A special discussion is due to be held between President Gotabaya Rajapaksa and the MP Group of the Sri Lanka Podujana Peramuna (SLPP) tomorrow (20).
The meeting is set to focus on the current fuel crisis, the 21st Amendment to the Constitution and the future initiatives of the government and will held tomorrow at 5 pm at the President’s House.
MIAP
Whilst Sri Lanka’s major creditors have still not got together to discuss debt restructuring, as part of the effort to draw a clear line under a debt crisis that spurred South Asia’s first default in 100 years, the Governor who has got this habit of blabbing to the media. Now he has said If Sri Lanka had gone earlier to the IMF we would not be in this mess.
This is nothing new. Opposition said so several times. This is a direct attack on the head of state. Whilst we all agree that mismanagement was clearly on the part of the president, and he was the root cause of this unprecedented crisis. He was badly advised. This type of statements is unwarranted.
Anyway what was Nandalal doing in the Central Bank as no 2 ? Daydreaming? Could he produce a document that shows he was advocating for the IMF? CBSL withdrew from the IMF program way back as 2020. Nandalal was too busy at that time working out his pension of Rs 750,000 per month. So he did not want to rock the boat.Worse than going to the IMF, was the south Asian tea producer defaulting on a paltry $78 Million USD in 2022, shutting Sri Lanka out of the capital markets.
Sri Lanka now seeks relief on its more than $ 55 billion of external debt (Zimbabwe was only $ 17 billion) to get its borrowing under control. Sri Lanka will soon hold its first meeting with its international creditors — which include a plethora of Chinese , Japanese and Indian institutions , Western banks, sovereign bilateral lenders and multilateral institutions. Sri Lanka needs to urgently reach a staff-level agreement on a $5 billion three-year extended credit facility with the IMF and needs to finish bilateral negotiations to secure the funding.
Nandalal other than spreading doom and gloom by increasing interest rates and going for a soft default (invented by Nandalal) he has not raised one Dollar to ease the situation . That is expected of a CBSL Governor. Instead he has focused on curbing the private sector and issuing statements, politicizing the institution further. Analysts say that Nandalal is not man for a crisis, he may be good they say in times when the country is stable. The country needs a people and business friendly Governor who can be innovative within the four walls of the CBSL.
Not a man who spells doom and gloom continuously. Unfortunately the President does not understand this and he will only make matters worse for Sri Lanka. Since he has now come back from the shadows to run the government.
Adolf
Prime Minister Ranil Wickremesinghe has already solved many burning problems in the country and the people therefore should be patient till he solves the rest, said Chairman of the United National Party (UNP) Vajira Abeywardena, speaking to a briefing in Galle yesterday (18).
Accordingly, the Prime Minister as of this moment has been able to provide successful solutions to the fertiliser problem as well as the shortage of essential commodities, Abeywardena revealed, adding that Wickremesinghe has adopted measures to receive the support of the International Monetary Fund (IMF) and to ensure food security as well.
Both the political parties and the people should be supporting the programme implemented by the Prime Minister and the rest of the problems can also be solved should they act with patience, he added.
MIAP
Leader of the Opposition Sajith Premadasa addressing a meeting held in the Opposition Leader’s Office yesterday (18) urged the government to stop this repressive system leading three-wheeler drivers to suffer in fuel queues 24 hours a day, the people to suffer inside vehicles, to starve, the innocent to die in the queues and by falling from trains and adopt an administration committed to the problems.
The rulers’ continuity of a journey failed to understand the pain and pressure of the people suffering in the queues must be stopped immediately, the Opposition Leader emphasised, calling on the government to allow the parents who are suffering from not being able to feed their children’s hunger and the students who have lost their education at schools and universities to settle in this country.
The government led by the President and the Prime Minister which has delivered frustration and suffering to twenty two million people in this country has repeatedly proved their incompetence and failure, Premadasa noted, suggesting that what the government does on the other hand is taking revenge on the people.
MIAP
The Parliamentary Consultative Committee held a meeting on the current situation in Sri Lanka yesterday (18), under the patronage of Indian Foreign Affairs Minister S. Jaishankar.
Tweeting, the Indian Foreign Affairs Minister noted that a good discussion held in a positive atmosphere on various issues and India’s role.
He added that unanimous support on the need to stand with Sri Lanka in this difficult time.
MIAP
Jagath Samantha, a brother of former Minister and Sri Lanka Podujana Peramuna (SLPP) Sanath Nishantha assaulted a person in plain sight yesterday (17), in his latest strike following a number of public assaults committed earlier.
