A bilateral meeting took place between Minister of Foreign Affairs G.L. Peiris and Minister for Foreign Affairs and Local Government of New Zealand Nanaia Mahuta, 22 June on the sidelines of the CHOGM Summit in Kigali, Rwanda.

Foreign Minister Peiris briefed his New Zealand counterpart about the staff level discussions currently taking place with the IMF in Colombo and the support which the country is receiving from bilateral donors as well as multilateral institutions in respect of supplies of food, fuel and medicines. He underlined the importance of bridging finance during the next few weeks. The New Zealand Foreign Minister agreed to look into the possibility of support from New Zealand and the Commonwealth.

Minister Peiris requested the assistance of New Zealand with regard to the development of Sri Lanka’s dairy industry and agro based industries with a particular reference to the supply chain and logistics.  Minister Peiris explained how the economic challenges in Sri Lanka have been aggravated by the impact of COVID-19.

The two Ministers discussed cooperation in the fields of higher education and vocational education with an emphasis on disciplines like computer and information technology intended to make education more relevant from the standpoint of livelihoods. They also discussed cooperation in ocean related issues, given the importance both Sri Lanka and New Zealand attach to matters such as climate change, global warming and conservation of ocean resources.

The two Ministers shared thoughts about the future of the Commonwealth as a force for the good of humanity in the modern world.

Foreign Minister also held bilateral discussions with Minister of Foreign Affairs, International Business and Diaspora Relations of Dominica Dr. Kenneth Melchoir Darroux on closer collaboration with the Caribbean region in the fields of trade, tourism and working together in international fora.

Ministry of Foreign Affairs

Colombo

23 June, 2022

A meeting between Minister of Tourism and Lands of Sri Lanka, Harin Fernando and the Travel Agents of France was organized by the Embassy of Sri Lanka in Paris, in collaboration with the Sri Lankan Airlines at the Embassy Premises on 20June, 2022 to promote Sri Lanka Tourism in France.

The event commenced with a beguiling audio visual titled: “Sri Lanka at a Glance”.  Welcoming the guests, the Ambassador of Sri Lanka to the French Republic and the Permanent Delegate to the UNESCO, Professor Kshanika Hirimburegama expressed that tourist arrivals from France breathes life to the Sri Lanka tourism industry, strengthening bilateral relations and people-to-people contact of two nations. She further added that Sri Lanka is a resilient nation which will overcome the current challenges and the friendship and solidarity extended by France was appreciated.

In his comprehensive presentation, Minister Fernando introduced Sri Lanka as a safe destination of historical monuments, natural wonders, unique lifestyles and delicious cuisine. The Minister urged a cross section of leading Travel Agents in France to encourage the friendly people of France to continue visiting Sri Lanka, which is known worldwide as one of the most exotic tourists’ destinations and assured the visitors of age-old traditional hospitality and warmth, despite the unprecedented times of difficulty.

He said that Sri Lanka is swiftly addressing all issues of concern with the assistance of its friends in the international community, and asked the visitors to have confidence in the people of Sri Lanka who would be pleased to see the solidarity of the French people at this juncture.

Aviation Manager, AVIAREPS (Sri Lankan Airlines), Philippe Boucolon made a presentation on ” Travel with Sri Lankan Airlines” covering all  aspects of the national carrier.

More than Fifty Travel agents who are leading players in the tourism industry in France took part in the event. The interactive session of the event created a platform for France tour operators to sort out their issues, barriers and challenges directly and a digital screen at the venue played tourism promotion videos.

Embassy of Sri Lanka

Paris

23 June, 2022

Prime Minister Ranil Wickremesinghe has met with Indian Foreign Secretary Vinay Kwatra, Indian Secretary to the Department of Economic Affairs Ajay Seth and Chief Economic Advisor to the Indian Government Dr. V. Anantha Nageswaran.

In a Social Media remark, the Prime Minister noted that he held productive discussions with these parties and is looking forward to stronger bilateral ties between the two nations.

“I had a productive discussion with Indian Foreign Secretary Vinay Kwatra, Indian Secretary to the Department of Economic Affairs Ajay Seth and Chief Economic Advisor to the Government of India Dr. V. Anantha Nageswaran. I look forward to stronger bilateral ties with India.”

