The Paris Club has said that it is ready to start the debt treatment process of Sri Lanka following the conclusion of the Staff-Level Agreement with the International Monetary Fund (IMF) last week.
The Paris Club in a statement also reiterated its willingness to coordinate with non-Paris Club official bilateral creditors to provide the necessary financing assurances in a timely manner and ensure fair burden sharing, as already proposed to the largest other official bilateral creditors.
“The Paris Club remains at the disposal of Sri Lanka authorities and non-Paris official bilateral creditors to further discuss the next steps of the debt treatment process,” it said.
The statement said Paris Club members welcome the SLA between the Sri Lankan Government and the IMF for a 48-month arrangement under the Extended Fund Facility worth $ 2.9 billion. “This agreement represents an important step to restore macroeconomic stability and public debt sustainability,” the statement added.
The Paris Club was formed in 1956 and is an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by borrower countries.
Paris Club members are Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, Netherlands, Norway, Russia, South Korea, Spain, Sweden, Switzerland, United Kingdom and United States. India has been an observer state since 2019.
Sri Lanka’s foreign currency bilateral debt as at end 2021 was $ 9.6 billion or 11% of GDP as against $ 20 billion held by private creditors. Guaranteed SOEs bilateral debt was $ 300 million and those held by the Central Bank of Sri Lanka was $ 1.8 billion. Of the Paris Club members, the giant share is held by Japan (32%) followed by Korea 3%, Germany and France 2% each, USA and Spain 1% each.
Paris Club ready to start the Sri Lanka debt restructuring process
Travel advisories exert adverse impact on tourist arrivals in August
Sri Lanka could achieve the set target of one million tourists, whilst earning over $ 1.75 billion by year-end despite the the drop in tourist arrivals in August owing to adverse travel advisories by some foreign countries Sri Lanka Tourism Development Authority Chairman Priantha Fernando disclosed.
The adverse travel advisories imposed by multiple countries against Sri Lanka have severely impacted numbers, as August becomes the third lowest arrivals month for the year so far.
In August, arrivals fell by 20.2% to 37,760 from 47,293 in July, the shattering industry hopes to exceed the year-to-date half-a-million mark.
May recorded the lowest tourist arrivals with 30,207, whilst the second lowest inflow was in June with 32,856.
Arrivals in the first eight months amounted to 496,430 (as against 5,040 in COVID-hit August of 2021), a welcome development for the triple-hit tourism industry, but performance is still down by 81% compared to the same period in pre-COVID 2018.
The latest data released by the Sri Lanka Tourism Development Authority (SLTDA) showed the daily average arrivals have dropped to 1,218 from 1,526 in July. The highest daily average arrivals were in March with over 3,600, but the numbers kept crumbling as ramifications of the economic crisis and political upheaval.
The UK topped the tourist traffic to Sri Lanka with 18% or 6,776 tourists despite the adverse travel advisories, followed by India with 5,340 tourists (14%) and Germany with 3,251 (9%).
India remains strong as the top tourist source market for Sri Lanka YTD with cumulative number of arrivals at 80,132 followed by UK 65,655, Russia with 49,747, Germany 40,359, France 28,235, Canada 19,056, Australia 18,412, US 14,259, Ukraine 13,908, and Poland 13,334.
Earnings from tourism in the first seven months were at $ 824.9 million, as against $ 50.4 million in the corresponding period of 2021, as per Central Bank provisional data.
In July, tourism earnings were estimated at $ 85.1 million, compared to $ 6.3 million a year ago.
Despite the multiple challenges, Sri Lanka’s tourism industry looks to be in high season, as they ramp up efforts to achieve the set target of one million arrivals and boost foreign exchange inflows to overcome the economic woes.
President RW needs at least 175 MPs’ support to build SL
Chairman of the United National Party (UNP) MP Vajira Abeywardena speaking to a briefing called in by the Party yesterday (04) said President Ranil Wickremesinghe needs each and everyone’s support to build the country.
“Mr. Ranil Wickremesinghe has taken over the stewardship of the nation. So, he continues to ask for everyone’s support in this regard. To recover this country from where it fell, at least 175 MPs’ support is needed, he said over and over again. What is being done is uniting all compatible and incompatible political parties for a national programme. Such a programme cannot be implemented overnight,” he said.