Samantha assaulted a person at a fuel station in Arachchikattuwa waiting for fuel and the event has been caught on a CCTV nearby.
The victim alleged that Samantha assaulted him posing death threats that they will ‘not issue fuel to JVPers.’
The Ruling Party MP’s brother had previously been arrested by the Police on a number of similar occasions.
MIAP
A tense situation reportedly occurred near a fuel station at Vishvamadu, Mullaitivu last (18) night, due to a heated exchange between the residents and a group of military men.
To control the situation, the Military opened fired in the air and two people were taken into military custody and later handed over to the Police.
Several people were reportedly injured during the event and the Puthukkudiyiruppu Police are conducting further investigations.
MIAP
The country’s manufacturing and services sectors reported mixed results in May but the duo’s outlook remains bleak as per the latest Purchasing Managers Index (PMI).
The Manufacturing sector recorded an index value of 50.3 in May 2022, with an increase of 13.9 index points from the seasonally low value in the month of April.
“The slight edging was mainly due to the recovery of Employment and the lengthening of Suppliers’ Delivery Time,” Central Bank said.
It said even though the lengthening of Suppliers’ Delivery Time generally reflects the expansion in the manufacturing activities, in this instance it was primarily due to supply side impediments arising from clearance delays of imported goods and fuel shortage.
Moreover, Employment edged up during the month, particularly in the manufacture of textiles and apparel sector, partly due to cross-industry employee movements.
CBSL said New Orders, Production and Stock of Purchases remained contracted on a month-on-a-month basis, yet at a slower pace, indicating subdued performance in manufacturing activities in May 2022.
“The subdued performance in Production and New Orders were particularly witnessed in the manufacture of food and beverage sector. The contraction in the New Orders was partly due to the ending of the festive month,” CBSL said.
Further, some respondents mentioned that deterioration of purchasing power due to high inflation together with cautious consumer spending amidst prolonged uncertainty over economic woes resulted in the decline in demand, particularly for the goods in non-essential nature.
Moreover, production process of the manufacturing sector has severely hit by numerous supply-side constraints, including a shortage of materials and the ongoing power outages.
The Stock of Purchases declined mainly due to the unavailability of required quantities in the domestic market and difficulties in opening letters of credit for importing materials, forcing many producers to significantly slow down their production.
“For the next three months, the overall expectations for manufacturing activities continued to deteriorate compared to the previous month due to the prevailing uncertain economic environment in the country,” CBSL said.
Services sector dropped marginally to an index value of 42.4 in May 2022 indicating a contraction in services activities for the second consecutive month.
“This was due to the declines in New Businesses, Business Activities, Employment and Expectations for Activity sub-indices,” CBSL said.
New Businesses declined further in May 2022 compared to April 2022, particularly with the decreases observed in accommodation, food and beverage, wholesale and retail trade, real estate, and education sub-sectors.
CBSL said decline observed in Business Activities in May was mainly due to supply-side constraints including, prolonged power outages and energy shortage. In addition, subdued demand attributable to rising prices and uncertainties in the country also contributed to the decline in business activities.
The civil unrest occurred at the beginning of the month also had a negative effect on the business activities.
Accordingly, wholesale and retail trade, other personal activities and transportation sub-sectors recorded major declines during the month. In addition, business activities of accommodation, food and beverage sub-sector was also affected by the continued drop in tourist arrivals.
Employment continued to decline in May due to terminations in line with the decline in business activities, retirements and resignations. Power outages, supply shortages and transportation difficulties led backlogs of work to increase further during the month.
“Expectations for business activities for the next three months deteriorated further in May due to supply-side constraints, inflationary pressure, and economic and political uncertainties in the country,” CBSL said adding “some respondents were also concerned over increase in interest rates and taxes, whereas some were optimistic on the progress made on IMF discussions and exchange rate stabilisation.
In an attempt to boost connectivity with each other, neighbours India and Sri Lanka to go ahead with two connectivity proposals which are considered key in enhancing people-to-people connectivity especially between the Northern region of Sri Lanka and Tamil Nadu.
Sri Lanka, which is going through its worst economic crisis, approved the two proposals this week. According to Sri Lanka’s Fisheries Minister Douglas Devananda, , a Memorandum of Understanding (MoU) was signed on 13 June to resume flights between Jaffna International Airport in Palaly and Tiruchirappalli Airport in Tamil Nadu.
