Former President, Sri Lanka Freedom Party leader Maithripala Sirisena says that President Gotabhaya Rajapaksa has agreed to form an interim all party government representing all parties in parliament.
He was addressing the media after a discussion with the President today.
By Jorgelina do Rosario
LONDON (Reuters) – Social unrest, political uncertainty and a complex web of creditors could scupper Sri Lanka’s push for a swift overhaul of its $12 billion overseas debt, analysts warn, saying the South Asian nation is fast running out of road.
A mix of Japanese, Chinese and Indian loans, a pile of bonds held by overseas investors and talks on an International Monetary Fund (IMF) bailout have added complexity to the South Asian nation’s worst financial crisis since independence in 1948.
S&P Global Ratings on Monday cut Sri Lanka’s foreign-currency debt rating to “selective default” after it missed interest payments.
In a flurry of activity over the past week, the World Bank agreed to provide $600 million to help pay for essential imports, the IMF said the government must raise interest rates and taxes and adopt flexible exchange rates, and Sri Lanka said it has begun debt-refinancing discussions with China.
“The IMF response has been very positive and the sense we get is they will try to expedite a programme within their parameters,” cabinet spokesman Nalaka Godahewa told Reuters. “We are in discussions with India, the World Bank and (Asian Development Bank) for additional support, so Sri Lanka is in a better position now to manage until IMF funds come.”
The Finance Ministry declined to comment.
The economy of the nation of 22 million people melted down after a large 2019 tax cut by President Gotabaya Rajapaksa drained government coffers and COVID-19 hit the lucrative tourism industry. Foreign reserves fell 70% over the past two years to $1.93 billion, leaving Colombo struggling to pay for such essentials as fuel, medicines and food.
Facing soaring inflation in addition to shortages, thousands have been protesting for weeks, demanding the resignation of Rajapaksa and his brother, the prime minister.
Colombo hopes it can conclude the IMF aid talks in about six months but it cannot control how long negotiations will take.
“Six months is quite ambitious,” said Guido Chamorro, emerging market portfolio manager at Pictet Asset Management, which holds the country’s bonds. “Sri Lanka resisted for years to go to the IMF, and that means that the Fund is going to ask for reforms to be completed before it provides a package.”
But investors may not be that patient.
“Waiting six months with the current state of affairs is not something viable, as we see a very fast and fluid situation on the ground,” said Joe Delvaux, portfolio manager at Amundi Asset Management, which holds the country’s bonds.
The government has yet to pick financial and legal advisers, a key step before debt talks with overseas creditors.
Godahewa, who is also the country’s media minister, said the government has had more than 50 responses to its search for financial and legal advisers, “and we will proceed quickly”.
CHINA’S ROLE
Sri Lanka is seeking about $3 billion in bridge financing. In addition to the World Bank pledge, India has committed $1.9 billion and is in talks for an additional $1.5 billion in credit for fuel and other essential imports.
Many of the government’s recent decisions have “added more pressure to the debt sustainability,” said Nathalie Marshik, head of emerging market sovereign research at Stifel.
Only recently have policymakers taken concrete steps to pave the way for the country’s 17th IMF programme, devaluing the rupee by around a third in early March and nearly doubling interest rates with a 700 basis-point hike this month.
It is not clear how Sri Lanka can ramp up revenues after posting a 2021 fiscal deficit of over 10% of GDP, given opposition to reversing tax cuts after a hike in fuel and cooking gas prices worsened public discontent.
“Measures would likely hurt the pockets of most of the population,” said Pictet’s Chamorro.
China’s influence is visible: The world’s second-largest economy has invested in such projects as highways, a port, an airport and a coal power plant.
Cabinet spokesman Godahewa said the government’s “only concern is the position of China”, adding, “We will have to use our good relationship with China.”
Sri Lanka owes Beijing some $6.5 billion in financing from development bank loans to a central bank swap, according to the Institute of International Finance (IIF).
“The IMF needs assurances that China, India and Japan will provide some type of financing,” said Sergi Lanau, deputy chief economist at the institute.
Recent talks on Suriname’s debt, with a combination of Paris Club support for an IMF programme and Chinese participation, are a “case to look at closely”, said Stifel’s Marshik.
But not all debt talks where China was a major creditor have seen quick progress recently. Beijing only last week agreed to join Zambia’s creditor committee, two years after the southern African country’s default.
And that was despite Zambia, unlike Sri Lanka, qualifying for an overhaul under the Common Framework – a G20 initiative designed to streamline restructurings for poorer nations.
Sri Lanka’s investors are in wait-and-see mode until there is more clarity on what an IMF programme would look like, but time is running out.
“Sri Lanka has a $2.5 billion gap to be filled for 2022 and 2023,” said the IIF’s Lanau, adding Sri Lanka needs at least $1 billion from the IMF. “The country needs fresh money to spend. If not, it’s going to collapse.”
