The uneconomical operations of SriLankan Airlines(SLA) and losses cannot be absorbed either to the limited fiscal space or state banking sector, hindering the productive private sector credit growth,” the Finance Ministry recently noted. 

It has recommended an immediate transformation for the airline to clear up its liabilities through a proper business restructuring by selecting a suitable business partner

 Even though, financing the losses of the SLA at this distressed economic condition cannot be further continued, the Government approved the re-issuance of all Letters of Comfort that expired during the period amounting to US$ 205.4 million and Rs. 27.6 billion, in favor of two state banks to continue SLA’s operations. 

The uneconomical operations of the SLA and losses cannot be absorbed either to the limited fiscal space or state banking sector hindering the productive private sector credit growth.

 However, under the prevailing economic conditions, the Government is no longer in a position to finance SLA’s losses and therefore SLA requires an immediate transformation to clear up their liabilities through a proper business restructuring by selecting a suitable business partner, Finance Ministery emphasised.

Aviation Minister Nimal Siripala de Silva While urging the local investors to come forward, the government plans to complete the restructuring process of loss-making SriLankan Airlines in a transparent manner within this year.

He stressed that all stakeholders must agree in principle the need to restructure the airline, as it would be a great unjust to the citizens if the government continues to fund the loss-making airline in the current context with taxpayer money.

In 2021, SriLankan reported a staggering loss of Rs.171 billion, bringing its accumulated loss to a whopping Rs.542 billion. As of March 31, 2022, SriLankan’s interest-bearing loans had increased to Rs.372 billion and its unpaid bills rose to Rs.183 billion, including bills payable to Ceylon Petroleum Corporation amounting to Rs.89 billion, bringing the total liabilities to a record Rs.618 billion.

The minister pointed out that the government has already exhausted a large amount of public funds, which could have been invested in other crucial areas to maintain SriLankan, which has turned to end up as another “white elephant”. 

In this backdrop, SLA had to incur Rs. 122 billion as finance costs, compared to Rs. 36 billion in the previous year. This scenario has had a significant impact to the banking sector and 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. 

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 from the loss of Rs. 3,753 million in previous year. Furthermore, the capital erosion of SLA has been aggravated by the 

massive loss experienced in 2021/22, throwing further doubt on SLA’s going concern in light of the government’s restricted fiscal space and the financial environment of the state banking sector. 

However, despite the numerus challenges prevailed in the country, SLA raised its operational income from passenger and cargo operations by 163 percent to Rs. 133,276 million in 2021/22 from Rs. 50,694 million recorded in 2020/21. 

This was largely owing to an increase in Passenger Carried Kilometers from 748.13 RPK million in 2020/21 to 4,968.59 RPK million in 2021/22. 

China Continues to provide further aid for Sri Lanka to  sustain in the ongoing economic crisis and it has not taken any decision to back down  on previous pledges relating to financial aid. 

Prime Minister  Ranil Wickremesinghe indicated he would be willing to accept more financial help from China, despite his country’s mounting debt.

He noted that his government has been talking with China about restructuring its debts.Beijing had earlier offered to lend the country more money but balked at cutting the debt, possibly out of concern that other borrowers would demand the same relief.

Sri Lanka has received and continues to reach out to numerous countries for help including the most controversial, China, currently the country’s third-largest creditor.

The China International Development Cooperation Agency (CIDCA) has pledged an urgent emergency humanitarian aid of RMB 200 million to Sri Lanka, including 5000 tonnes of rice (with the previously announced 2000 tonnes), pharmaceuticals, production materials and other essentials.

 Furthermore, the Yunnan Province has announced a donation of RMB 1.5 million worth of food packages to Sri Lanka.

China has announced another 300 million RMB in aid to crisis-hit Sri Lanka. The Chinese Embassy in Colombo said that the aid will be provided for the purchase of urgently needed drugs, food, fuels, etc.

The latest aid increases the total emergency grant from China to 500 million RMB (approximately 76 million USD).The Chinese Embassy said the aid is being granted “to support Sri Lankan people at these trying times.”