MIAP
Consumer rights activists condemn price revision on flour (VIDEO)
Consumer rights activists heavily condemned the recent astronomical price revision on bread flour, alleging that a mafia worse than that of sugar is in operation in the trading of flour and urging the government for an immediate intervention.
Calling in a briefing yesterday (04), Convener of the Movement to Protect People’s Rights, Consumer Rights Activist Asela Sampath said the bread flour price must be controlled and the mafia must not be allowed to rule the industry. The lack of standard in bread flour has made it difficult to issue short-eats to the restaurants, he noted.
“The bread flour price must be controlled at this moment. If we are to let the mafiamen to rule, the people of this country will have to stay in hunger. There is no mobile bread distributor (referring to Chun Paan) to be found today. Today, it has become difficult to issue a vegetable roti, a pastry, a parata, an egg roti, or anything to the restaurants. Why? Because bread flour has no standard. Usually, bread flour used to come from cold countries,” Sampath said.
The consumer rights activist continued: “Now, the imports from India have been ceased. Because there was a surplus of stocks in India which was sent here and stocked back. By doing that, the price has gone up from Rs. 200 to Rs. 260, then Rs. 300, and then Rs. 310. Now the price is Rs. 400 – 410. The same stock of bread flour is being loaded and sold over and over again. The middlemen collect their charge, innocent people live in hunger. The industries have collapsed. You may see for yourself, how many bakeries have now been closed? A slice of bread like this (showing one to the media) will have to be sold for Rs. 30 from now on, if a loaf of bread ought to be sold for Rs. 300. This is because a kilo of bread flour is sold for Rs. 400. Because of this black market mafia, innocent consumers are being exploited. Please, the government must intervene on this matter. This is a mafia worse than that of sugar. For god’s sake, to increase the price on a daily basis, do they add gold dust to bread flour?”
MIAP
Fitch Ratings warns of risks from political instability in Sri Lanka
Political instability in Sri Lanka will pose risks to the implementation of reforms and the distribution of IMF funding, Fitch Ratings warned today.
Fitch Ratings said that the IMF staff-level agreement with Sri Lanka on a USD2.9 billion programme, confirmed on 1 September, appears to signal a sharp change in policy settings in order to achieve macroeconomic stability, including through large fiscal adjustment, greater exchange-rate flexibility and more central bank autonomy.
Fitch said that this should facilitate negotiations with official and private creditors, but the timing of any debt restructuring agreement remains uncertain.
The Extended Fund Facility will not be approved by the IMF’s Executive Board until the government has implemented a number of agreed prior actions (not publicly specified), financing assurances have been received from official creditors, and good faith efforts have been made to reach agreement with private creditors.
The IMF has assessed Sri Lanka’s debt burden as unsustainable, so the outcome of negotiations with creditors should involve debt relief, Fitch Ratings pointed out.
“Tax reform will be an important element of the agreed programme. Personal income tax will be made more progressive and corporate income tax and VAT will be broadened, with a goal of achieving a primary fiscal surplus of 2.3% of GDP by 2025, compared with a deficit of 5.7% in 2021.
“In line with this, the interim 2022 budget unveiled by the new government on 30 August laid out plans to raise the standard rate of VAT to 15% from 12% from 1 September, and proposed compulsory tax registration for all residents aged over 18 years. The budget sought to raise government revenue/GDP from 8.2% in 2021 to 15% by 2025, and to reduce public debt/GDP from around 110% at end-2021 to not more than 100% in the medium term. The revised budget deficit for 2022 is projected at 9.8% of GDP, up from 8.8% of GDP in the original 2022 budget.”
The credit rating agency said it believes the Sri Lankan government has some room to reduce capex, but its non-discretionary expenditure is large. Interest payments and wages were equivalent to 1.3x government revenue in 2021. “We expect additional revenue raising to be the main driver of fiscal consolidation, but the budget signalled there will be reallocation of expenditure towards social spending to cushion the effects of the economic crisis.”
The statement cautioned that political instability will pose risks to the implementation of reforms and the distribution of IMF funding, even if a debt restructuring is agreed. “Additional social spending may not be sufficient to prevent public opposition, particularly given that the government’s public support appears weak, in our assessment, and that the economic growth recovery in 2023-2024 will be constrained by the strong fiscal consolidation.”