(Reporting by Jorgelina do Rosario in London; Additional reporting by Uditha Jayasinghe in Colombo; Editing by Karin Strohecker and William Mallard)
Though still struggling to conquer eastern and southern parts of Ukraine, Russia has indicated it wants to invade yet another former Soviet territory, this time to the west: Moldova.
The landlocked country had not been much in the news since 1990s when the then-Soviet republic declared independence from the collapsing USSR. No one paid much attention to it, least of all the newly minted Russian government headed by Boris Yeltsin. However, Soviet troops remained, under the Russian banner.
About 1,500 Russian soldiers are still there, in a region called Transnistria, and Russia wants to link up with them by land. Last week, a Russian news outlet quoted Major General Rustam Minnekaev, who commands troops in central Russia, as declaring that a goal of the “special operation” in Ukraine is to open “another way out to Transnistria, where there are also facts of oppression of the Russian-speaking population.
As if on cue, someone shortly blew up a pair of antennas that broadcast Russian-language radio. Then a blast damaged a building that houses pro-Russian security services in eastern Moldova. The security services blamed Moldovans while Russia’s Sputnik news service said Ukrainians who “aim to drag Moldova and unrecognized Transnistria into a conflict” did it.
A supposedly oppressed Russian-ethnic minority was one of Russia’s President Putin’s declared justifications to attack Ukraine.
“I believe that the provocations … are a challenge from the Russian Federation,” former Moldovan Defense Minister Vitalie Marinuta said. “I see them building more and more facts that will give them the right to intervene in the Transnistria region. I think we have reason to worry these days.”
In Chisinau, the Moldovan capital, the government, was quick to blame Russian provocateurs. The attacks were “pretexts” meant to raise tempers, declared Moldova’s Bureau of Reintegration Policies.
On Tuesday, Moldova’s President, Maia Sandu, convened a meeting of security officials to discuss the threat and said the country was being kept in “constant turmoil.
Moldovans had hoped the Ukraine crisis would not upset their own tense pseudo-tranquility. Nonetheless, the war has had a pair of negative effects on Moldova. The Ukrainian port of Odessa – which also serves landlocked Moldova – has been mined and is closed to sea traffic. In addition, about 400,000 refugees have flooded the country.
“We are by far the most fragile neighbor of Ukraine,” Foreign Affairs Minister Nicolae Popescu said.
Russian troops in eastern Moldova have long unsettled the country. Back in the 1990s, they sided with rebellious Russian residents who mostly lived on the eastern bank of the Dniester River. The Russians wanted to remain in Moscow’s embrace. A civil war ensued.
Ever since, despite off and on peace talks, the country has been split between about three million Rumanian-speaking Moldovans on the west side of the river and 350,000 ethnic Russians along the east bank.
Like Ukraine, Moldova has set its sights on joining the European Union, a further irritation to Putin. The Russian president would like both Ukraine and Moldova to join his alternative Eurasian Economic Market, which currently includes two Central Asian states plus Belarus, Armenia and Russia. Although Moldova relies on Russia for supplies of natural gas and petroleum, it looks West for future prosperity.
In March, Moldova joined Ukraine and Georgia to ask for expedited membership in the EU. The EU is in no hurry. Back in 2014, Moldova signed an association agreement in hopes of aligning itself with EU policies, but association included no guarantee of membership.
Moldova has long lived under implicit threats from Russia. The Russian military cohort supplements a 5,000-member Transnistria militia and about 1,000 armed Cossacks.
Two theories vie to explain Moldova’s possible value to Russian military aims. One centers on the use of Russian troops stationed in Transnistria to invade Ukraine and approach Odessa, Ukraine’s largest port, from the west.
The other centers on a possible total conquest of both Ukraine and Moldova, thus reviving the Soviet-era frontline with NATO at the borders of Romania and Poland.
The Moldovan army’s ability to defend itself is limited. Its troop strength us about 5,700; the country’s air force consists of six old MiG 29 fighter jets.
Without much muscle to back her up, President Sandu called on Russia last week to remove its troops from Moldova. Putin ignored the demand.
Even before the war got underway, the US State Department urged Americans visiting Transnistria “to depart immediately via commercial or private means.”
Ukraine rang its own alarms by banning vehicles with Transnistria license plates from entering the country. In February, the Ukrainians warned that Russia would create some sort of pretext to justify an invasion from Moldovan territory. Kyiv’s fears increased when Russia and its Transnistria allies held joint military drills in March.
Late Tuesday, Russian allies in Moldova raised tensions by directly blaming Ukraine for the attacks in Transnistria. “The traces of these attacks lead to Ukraine,” Vadim Krasnoselsky, the self-styled president of Transnistria, told Russian news agency TASS. “I assume that those who organized this attack have the purpose of dragging Transnistria into the conflict.”
