7bn to 2.3bn tons of greenhouse gases that will need to be prevented on top of current policy if the 2030 goal is to be met.

“The EPA still has authority, although it is more narrow than it was, so they need to get moving and crank out some rules because there’s not a lot of time left,” Larsen said.

“It’s entirely possible the US will meet its emissions target but we have just eight years until 2030. The ball needs to start rolling very fast, very soon, if we are to get there. Everyone needs to really step up and start delivering.”

COPE to take stringent action against state officials failed to obey orders

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Stringent disciplinary action is to be taken against officials of state institutions who have failed to abide by the orders given by the Committee on Public Enterprises (COPE).

The COPE has compiled a report on the investigations carried out by the members of the committee.

This report on the orders and decisions related to several state institutions including SriLankan Airlines, Central Bank of Sri Lanka, State Timber Corporation, People’s Bank, Development Lotteries Board, Building Materials Corporation, Litro Gas Lanka Limited and Litro Gas Terminal Lanka (Private) Limited was presented on Tuesday 04.

The Chairman of the Committee on Public Enterprises (COPE) and Member of Parliament (Prof) Charitha Herath said that the Parliament will focus on taking special measures against officials who do not implement the recommendations and decisions made by COPE.

He mentioned this at a special meeting of the Committee on Public Enterprises which was held in Parliament yesterday (04).

The meeting was held especially with the participation of the members of the committee and the views of its members on 3 main issues were obtained, the statement said.

Accordingly, the review of the progress made pertaining to COPE investigations conducted during the period from February 23rd, 2022 to date was considered at the meeting.

Accordingly, the Chairman of COPE stated that the investigations carried out during this period have been complied into a report and copies of the report have been given to the members of the committee.

The chairman of the committee further pointed out that certain reports related to certain decisions given by the committee have not yet been given to the committee by these institutions.

The Members of Parliament who were present, pointed out that strict action should be taken against the officials who do not implement these decisions. They pointed out that the Parliament and the committee should intervene further regarding the matter.

The members further said that the public should be aware that this is a place which performs important functions going beyond media shows or restricting itself to simple chatter.

Thus, the Chairman of the Committee stated that the Committee is working according to the legislative powers received in terms of the Standing Orders and the Constitution.

He also pointed out that identified important institutions will be called back and special measures will be taken as Parliament in the future.

Furthermore, COPE decided the dates related to the meeting aimed at specifically discussing the implementation of public debt and financial policies of the Central Bank.

Accordingly, COPE decided to hold a special meeting to discuss on this regard on the 19th, 20th, 21st and 22nd of this month. The mutual agreement resulted in the summoning of officials including the former Governors of the Central Bank, former secretaries of the Ministry of Finance.

Furthermore, it was decided to have a special meeting of COPE on August 02, 03, 04 and 05 to look into the electricity generation, purchase, distribution and projects of the Ceylon Electricity Board.

In addition, it was also decided in this meeting to call the Ceylon Petroleum Corporation to the COPE on the 7th of this month.

Airport and Aviation Services Ltd reduces losses amidst economic challenges

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State-run Airport and Aviation Services (Sri Lanka) Ltd entrusted with the task of Airport operations is running at a total loss of Rs. Rs. 755 million last year as the country gradually opens up for international traffic.

Coupled with the reduction of administrative cost and Net Finance cost, the bottom-line impact of the AASL shows an improvement in 2021 having a reduction of total loss to Rs. 755 million in 2021 from the loss of Rs. 3,733 million in previous year, the company balance sheet showed.

Operational revenue of the Airport and Aviation Services (Sri Lanka) Limited (AASL) has declined by 5 percent to Rs. 7.4 billion in 2021.

The revenue streams of AASL mainly comprise the aeronautical operations and non-aeronautical activities amounted to Rs. 2.3 billion and Rs. 5.1 billion, respectively in 2021.

However, the other operational income of AASL in 2021 has shown a trivial declined to Rs. 3.8 billion compared to Rs. 3.9 billion in 2020.