By March 2022, China had provided Sri Lanka a total of US $ 2.8 billion as aid since 2020, including the US$ 1.5 billion currency swap in 2021.

In March, it was reported that the Sri Lankan Government requested a further US$ 1 billion loan and a US$ 1.5 billion credit line from China.

At the time it was said that the Sri Lanka Government was expecting to use the US $ 1 billion loan to settle the previous loans taken from the Chinese bank

Opposition figures have accused the president and the former prime minister of taking on a slew of Chinese loans for splashy infrastructure projects that have since failed to generate profit, instead adding to the country’s debt.

Critics have also pointed to a beleaguered port in the hometown of then-President Mahinda Rajapaksa, Hambantota, built along with a nearby airport as part of China’s Belt and Road Initiative projects, saying they cost too much and do too little for the economy.

The airport is running at a loss of Rs 10 million per day and the government is considering  operating it under Joint venture with foreign collaboration, official sources said.  

We need to identify what are the projects that we need for economic recovery and take loans for those projects, whether it be from China or from others, Wickremesinghe said.

The indian business giant Adani Group says it was “disappointed” as it reacted to a massive controversy over an energy project in Sri Lanka awarded to the group, after  Ceylon Electricity Board Chairman’s  claim that President Gotabaya Rajapaksa acted under pressure from Prime Minister Narendra Modi.

“Our intent in investing in Sri Lanka is to address the needs of a valued neighbour. As a responsible corporate, we see this as a necessary part of the partnership that our two nations have always shared. 

We are clearly disappointed by the detraction that seems to have come about. The fact is that the issue has already been addressed by and within the Sri Lankan Government,” said a spokesperson of the Adani group.

MMC Ferdinando, the chairman of Sri Lanka’s Ceylon Electricity Board (CEB), resigned, three days after he claimed before a parliamentary panel that he was told by President Rajapaksa about PM Modi pressuring him to give the wind power project directly to the Adani Group.

The government has not reacted to the claim, which the official retracted on Sunday evening and which President Rajapaksa has emphatically denied.

The allegations involve a 500-Megawatt renewable energy project in Sri Lanka’s Mannar district. A video of Mr Ferdinando’s comment at the parliamentary hearing has been widely circulated on Twitter.

“On Sunday evening, following a strong denial by President Rajapaksa on Twitter, Mr Ferdinando also withdrew his comments, claiming he had been “overcome with emotion” while facing questions that suggested wrongdoing by him.

President Rajapaksa had tweeted: “Regarding a statement made by the #lka CEB Chairman at a COPE committee hearing regarding the award of a Wind Power Project in Mannar, I categorically deny authorisation to award this project to any specific person or entity. I trust responsible communication in this regard will follow.”

His office followed it up with a longer statement “vehemently denying” the charge. The President has “categorically stated that he had not at any time given authorisation to award a wind power project in Mannar to any person or any institution,” the statement said.

“Sri Lanka is currently in an acute shortage of power and President desires to expedite implementation of mega power projects as early as possible. 

However, no undue influence will be used in awarding such projects. Project proposals for large-scale renewable energy projects are limited, but special attention will be paid to the selection of institutions for the projects, which will be carried out strictly in accordance with the transparent and accountable system by the government of Sri Lanka,” said President Rajapaksa’s office.

The controversy erupted a day after Sri Lanka changed its laws to remove competitive bidding for energy projects. 

The Adani group figured in the parliamentary debate on the Electricity Amendment Bill before it was passed amid opposition protests. 

The opposition accused the government of ramming the bill through parliament to facilitate large renewable energy deals to the Adani group, which signed an unsolicited government-to-government agreement to build the Mannar wind power plant.

The main opposition SJB in Lanka asserted that projects beyond 10 MW capacity should go through a competitive bidding process, but government MPs voted against it.

The Adani Group reportedly won contracts to develop two wind power projects, in Mannar and in Pooneryn, in December.