In 2016, two years after Russia’s first invasion of Ukraine, a Swedish government research team visited Moldova and suggested that formal peace remained out of reach. “Though struggling to conquer eastern and southern parts of Ukraine, Russia has set its sights on invading yet another former Soviet territory, this time to the west: Moldova.”
The report explained, “The main goal in this area has been gradually reduced to one of just avoiding a new armed conflict, rather than solving the conflict and reintegrating the country,” the Swedish report said. “This approach and practice lead to the preservation of the current defective status quo and moved it even further away from a conflict settlement.”
It turns out the status quo was not just defective but also untenable.
Samagi Jana Balawega MP Kumara Welgama says that all the President’s Expenditure Heads should be cut to the last rupee during the next Parliamentary session and then the President will have to resign.
He has suggested that the executive presidency should be abolished within three months after the appointment of the Chief Justice as the acting President.
He has sent a letter to the Speaker with seven proposals stating that he will not support any no-confidence motion or interim government resolution and will not support any government action while Gotabhaya Rajapaksa is in office.
The full article is below.
It is reported that the distribution of Thriposha has been stopped by the offices of the Medical Officers of Health island-wide.
For a long time, the Government of Sri Lanka has provided free Thriposha as a remedy for malnutrition in pregnant mothers and young children.
But in the face of the current economic crisis, it has stalled.
A spokesman for Lanka Thriposha had told the media that production of Thriposha had been suspended for three months now due to lack of raw materials.
The Samagi Jana Balawegaya says that it hopes to hand over the no-confidence motion against the government to the Speaker next week.
Ashok Abeysinghe, a Member of Parliament for the party, said that they had recently requested independent parliamentarians who were members of the ruling party earlier to sign the no-confidence motion and that the people of the country were watching what they were doing.
He added that about 125 had stated that they would support the no-confidence motion.
Although President Gotabhaya Rajapaksa has invited all party leaders in Parliament today (29) to discuss the formation of an all-party government, a small group of parties such as the Sri Lanka Freedom Party – Wimal – Gammanpila – Vasudeva have decided to meet the President separately.
This was stated by the General Secretary of the SLFP Dayasiri Jayasekara to the media yesterday.
If the discussion is about the formation of an all-party government and the proposal was made by the same 11 parties in the Maithri-Wimal alliance, then there is a lot of speculation in the political arena as to what they have to do to meet the President separately and secretly without the presence of other parties.
Litro Gas has decided to decrease the number of domestic gas cylinders released to the market on a daily basis by more than half.
Accordingly, the number of cylinders issued daily will have to be reduced from 80,000 to 30,000, the company’s new chairman Vijitha Herath has told the media.
Sri Lanka needs about 30 million US dollars a month to meet its monthly demand for gas, which has to be reduced due to the current foreign exchange crisis.
Accordingly, only 28% of gas consumers in cities where firewood is not available will have to supply gas and others will have to use firewood, he said.
Three police constables have been arrested for shooting dead a man and injuring several others during a public protest in Rambukkana, the Police Media Unit said.
Senior DIG Ajith Rohana said that the three police constables who were part of the shooting team were arrested in the Kundasale area in Kandy last night (28).
The Embassy of Sri Lanka in Beijing in collaboration with the China Sri Lanka Association for Trade and Economic Cooperation (CSLATE) and the Beijing Wanhongtai Technology Group Co., Ltd. Company opened the first Sri Lanka Tea Shop and Cultural Centre in Beijing on 20 April 2022 in the prestigious Xiu Shui Street, Chaoyang District. The shop with its large outdoor area has been made available to the Ambassador free of charge. This initiative is among a range of activities undertaken by the Embassy to commemorate the 65th Anniversary of establishing diplomatic relations and 70th Anniversary of the Rubber-Rice Pact. The Deputy Secretary General of the Shanghai Cooperation Organisation (SCO), Government officials, representatives from Diplomatic Missions in Beijing, and the Chinese business community attended the event.
The Ambassador of Sri Lanka to Beijing, Dr. Palitha Kohona, addressing the gathering, said that this was a pioneering initiative to promote Ceylon Tea in China and thanked CSLATE and the Beijing Wanhongtai Technology Group Co., Ltd. Company for their inspiring vision. he also stated that this was the first Ceylon Tea Shop and Cultural Centre in China and he was hopeful that many more would follow. The Ambassador invited the attendees to encourage their friends to visit the tea shop to taste Ceylon Tea and relax. Ceylon Tea was among the top and leading black teas in the world due to its unique flavour and scent. Second Secretary (Tea Promotion) Sampath Perera demonstrated Ceylon Tea preparation. He also spoke of the seven regions of Sri Lanka that produce Ceylon Tea and their distinctive taste and aroma.
The invitees were later treated to Sri Lankan delicacies and Ceylon Tea.
The Embassy of Sri Lanka
Beijing
27 April, 2022