Airport and Aviation Services (Sri Lanka) Limited Airport operation is one of the key industries which facilitates for connecting people, countries, and cultures, providing access to global markets by generating trade and tourism, and forging ties between developed and developing countries.

Minister of Ports, Shipping and Aviation Nimal Siripala de Silva noted that the will initiate action to expand aviation sector by allowing new companies to operate domestic flights in the country.

He noted that the Airport Aviation Services Sri Lanka Limited has been entrusted with the task of selecting these companies after calling expressions of interest .

AASL will have to generate its own income by implementing projects aimed at developing the aviation sector he added.

The year 2020 and 2021 proved difficult for the aviation industry’s existence due to the global spread the COVID-19 disease.

Majority of aircraft operations around the world have been constrained or grounded, with very few flight movements recorded over the years.

According to the International Air Transport Association (IATA), net industry losses approximated to US $ 51.8 billion in 2021, demand was around 40 percent of 2019 levels in 2021, total passenger numbers were around 2.3 billion in 2021.

Sri Lanka tea factories face a threat of closure in fuel crisis

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Tea factory owners are facing a threat of total closure owing to the worsening fuel crisis and other shocks putting much needed foreign exchange earnings at risk.

“There is a serious risk of all the tea factories in seven districts across the country coming to a standstill if sufficient fuel stocks are not received in the next few days.

Right now, the factories are working three to four days per week as the rest of the days the employees are in fuel queues,” Sri Lanka Tea Factory Owner’s Association President Lionel Herath said.

He claimed the Power and Energy Ministry’s support extended to one of the oldest and key export industries has been disappointing.

“Some tea factory owners have paid money to get fuel and built necessary storage tanks, but the fuel has not been provided till now.

Three months ago, our main issue was fertiliser, now it is the shortage of fuel to operate the factories,” he added.

It was pointed out that in the seven tea-growing districts, 264 private tea factories and another 258 factories under the plantation companies and non-members operating across the country are operating with utmost difficulties.

He also said the transportation of tea leaves has also been hampered due to fuel shortage and the wood prices have also increased significantly from Rs. 1,500 to Rs. 4,000.

“Tea factories have fallen into a serious crisis due to the power cuts, fuel shortage, economic crisis, and rising costs. The Government should pay more attention to the problems faced by the tea industry, which contributes significantly to the national economy,” Herath said.

As per him over 400,000 tea smallholders and nearly two million people or 10% of the total population are engaged in direct and indirect jobs related to the tea industry and are suffering from multiple issues.

Herath said they discussed with the Plantation Industries Minister to ensure a steady supply of fuel. SLTFOA Joint Treasurer Dr. W. Jinadasa said due to the shortage and price of fertiliser tea production and quality have dropped significantly.

“Tea production has dropped by 20% to 30% due to fertiliser, whilst the tea buds quality (two leaves and a bud) have dropped by 60% – 70%.

There is a good price for tea in the market, but the industry does not have sufficient quality quantities due to short-sighted policies the Government implemented and the cost across the board has increased by three to four folds,” he added.

He also pointed out that the use of fertiliser has dropped by 80%, given the high prices at present. “Previously, the tea fertiliser mixture was given at a concessionary price of Rs. 1,500, but following the organic fertiliser policy failure coupled with the exchange rate hike, a 50 kg fertiliser bag is now sold including extra Rs. 8,000.

The high fertiliser prices cannot be absorbed by many producers at present, and it has impacted the quality tea leaves production,” he explained.

As entrepreneurs of the tea industry, Dr. Jinadasa said the sector has contributed significantly to the gross domestic product and earned much-needed foreign exchange — a key concern for the current economic crisis and shortage of reserves.

“We are sleeping on a treasure trove. Tea industry can easily earn around $ 5 billion. We can grow tea all year round, unlike most competitive countries, but our politicians and officials responsible have not introduced policies to develop the tea industry.”

He said the tea smallholders contribute around 75% of the 300 million kilograms of annual production, but the authorities have not given the due recognition and necessary support to develop the stakeholders.

“No one wants to develop local resources, otherwise there are many areas the authorities can develop. In 1990 Sri Lanka’s tea production was 11% of the GDP and it has dropped to 4% of the GDP in 2021.