Gautam Adani had visited Sri Lanka in October and had tweeted about his meeting with President Rajapaksa.In 2021, the Adani Group had signed a $700 million deal with the state-run Sri Lanka Ports Authority (SLPA) to develop and run the strategic Colombo Port’s West International Container Terminal

The Government will soon adopt a short-term foreign finance mobilisation strategy of repurposing financial resources granted by international donors and the undisbursed loan balance of billions of dollars to maintain basic living standards of the people.

The total undisbursed loan balance of foreign financing and foreign financial resources available from the already committed loans for development projects that are to be utilised in the next 2-5 years, is estimated at US$ 7.95 billion, a Finance Ministry report revealed.

At least $5 billion is needed in the next six months to maintain basic standards of living of the people, including some $3.3 billion for fuel imports, while an additional $1 billion is required to strengthen the Sri Lankan rupee, Prime Minister Ranil Wickremasinghe told parliament on Tuesday.

The Ministry in collaboration with the Central Bank will hold a foreign donor conference under the leadership of India, China and Japan under the patronage of the International Monetary Fund (IMF) to reach a consensus on foreign finance restructuring and other related matters, a senior official said.

The bulk of the remaining funds under the recent projects are funded by the ADB (23 per cent or $1.84 billion), followed mainly by World Bank (19 per cent or $1.52 billion), China (17.2 per cent or $1.37 billion) and Japan (15.6 per cent or $1.24 billion) and the balance of around $ 2.1 billion by other donor countries.

Nearly 24 per cent of the foreign financing is expected to be disbursed during the next 2-5 years for the road and bridges sector while a considerable amount is to be disbursed mainly for sectors such as water supply and sanitation and transport, the report divulged. A portion of the remaining funds would be used for the import of food, fuel, LP gas and fertiliser.

Most of the donor funds harnessed are outright grants or long-term loans that carry low interest rates; a Treasury official said adding that restructuring these funds for the utilisation of meeting the urgent humanitarian needs of the people is an urgent need at present.

Sri Lanka will soon resume flights from Jaffna to India, Prime Minister Ranil Wickremesinghe said on Tuesday as he asked tourism authorities to draw up plans to attract more Indian tourists.

Prime Minister Wickremesinghe instructed to restart operations at  Jaffna’s Palaly airport to Indian destinations to facilitate travel. This was discussed during a meeting held with the industry stakeholders.

India’s state-run Airports Authority of India (AAI), which plans to build airports abroad, is yet to get the India’s Ministry of External Affairs’ (MEA) nod to develop Sri Lanka’s Palaly airport, a recent international media report highlighted.

AAI signed an agreement  with the Indian ministry of external affairs for preparation of comprehensive project report for development of Palaly Airport in Sri Lanka. 

India had earlier promised to develop Palaly airport which has been a demand by the northern province for some time. The airport will be Sri Lanka’s first in the north, give the northern people of Island nations a direct connectivity with places like South India, Malaysia, Singapore, and Thailand.

India has also offered to develop the Kankesanthurai airport also in the north of Sri Lanka, as well as the Mattala international airport in south Sri Lanka, to keep a hawk eye on nearby Chinese Hambantota port.

Palaly is vital for due to the fact that it is in the Tamil-dominated area of Sri Lanka which has been traditionally closer to India. By developing vital infrastructure here, India is also keeping a foothold in this part of Sri Lanka..

India in May re-emerged as Sri Lanka’s top inbound tourist market with 5,562 arrivals while over 3,723 came from the UK. However, the total number of international tourist arrivals to Sri Lanka in May plunged by almost 52 per cent, in comparison to April and 72 per cent in comparison to March.

The tourist arrivals have lessened due to the effects of the current economic and political situation in the country with main market countries issuing adverse travel advisories. Sri Lanka is currently facing its worst economic crisis since independence from Britain in 1948.

Sri Lanka Tourism Development Authority (SLTDA) expects to attract around 800,000 tourists for the rest of the year, with an estimated revenue of 800 million US dollars with Prime Minister Ranil Wickremesinghe instructing to attract Indian tourists amid a worsening economic crisis.

“The Prime Minister has instructed officials to prepare a plan to attract tourists from India for the next six months,” the Prime Minister’s office said in a statement after a meeting between Premier Wickremesinghe and SLTDA officials.