Ruling Party MP Dhammika Perera is due to be sworn in as a Minister of the Cabinet tomorrow (24).

Accordingly, the ex business mogul will be sworn in as the Minister of Technology and Investment Promotion.

MIAP

By P.K.Balachandran

Colombo, June 21 (Counterpoint): The Sri Lankan Prime Minister Ranil Wickremesinghe is to visit India shortly to meet his Indian counterpart Narendra Modi and other key Indian ministers, reliable sources said on Tuesday. The exact dates of the visit are being worked out, the sources added.

Both Wickremesinghe and Modi have been keen on meeting each other ever since Wickremesinghe assumed office in May. But the Sri Lankan leader had been busy trying to manage the unprecedented economic crisis his country has been undergoing. In addition, he had to manage a fractious parliament in which he had nil support to begin with. Adding to his challenges, was the controversy over his appointment as Prime Minister bypassing others with more support in parliament. Further, agitators on the streets were wanting both President Gotabaya Rajapaksa and Wickremesinghe to go home making way for a more legitimate all-party government. 

Therefore, Wickremesinghe’s primary task, upon taking over, was to establish his legitimacy by proving majority support in parliament even if it was to be only a temporary patchwork of disparate elements. Eventually, and to his credit, fairly quickly, he did stitch together an informal, but working coalition with the help of the Rajapaksas’ political party, the Sri Lanka Podujana Peramuna (SLPP).

While the irate citizens of Sri Lanka were wondering if their rulers would ever take time off from mindless politicking and attend to their crying needs, India was steadily sending aid in the form of food, fuel, fertilizer and medicine which has now reached US$ 3.5 billion in value.

But many wonder if India will be able to continue with such inputs on such a massive scale, for long. India has to factor in the fact that no other country has come in with help in any substantial way. While China has had geostrategic issues troubling it, the Western powers are waiting for the IMF’s investigations and recommendations and the Sri Lankan government’s response to those recommendations.

Against this background, a desperate Sri Lanka has asked India for an additional US$ 500 million to buy fuel. A request to push through this deal expeditiously is expected to be high on Wickremesinghe’s agenda for his talks with Prime Minister Modi, Finance Minister Nirmala Sitharaman and Foreign Minister S.Jaishankar.

On their part, the Indians, comprising Prime Minister Modi, his ministerial colleagues and the Indian Security Establishment, will be keen on getting firm commitments from Wickremesinghe on implementing or speeding up a number of projects for which MOUs had been signed, some way back in 2017.

New Delhi will also be worried about the controversy whipped up by certain circles in Sri Lanka over the US$ 500 million renewable energy projects in North Sri Lanka given to Gautam Adani. The project had been given in an unconventional way circumventing the normal tender procedure. There is controversy over the pricing of power also.  Modi and his ministers will be keen to know if Adani’s project will go through smoothly and unhindered.

The power situation in Sri Lanka is worrying not only Sri Lankans but also India. India, which imports most of its oil, cannot go on sending oil consignments to Sri Lanka. It is learnt that Adani might get a major coal-powered energy project also in Sri Lanka.

To rebuild the shattered Sri Lankan economy, IMF’s help is a must. And for its part, the Lankan government must implement the IMF’s recommendations without being influenced by lobbies with a vested interest in the old, rotten system. Western aid givers and lenders have made it clear that they will go by the results of the IMF’s mission and course Sri Lanka’s follow-up actions. An IMF team is currently in Sri Lanka on a 10-day visit.

Although queues in front of fuel and cooking gas outlets are still miles long, and shortages and high prices are hitting the lower middle class and the poor below the belt, sources close to the government see a silver lining. They point out that remittances from expatriate workers and earnings from exports have increased and are expected to further increase giving rise to the hope that with greater Western support following the IMF’s intervention, the economy will be on the road to recovery towards the end of the year.

NewsIn Asia

Statement by Ajith Nivard Cabraal on 21^st June 2022 re. the decision to allow “flexibility” of the LKR

The decision to allow the Sri Lankan Rupee (LKR) to be “flexible” from 7th March 2022 onwards is sometimes described by certain persons as being an “unilateral” decision of then Governor Ajith Nivard Cabraal. Therefore, this statement is to provide the factual position so as to set the record straight.

