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CBSL Governor’s Report Card as at 20th June 2022!

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Prior to even comprehend his self-advocacy for service extension, the Report Card of the Governor of the Central Bank of Sri Lanka (CBSL), Nandalal Weerasinghe has to be looked into.

CBSL Governor’s Report Card as at 20th June 2022:

  1. Raised interest rates by a staggering seven per cent and killed all Small and Medium Enterprises (SMEs) and Construction sectors. Now, the economy is set to contract by eight per cent in 2022 as per the World Bank estimates.
  2. Defaulted on Forex loans and that resulted in many other problems:
    a) No Letters of Credit (LCs) for banks
    b) Rating downgraded to “D”
    c) No overseas financial institution is now giving a single loan to Sri Lanka
    d) Fuel, gas, coal, medicine, and other essential imports have to be paid for up-front, as credit cannot be arranged: therefore, there are massive shortages in the country.
    e) Almost all Forex funded infrastructure projects have been stopped.
    f) All Foreign Direct Investment (FDI) inflows have stopped.
    g) All local banks are highly vulnerable because their collective Sri Lankan International Sovereign Bond (ISB) holdings of about USD 3 billion (Rs. 1,080 billion) will now have to be provided for as bad debts, and therefore the banks will have to absorb those huge losses. When that is seen in the Bank balance sheets, the stock market will also completely collapse.
  3. Allowed the Rupee to slide from 299 to 377, before “fixing” at 360 from 12th May onwards; claimed that with the entry of IMF, the Rupee will strengthen, but it was the reverse that happened.
  4. Stopped “on-account” forex payments and thereby killed the entire food and beverage, IT, logistics and construction trades.
  5. Printed a record-breaking Rs.316 billion at double the speed of his two predecessors, without even offering an alternative.
  6. Plays the “blame-game” all the time, blaming past decisions for the current situation, but no cohesive plan has still been presented by him, while whatever his initiatives taken by him so far, have been leading to disastrous results.
  7. Works earnestly towards his re-appointment by shamelessly getting the CB staff and pensioners and some journalists to send recommendation letters about him regularly to the media.
  8. Spent lavishly on a big jaunt to Washington that cost the tax payer Rs.18 million, without any benefit whatsoever to the country.
  9. Alienated China so badly that it is likely that China may not be receptive to the restructuring arrangements as proposed by the IMF and others
  10. Has side-lined and undermined the Prime Minister and Finance Minister, having deceived and got the support of the President.
  11. Stopped the “loan moratorium” to SME businesses and others thereby crippling millions of livelihood opportunities in the entire country
  12. Hasn’t been able to arrange a single new line of credit or bridging finance from any country or institution, other than merely using the facilities that were arranged previously.

Has the CBSL Governor passed or failed?

You decide.

Sri Lanka sued by holdout Hamilton Reserve, other bondholders form group

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More than 30 bond holders said they have formed a group to negotiate with Sri Lanka after it defaulted on its foreign debt while but at least one holdout has sued the country in a US court demanding payment.

Hamilton Reserve, a St Kitts and Nevis based bank, has filed suit in the Federal Court of New York Southern District, advised by lawyers Bleichmar Fonti & Auld against Sri Lanka.

Some Sri Lanka bonds, especially those issued before 2015 have ‘single series’ collective action clauses which allow one bond holder with a large position to holdout and sue for full payment.

Hamilton Reserve had built up a 250 million US dollar blocking minority in a July 2022 bond which is part of a debt suspension, Bloomberg Newswires reported.

Later bonds have aggregate collection action clauses which require a large position to be held in all bonds making holdout difficult.

Sri Lanka has 12.6 billion US dollars of bonds.

Sri Lanka defaulted on foreign debt April 2012 after seven years of aggressive macro-economic policy involving monetary and fiscal stimulus to close an ‘output gap’.

Sri Lanka has hired Clifford Chance and Lazard as legal and financial advisors to restructure its foreign debt.

The Clifford Chance team is being headed by London-based partner, Deborah Zandstra, who has advised Argentina, the legal news portal law.com has reported said.

Other bond holders have formed a steering committee made up of of Amundi Asset Management, BlackRock Eaton Vance Management, Grantham, Mayo, Van Otterloo & Co. LLC, HBK Capital Management, Morgan Stanley Investment Management, Neuberger Berman, T. Rowe Price Associates Inc, and Wellington Management, legal advisors White and Case LLC said in a statement.

Rothschild & Co is financial advisors for the group.

The bondholders said they welcomed the “ongoing engagement with the International Monetary Fund (the “IMF”), and encourages the authorities to formulate and implement a package of meaningful reforms and fiscal adjustments to restore the conditions for sustainable and inclusive growth and support the long term prosperity of Sri Lanka.”

“The Group is ready to interact swiftly with the authorities and the IMF to help achieve a timely resolution of Sri Lanka’s debt related challenges.

“To this end the Group expects that the forthcoming process will be conducted in a manner consistent with the G20-endorsed Principles for Stable Capital Flows and Fair Debt Restructuring, which emphasise transparency, good faith negotiations and fair treatment among creditor classes.”

ECONOMYNEXT 

Dhammika Perera sworn-in before the Speaker

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Dhammika Perera was recently sworn in before the Speaker as a Member of Parliament for the Sri Lanka People’s Front.

He was elected as a Member of Parliament to fill the vacancy left by Mr. Basil Rajapaksa in the National List.

Decision taken by the SJB not to take over this govt. is accurate – Rajitha (VIDEO)

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The people of this country now believe that the decision taken by Samagi Jana Balawega not to take over this government under the Rajapaksas is correct, says Samagi Jana Balawewa MP Rajitha Senaratne.