Fitch Ratings rates Sri Lanka’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘RD’ (Restricted Default). The Long-Term Local-Currency IDR is ‘CCC’, and is Under Criteria Observation following our introduction of +/- modifiers in the ‘CCC’ category. A default on local-currency debt could have adverse effects on Sri Lanka’s banking sector that would erode the net benefits of such a restructuring.
When the credit rating agency affirmed the Long-Term Local-Currency IDR in May, it assumed that the government would continue to service local-currency debt. Nonetheless, the ‘CCC’ rating reflects a high risk that local-currency debt will be included in debt restructuring, as the stock and interest costs are large, and omitting it could increase the restructuring burden on holders of foreign-currency debt. The central bank governor in late August affirmed that Sri Lanka would not restructure domestic debt, but this was partly in response to comments from President Wickremesinghe that appeared to suggest that this policy option was being examined, Fitch said.
Fitch may move Sri Lanka’s LTFC IDR out of ‘RD’ upon the sovereign’s completion of a commercial debt restructuring that we judge to have normalized the relationship with the international financial community.
Foreigners don’t visit a country with a disturbed society: K.D. Lalkantha
In the society’s collapse it is hardly believable that foreigners will come to Sri Lanka by spending an unnecessary amount of money for their needs, said Janatha Vimukthi Peramuna (JVP) Politburo member former MP K.D. Lal Kantha, addressing a summit organised by the National People’s Power (NPP).
The former MP emphasised that the current Sri Lankan society is disturbed, saying, “Foreigners do not visit a place where the society is unstable. It is very difficult to find a medicine. They will not come. Why? Because the society of our country is disturbed. The society is messed up. The price of an egg today is not as same as yesterday. Even the shopkeeper does not remember its price. Even he remembers the price of an egg by looking at the bill.”
Lalkantha went on: “What is the price of a loaf of bread now? Rs. 300. Will foreigners come to eat bread for Rs. 300? They rather visit the Maldives for that. Why bother coming here? Do they have to come to eat an egg for Rs. 65 – 70? The charges rooms and other facilities have also risen; everything gone up; cannot continue without it. The charge of a threewheeler has gone up. So they know, that the society is unstable.”
MIAP
A Board of 75 Ministers to be formed, sources
The board of ministers due on formation this week will consist of 75 ministers total, internal sources disclosed.
Accordingly, the board of ministers will consist of 40 Cabinet Ministers and 35 State Ministers, according to sources.
The existing 18 Cabinet Ministers will also be included to the new Board, sources further disclosed.
MIAP
Sri Lanka’s demand for legal liquor drops by 40 percent
Sri Lanka’s economic crisis has brought down the demand for legally produced liquor by 40 percent shying away the boozers from liquor bars and wine stores in the country at present, Excise Department head divulged.
Commissioner General of Excise M.J Gunasiri said that the demand of liquor has dropped significantly due to unbearable price hike of arrack and other alcoholic beverages by manufacturing companies and present economic hard ships faced by the people.
The daily revenue of the department has dropped by Rs 100 to Rs 150 million as the people cannot afford to buy a widely consumed 750 millilitre bottle of extra special arrack at the price of Rs.2500 an increase of Rs 680 from the previous price he revealed.
Locally manufactured beer containing 450 millilitres also rose by Rs 30 rupees, with the market price at Rs.330.
This was not due to tax hike but owing to massive decline in the buying power of people he pointed out adding that the monthly excise duty paid to the government which used to be approximately Rs 9 billion had reduced to Rs. 5.4 billion.
Liquor manufacturing companies had to make three price revisions recently due to high prices and scarcity of the main ingredient ethanol being produced locally using sugar cane which has impacted by organic fertiliser mania, a senior official of a leading distilleries company said.
Production costs and raw materials as well as other ingredient costs like essence have also increased he pointed out adding that ethanol previously priced at at Rs 500 to 600 has been increased to Rs 1000 to 1500.
Domestic ethanol production has come down drastically due to low harvests of sugar cane and corn as a result of using organic fertiliser for cultivation.
Leading local manufactures have urged the government to enable the importation of ethanol to cater even to the lower demands, as the scarcity of ethanol badly hits the industry.