The decision to allow flexibility in the exchange rate was taken by the Monetary Board of the Central Bank of Sri Lanka based on a Monetary Board Paper dated 7th March 2022 submitted by all three Deputy Governors (Mr Mahinda Siriwardene, Mr Dammika Nanayakkara & Mrs Yvette Fernando), Director – Economic Research Department and Director – International Operations Department. The Board Paper stressed the need for changing the exchange rate policy immediately in order that the exchange rate acts as a “shock absorber” in the face of adverse developments in the global front on Sri Lanka’s already fragile Balance of Payments, including the increase of the crude oil price to nearly USD 140 per barrel and the worsening Russia-Ukraine war.   

Based on that Board Paper and the discussion at the meeting, the Monetary Board decided to “allow the market to have a greater flexibility in the exchange rate with immediate effect and communicate that the Central Bank is of the view that forex transactions would take place at levels which are not more than Rs. 230 per US dollar”. From the above it will be clear that, while the Monetary Board had expressed its “view” as to the level at which forex transactions would take place as a market guidance, a clear decision had been taken to allow for the flexibility of the LKR in the forex market. On the same day, a statement was issued to the media in line with the above decision.

Refer: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20220307_policy_package_to_support_greater_macroeconomic_stability_e.pdf

Further, within about a week of floating the LKR, the President made a formal announcement that the government had initiated discussions with the International Monetary Fund (IMF) for a programme.

Subsequently, Governor Cabraal resigned on 4^th April 2022, on which day, the LKR was trading at Rs. 289.73/299.99 per USD in accordance with the new “flexible” exchange rate policy as announced by the Monetary Board. After Governor Cabraal’s exit, the Monetary Board chaired by the new Governor Dr. Weerasinghe continued with the “flexible” exchange rate policy, whist the Government and CBSL also took a series of far reaching decisions which included the decisions to: sharply increase policy interest rates by 700 bps from 8^th April 2022 onwards, and to discontinue repayments of forex loans and interest from 12^th April 2022 onwards. In the meantime, the LKR continued to depreciate to a range of Rs. 364.23/377.50 against the USD by 12^th May 2022, at which point, the Monetary Board had apparently once again decided to “fix” the exchange rate at a new range between Rs.355.00/Rs.365.00 per USD. Such move to “fix” the exchange rate seems quite similar to the policy adopted by the Monetary Board chaired by Governor Professor W D Lakshman which “fixed” the LKR exchange rate at a range of Rs.199.00/203.00 per USD from 6th September 2021 onwards.  

It must of course be understood that there will always be conflicting opinions among stakeholders as to the value, timing and methodology to be followed in “fixing”, or “floating” or “pegging” a country’s currency. It is also quite possible that after decisions are taken to “float” or “fix” or “peg” the currency, others could, claim that the decision was right or wrong or implemented differently. However, it must be appreciated that the decision-making authority has to take its decision based on the prevailing circumstances, expert advice, practical ground conditions, judgement of future expectations and outcomes, etc. when viewed holistically. That is obviously why the Monetary Law Act provides the authority to the Monetary Board to change financial and monetary sector policies (including the exchange rate policy, interest rates, statutory reserve ratios, etc) when it deems appropriate to do so, from time to time.

It must also be appreciated that the implementation of policy measures is carried out by the professional and technical staff, of the Central Bank and they would naturally ensure that the policy measures being implemented are based on legal and binding decisions of the Monetary Board, which is the decision making authority, and not based on “unilateral” decisions of a single person.

A US Bank that had invested in a sovereign bond issued by Sri Lanka filing a lawsuit in a district court in Manhattan seeking settlement and interest would be a very unfortunate situation, said Leader of the Opposition Sajith Premadasa, addressing a meeting with a delegation of renewable energy at the Opposition Leader’s Office.

Accordingly, even foreign nations have made Sri Lanka a defendant before international courts, he pointed out, adding that the true nature of those so called economic super men has now been revealed.

The entire country has turned into one refugee camp, Premadasa went on, adding that the government that is numbed before the struggles of the people has turned Parliament invalid.

He reminded that the Prime Minister who questions the Samagi Jana Balawegaya’s move of boycotting Parliament today had sheltered the Rajapaksas by keeping his sole parliamentary seat vacant for an entire year.

MIAP