Meanwhile, a ferry service would be launched between Kankesanthurai, Jaffna in Northern Sri Lanka to Karaikal in Puducherry, a Union Territory in Tamil Nadu, India as the second connectivity project.
The proposal for the ferry service has long been on the cards. Union Minister for Health and Family Welfare of India Mansukh Mandaviya also commented on the project last year.
Minister Mandaviya in a tweet said he met with officials over the proposal and that it will ensure easy and cheap connectivity, thereby enhancing various economic activities between the two neighbours.
Similarly, Chairman of Jaffna District Development Committee MP Angajan Ramanathan tweeted early last year and said that the MoU was signed between Sagarmala Development Company Limited and INDSRI Ferry Services Pvt Ltd for Passenger Shipping Service from Kankesanthurai or KKS Port to Karaikal Port and the sea connectivity between India and Sri Lanka will strengthen bilateral relations.
However, Minister Douglas Devananda told media after the Cabinet approval was granted to the project this week that the subject minister will study the proposal and then forward it to President Gotabaya Rajapaksa. “The process should begin by next month,” he said.
Commenting on the resumption of flights from Jaffna to Puducherry, Minister Devananda said the flights would launch as soon as refurbishment works of the airport are completed, and once the Immigration and Customs services are revived.
While these projects were being implemented, plans were afoot to connect the Northern region with South India as well. However, the project to launch flights from Jaffna to Chennai operated by Alliance Air was not materialised until November 2019, only to be suspended amidst the COVID-19 pandemic that broke out soon after.
Last week, Sri Lankan Premier Wickremesinghe said in Parliament that India was the only country that gives money to Sri Lanka for fuel. “No country is giving us money for fuel and coal. Only India is giving. Our Indian credit line is now nearing its end. We are talking about extending it,” he said.
In late May, Indian High Commissioner in Colombo Gopal Baglay handed over a consignment comprising of 9,000 metric tons of rice, 50 metric tons of milk powder, and over 25 metric tons of drugs and other pharmaceutical supplies to Sri Lanka.
Soon after the economic crisis hit Sri Lanka, Indian External Affairs Minister S. Jaishankar visited the country and said on March 30 that the Indian system is working “overtime” to expedite its assistance to Sri Lanka.
Sri Lanka now needs US$ 5 billion from the international donar countries and agencies to avert current economic turmoil and the crisis could have been avoided if it had gone to the International Monetary Fund (IMF) for a bailout sooner, the country’s Central Bank Governor said.
Central Bank Governor P Nandalal Weerasinghe noted that the delay in seeking outside help was a mistake.Sri Lanka defaulted on its foreign debt for the time in its history last month.
“If the government had taken the decision to go to the IMF earlier, and if it started the debt resettlement process one year before, Sri Lanka could have managed the situation without this kind of suffering in this country,” he said.
His comments came as he is attempting to restore order to Sri Lanka’s economy, which is experiencing extreme fuel shortages, soaring food prices and a lack of medicines.
A recent survey by the United Nations World Food Programme found that around two thirds of Sri Lankan households have been forced to reduce their food intake.
Mr Weerasinghe said Sri Lanka was experiencing its worst economic crisis since independence from Britain in 1948.
A team from the IMF is due to arrive in Colombo for talks on Monday and Mr Weerasinghe will be a key participant in those meetings.
Yet there is uncertainty about whether Mr Weerasinghe will be reappointed for a full six year term at the end of this month. But he said that he has expressed his desire to continue.
A complication in the IMF negotiations is Sri Lanka’s substantial borrowing from China, which Mr Weerasinghe said accounts for 15% of the country’s total external debt.
The fund has a policy of not bailing out countries unless all its other creditors have first agreed to write down their loans.
“I’m sure China as a good friend of Sri Lanka [will] offer similar relief that will be offered by other creditors as well,” said Mr Weerasinghe.
Former Sri Lanka central bank staff have written an open letter to the embattled President Gotabaya Rajapaksa urging him to keep Mr Weerasinghe in the post.
“If anyone is contemplating to remove him from his position as the Governor of the Central Bank of Sri Lanka, we see it as a highly unpatriotic move with entirely ulterior motives,” they wrote.
The World Bank has warned that as many as 12 other developing countries are at risk of default over the coming year.
Analysts say states such as the Maldives, Rwanda, Ethiopia, Senegal are also all on the financial brink.Egypt, Ghana and Pakistan are also seen as intensely vulnerable.