Mr Gunasiri noted that excise officers are conducting raids to crack down on liquor bars and wine stores selling liquor bottle without stickers with unique code or affixed with false liquors.
He revealed that the department has recently imported 11 million security stickers from, Madras Security Printers Company of India and there was no shortage of stickers at present.
Sri Lanka’s oil spill management capability enhances with JICA assistance
Sri Lanka’s management capability and techniques on oil spill response system will be getting updated and modernized with Japan International Cooperation Agency (JICA) assistance to prevent marine pollution.
The need of tackling. maritime oil spill incidents has become essential for the island nation following the two ship disasters in its territorial waters within last two years.
A fire broke out on the MT New Diamond oil tanker , about 30 nautical miles off the coast of Sri Lanka on Sept. 8, 2020 causing severe damage to natural marine environment and ecosystem
On 20 May 2021, cargo ship “X-PRESS PEARL with 1,486 containers onboard carrying dangerous cargo caught fire about nine nautical miles (16 km) off the coast of Colombo commercial shipping harbor causing massive damge to the coastline, natural marine environment and ecosystem.
Under this setup japan International Cooperation Agency (JICA) launched a three year new technical cooperation project together with Japan Coast Guard (JCG)and Sri LankaCoast Guard(SLCG) in further assisting SLCGto establishan in-houseoil spill responsetraining system,an extensionof pastcooperationon oil spill incident management techniques.
Sri Lanka located on the important maritime transport route between Asia and Europe/ Middle-east, amaritime accident would have major impacts on safe navigation of vessels, maritime environmentand economic activitiesof the region.
SLCG is recognized as one of the principal players to combat maritime oil spill incidentsand JICA has extended its continuous support to SLCG since 2014up to now, including provision of two (2) patrol vessels tailored in Japan and continuous technical training to enhance SLCG’s response capacity.
Following theproject Kickoff in July 2022, a JICA mission has been deployed to SriLanka Coast Guard from 29thAugust to 2ndSeptember that consists of three (3) JCG officers including the Mobile Cooperation Team as JICA Experts and a SeniorAdvisorof JICA HQs to commence project activities in Sri Lanka.
JICA Expert members conducted an inspection of the SLCG patrol vessel 501 Samudraraksha, and 502 Samaraksha which were handed over to SLCG in year 2018,and oil spill combat equipment expected to be used in the practical training sessions.
The 3-year project aims at strengthening SLCG’s in-house training system to establish and sustain the knowledge and skills accumulated on oil spill response through the series of JICA’s cooperation in the past 10 years.
22trained SLCG instructors are expected to receive additional intensive training in Japan and Sri Lanka through transfer ofknowledge and skills used by JCG under Japan’s Official Development Assistance
.A Joint Coordinating Committee Meeting was held between SLCG, JCG and JICA on 30th August to finalize the project approach including its operational plan for the next 3 years.
Not Repression, only the Democratic Reforms will end the people’s struggle in Sri Lanka
A just and spontaneous people’s struggle in Sri Lanka for socio-economic rights, accountability, and democratic and political reforms has met with severe repressive measures under the notorious Prevention of Terrorism Act (PTA).
President Ranil Wickremesinghe, who – when he was Prime Minister – accepted the people’s right to protest peacefully and promised to look into the demands of the protest movement, has now taken a U-turn. His first act since becoming president was to declare a state of emergency, providing the security forces with draconian and unaccountable powers, including the right to detain a person for up to 72 hours without being charged. So far, close to 4,000 activists have been arrested under the flimsiest of charges and more than a thousand are still held in remand custody.
Emergency Regulations are being used to suppress the democratic will of the people and engender an ethos of fear and silence. And authoritarian and unaccountable powers of the presidency are being applied to instil terror in an unwilling populace to secure compliance.
Since the emergency proclamations, peaceful protestors have been attacked by the security organs of the State. Several protestors have been kidnapped, many have been arrested, and even ambulances and medical personnel were prevented from promptly accessing the injured at the site of an attack.