If the authorities understood the value of the sector in terms of foreign exchange generation, employment creation, poverty alleviation, and sustainable growth — our productions could have been over 20% of the GDP,” Dr. Jinadasa stressed.

It was pointed out that the best tea production era was from 1985 – 2005, and thereafter no significant initiatives were taken to replant and increase production countrywide.

760 people receive dual citizenship in SL. A policy decision from Dhammika to speed up the process

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760 people who had applied for dual citizenship in this country have been issued with relevant Dual citizenship today (06).

Investment Promotion Minister Dhammika Perera said that a special policy decision was reached today to carry out the process of issuing dual citizenship in this country without delay.

Accordingly, dual citizenship will be issued every week on Monday for the people who have received security clearance. A person who has received clearance from the Ministry of Defense will avoid long delays in issuing dual citizenship and it can take a maximum of 6 days for a person to receive dual citizenship.

Ranil determined not to leave premiership even if he was removed from the post of Finance Minister

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About three weeks ago, Lanka News Web reported that a group of MPs of Sri Lanka Podujana Peramuna has asked President Gotabaya Rajapaksa to at least remove Ranil Wickramasinghe from the post of Finance Minister.

They demanded that Wickramasinghe should be removed from the post of Finance Minister as he has failed to bring foreign exchange to solve the economic crisis as he promised when he assumed the office of Prime Minister and since Wickramasinghe has not yet received an answer to the problems faced by the people including the rising cost of living. It was also reported that they had presented continuously on several occasions.

Accordingly, it was believed that if the President removed Mr. Wickramasinghe from the post of Finance Minister, Wickramasinghe would also resign from the post of Prime Minister.

However, at present, internal sources say that Wickramasinghe will not step down from the post of Prime Minister even if he is deprived of the position of Finance Minister.

Internal sources stated that since he became the Prime Minister with the rarest opportunity in history and the only way to recover the United National Party, which has fallen to zero, is to hold on to the position of Prime Minister. Ranil Wickramasinghe is firmly determined not to step down from the post of Prime Minister under any circumstances.

EFC appoints new Council and Board of Trustees for 2022/2023 

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  • New Chairman Krishan Balendra, Vice Chairman Dinesh Weerakkody 
  • Vajira Ellepola assumes duties as new Director General

Chairman Krishan Balendra
 
Vice Chairman Dinesh Weerakkody

The 93rd Annual General Meeting of the Employers’ Federation of Ceylon (EFC) was held on 29 June.

The highlight of the AGM was the appointment of the Council and the Board of Trustees for the financial year 2022-2023.  Krishan Balendra was appointed as the new Chairman succeeding Vish Govindasamy while Dinesh Weerakkody was appointed as the Vice Chairman.

The newly appointed Chairman Krishan Balendra who is also the Chairman of John Keells Holdings, one of the largest diversified conglomerates in the country, brings a wealth of experience. Balendra thanked the members for placing confidence in him and invited the members to closely engage with the EFC.  Joining the new Chairman is the newly appointed Vice Chairman Dinesh Weerakkody, Senior Company Director. He is also the former Chairman of the Employees’ Trust Fund Board of Sri Lanka, Commercial Bank of Ceylon and Hatton National Bank.

13th Director General Vajira Ellepola to have taken the reins of the EFC with effect from 1 July, is an Attorney-at-Law and has been with the EFC since 2000. An experienced professional in the fields of employment law and industrial relations, Ellepola has held the position of the Deputy Director General of the EFC since July 2015.

Established in 1929, the Employers’ Federation of Ceylon (EFC) is the national employers’ organisation in Sri Lanka. In its nearly 100-year journey, EFC had committed itself to adapt to the requirements of a dynamic membership to promote productive employment and social harmony. Apart from the wide range of services EFC provides to its member organisations which consist of individual employers representing different business interests, the organization has today evolved into a formidable body which commands the attention of the policy makers in relation to labour policy. The EFC is recognised by all Trade and Business Chambers in Sri Lanka as the ‘voice of business’ in relation to employment law and industrial relations here at home. 

DAILY FT