Sri Lanka witnessed the arrivals of 378,521 foreign visitors to the island nation in the first five months of this year. The Covid-19 pandemic hit 2021 saw 194,495 tourists for the full year.

The tourism industry started to boom in March this year, but the arrivals hit by economic crisis and protest-led political crisis.

Tourism accounted for 5 percent of the GDP in 2018 with 4 billion US dollar earnings, but  fell in 2019 due to the impact of Easter Sunday attack and later due to the Covid-19 pandemic. It has brought 680.7 million US dollars in the first five months of this year.

Sri Lanka is targeting around 2.5 million tourists by 2025 with an expected revenue of $ 3.5 billion and the Prime Minister urged all stakeholders to formulate long-term plans to attract around 1.5 million high-level tourists.

“The Prime Minister also instructed the relevant stakeholders to engage in youth awareness programs as many employees in the hospitality sector have already left for other locations and the number of new recruits to hotel schools in the country has come down drastically,” the prime minister’s office said.

“The Prime Minister also discussed the possibilities of organizing cultural festivals which will provide a unique opportunity to create new employment opportunities and allow the tourists to immerse themselves in the local cultures.”

Meanwhile, Minister of Tourism Harin Fernando said that he had already held discussions with the diplomatic community to compel the relevant countries to lift the existing tourism restrictions on Sri Lanka.

Over  six wetland sites are being developed in the Colombo Metropolitan Region, the United Nations Development Programme (UNDP) in Sri Lanka said.

Sri Lanka ratified the Ramsar Convention on Wetlands in 1990, and in 2017 the parties to the Convention declared ‘Wetland City Accreditation’ for cities which are located near wetlands, to conserve and encourage the sustainable use of urban wetlands.

Colombo is the only capital city among eighteen selected worldwide, and the only South Asian city to be declared a wetland city in 2018, breathing new life into the Colombo wetland conservation efforts.

The Small Grants Programme (SGP) of the UNDP in Sri Lanka, funded by the Global Environment Facility (GEF), has the overall goal of enabling community organizations to take action for adaptive landscape management and collective decision making to build socio-ecological resilience.

Between 2017 and 2021 through its Sixth Operational Phase, GEF-SGP provided grants to 10 community organizations within the landscape to minimize further disturbance to wetland systems by human interventions.

These human intereventions had been done through a participatory, multi-stakeholder, landscape management modality, aimed at conserving biodiversity, optimizing ecosystem services, managing land (particularly agro ecosystems), water and mitigating climate change.

“The GEF-SGP approach looks at the landscape as a whole, and the preservation of the wetlands is done using the involvement of people themselves. 

Therefore, communities are empowered to conserve the environment while engaging in their livelihoods. However, if we don’t get communities living in the areas actively involved in the preservation of habitats while taking livelihoods forward, any work towards wetland preservation will not be successful,” Dr. Anil Jasinghe, Secretary to the Ministry of Environment stated.

Currently, over six wetland sites are being developed in the Colombo Metropolitan Region, which covers an area of over 20 km2, amounting to 2.9% of its total land area. 

The Thalawathugoda wetlands, now known as ‘Diyasaru Park’, and the Beddagana wetlands, renamed ‘Bird Park’, are popular places of recreation for walking, bird watching and study tours. 

The historically important Thalangama Tank has nearly 180 farmers cultivating over 200 acres of paddy supported by the tank. 

Clearing and networking canals around the city and preserving land close to the city centre in Kotte, Rajagiriya and Kolonnawa are admirable attempts to conserve biodiversity with attention paid to the links between hydraulics and ecology allowing better protection of fragile wetland diversity, UNDP said.

Several environmental and public interest socities were among the grantees selected to carry out coordinated community projects in the landscape to generate ecological and socio economic synergies that produce harmonized and long-lasting environmental benefits, increased social capital, and substantial benefits to local communities.

The initiatives implemented by the project have empowered communities in compiling the strategy for protecting the urban wetlands, flora and fauna of the Colombo landscape while contributing towards uplifting livelihoods for women, unemployed or underemployed of the wetland communities.