Inter University Students Federation (IUSF) held a peaceful march on August 18, and the security personnel used batons, water cannons and tear gas to disperse them. On the day, 21 student leaders were arrested of whom three, including the IUSF Convenor, were illegally held in detention bypassing the court’s system. President Wickremesinghe signed orders to hold them in long-term detention under the notorious Prevention of Terrorism Act (PTA). And the regime’s arrest spree continues.
The draconian PTA gives wide powers to the Executive and security forces to arrest and detain persons for a lengthy period of time under any false pretext without any convening judicial authority examining the basis of the charges laid. Such detentions have been used countless times in the past decades to subject detainees to torture and inhuman treatments. The Ranil-SLPP regime has formed special units to target all those who are facilitating and attending the protests including members of the expatriate community.
The situation appears to be developing into a nightmarish scenario where thousands could die or be made to disappear, and abductions, torture and degrading punishments could become the norm, as has happened repeatedly in the past. From August 22, in tandem with the deployment of security forces in all 25 districts of Sri Lanka to maintain public order, certain pro-Ranil and pro-Gota military officers have been promoted to the ranks of Major Generals. Any opposition to the government is being maliciously and falsely interpreted as fascist or terrorist activity. Amnesty International, UN Special Rapporteur on Human Rights and other human rights organisations and civil society actors have already expressed their serious concerns about these developments.
Sadly, the history of Sri Lanka is replete with heavy-handed police and security forces’ responses to peaceful dissent against State oppression and tyranny. The PTA was originally enacted in 1979, to crush the Tamil youth of the North and East who took up arms to fulfill the mandate given to the Tamil leaders at the August 1977 General Elections to secure a separate state for the Tamil speaking people of Sri Lanka. Rather than negotiating with the Tamil political leaders to accommodate their clarion call for federalism, which they have been demanding since 1949, the JR Jayawardena government set out to suppress the militants by whatever means, labelling them ‘terrorists’. A 30-year vicious war followed and billions of rupees were spent to find a military solution for a political problem that saw numerous extra-judicial killings and thousands of people disappear with total impunity.
That draconian PTA, which was to have eradicated the so-called terrorism within a year or two, is still being used today against the peaceful activists and youth of the South, who are campaigning for their just demands for economic wellbeing, fundamental rights, political reforms and government accountability. The suffering people of a failed state have no choice but to persist with their protests; oppressing and terrorising them is not an option.
By applying targeted repression against the protestors, the ruling elite is engaged in sophisticated political manoeuvring to blunt the will of the populace for long-lasting political and structural change. The Ranil-SLPP regime by granting political concessions to some social groups while violently suppressing others is trying to sow the seeds of disunity, yet again, thwarting their desire for building a united country through truth-seeking, righting the wrongs of the past, and a fair go for all.
President Nelson Mandela once said: “… it is the oppressor who defines the nature of the struggle, and the oppressed is often left no recourse but to use methods that mirror those of the oppressor. At a point, one can only fight fire with fire.”
Today, the Sri Lankan state cannot feed its people, and the power and wealth of the nation are in the hands of a few. Instead of dealing with the economic crisis, and the institutions and individuals who perpetrated it, they are resorting to their old political playbook of looking for scapegoats to hide their criminal actions. This is done so by escalating violence against those who are seeking peaceful change. These actions clearly breach international human rights and fundamental freedoms of the people.
Under these dire circumstances, we appeal to the international community, the United Nations Human Rights Council, trade unions, progressives and all those who value democracy and human rights to resolutely oppose the escalating human rights violations under the Ranil Wickremesinghe presidency and stand in solidarity with the people of Sri Lanka whose legitimate campaigns have been suppressed by arbitrary arrests and detention. Any international bailout and support from the wealthy diaspora must be contingent upon curtailing corruption, wastage and mismanagement of the economy, freedom of expression, and respect for the rule of law.
AAGGSL calls upon the Ranil-SLPP government to immediately rescind the Detention Orders issued and to take all necessary steps, along with the opposition parties, to abolish the draconian PTA.
We strongly believe that only democratic and constitutional reforms, not repression, will end this spontaneous people’s struggle for a holistic system change that will pave the way for sustainable economic prosperity and peace in Sri Lanka.
Until then, the people’s struggle through peaceful means must go on.
Signed:
Dr Lionel Bopage
President
Australian Advocacy for Good Governance in Sri Lanka
Melbourne, Australia