He says that as long as the Rajapaksas are there to rebuild the country, there will be no world aid.

The MP says no fuel will be received from the Middle East as relief due to the anti-Muslim sentiments sown by the Rajapaksas.

However, he says that if an all-party government is formed tomorrow or correctly, there is a possibility of importing oil and gas on a payment basis after talking to the Middle East.

Senaratne emphasizes that a country suffers because of one person in the end.

Several members from the SLFP join the government as state ministers

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Agriculture Minister Mahinda Amaraweera says that several more SLFP MPs are due to join the government.

Accordingly, they will be sworn in as State Ministers in the future, he said.

Mahinda Amaraweera stated this while participating in a political discussion on Hiru TV.

Mahindananda censures Basil at the COPE meeting

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It is reported that the Member of Parliament for the SLPP Mahindananda Aluthgamage has made a strong accusation against the National Organizer of the party Basil Rajapaksa at the meeting of the Committee on Public Enterprises (COPE) held in Parliament yesterday (21).

Former CEB Chairman MC Ferdinando had earlier made a statement before the COPE Committee that Indian Prime Minister Narendra Modi had pressured President Gotabhaya Rajapaksa to hand over a proposed power project in Mannar to the Indian Adani Company, which had caused a great deal of controversy. Ferdinando later withdrew his statement and resigned as chairman of the Electricity Board.

During a meeting of the COPE yesterday, the statement was re-discussed. Mahindananda Aluthgamage has stated that this was not a statement made only at the behest of Ferdinando but a statement made with the consent of Basil Rajapaksa. Aluthgamage has said that Basil Rajapaksa had obtained a loan from India when he was the Minister of Finance and that he wanted to have the credit of it only for himself. Sources say that Basil Rajapaksa has been accused of trying to raise a diplomatic issue between Sri Lanka and India without allowing the loan to be taken further.

Former Minister of Agriculture Mahindananda Aluthgamage, a senior member of the SLPP, is currently working closely with a group of independent parliamentarians and is also involved in the project to make Dullas Alahapperuma the Prime Minister, sources said.

Police raid the Frontline Socialist Party HQ!

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It is reported that a police team has forcibly raided the headquarters of the Frontline Socialist Party yesterday (21).

Officers from the Mirihana Special Crime Investigation Unit and the Wellawatte Police had arrived at the party headquarters in Nugegoda in two jeeps and a motorbike.

When party members protested, police said they had come to arrest a man on a warrant.

However, when asked who the warrant holder was, the police did not have an answer and they turned away in the face of protests from party members, said Frontline Socialist Party Education Secretary Pubudu Jayagoda.

A former leftist guerrilla wins Colombia’s election

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Gustavo Petro’s past leaves a legacy of distrust to overcome

“We are writing a new history for Colombia, Latin America and the world,” declared Gustavo Petro, the winner of Colombia’s presidential election, in Bogotá on June 19th. “Change”, he said, “will open opportunity and hope for all Colombians in every corner of the national territory.” The portentous tone was understandable. When he takes office on August 7th Mr Petro will become the country’s first left-wing president. He offers a radical departure from two decades of right-wing and centre-right rule. Mr Petro’s running-mate, Francia Márquez, a 40-year-old environmental activist, will become the country’s first black vice-president.

Mr Petro won by 50.4% to 47.3%, a wider than expected margin, in a run-off against Rodolfo Hernández, a property tycoon. His 11.3m votes, helped by a record turnout of 58%, mark the highest tally in Colombia’s electoral history. Mr Petro is a former mayor of Bogotá and once belonged to m19, a leftist guerrilla group. His win is part of a broader trend in Latin America in which leftists with iconoclastic agendas are winning elections. Mr Petro said his government would “develop capitalism, not because we adore it, but because we have to overcome premodernity and feudalism.”

His win was a victory for press-the-flesh campaigning over social-media savvy. With polls forecasting a tight race Mr Hernández, who reached the second round thanks mainly to finger-jabbing rants on TikTok, needed to mobilise conservative and centrist voters. But in the final week he cancelled media appearances and flew to Miami, saying his life was at risk. His standing among conservative types took a further hit when a video emerged of him dancing to reggaeton on a yacht in the presence of a dozen young women in bikinis.

Mr Petro cut a more statesmanlike figure. Having previously appeared behind bulletproof shields at big rallies, he spent the last week gamely chopping sugar-cane in the Andes, riding across Colombia’s eastern plains and picking coffee in the agricultural heartland. Mr Petro had run for the presidency twice before, leaving his movement, Pacto Histórico, well organised and effective at mobilising grassroots support.

Nevertheless, many Colombians remain deeply distrustful of their president-elect. Polls taken before the election found that he was less popular among older voters who lived through the 1980s and 1990s, a particularly violent period of the country’s long-running civil war. For many such voters Mr Petro’s membership of m19 is difficult to swallow. Others fear that his plans for increased social spending and curtailed oil exploration could sink an economy that has been one of the region’s most consistently strong performers. The imf reckons Colombia will grow by 5.8% in 2022.

The coming days should provide clues to the new government’s direction. Pacto Histórico will hold only 15% of seats in the Senate and the Chamber of Representatives, so Mr Petro will have to seek alliances. He will also reveal pivotal members of his cabinet. “The tone will be set by his minister of finance,” says Juan Carlos Echeverry, a former finance minister and head of Ecopetrol, the state oil firm.

It is not clear what Mr Petro will do if he cannot build an effective coalition. He has a reputation for authoritarianism, derived in part from his time as mayor of Bogotá and his closeness—often exaggerated by his opponents—to the regime of Nicolás Maduro, the autocratic leader of Venezuela, a country with which Mr Petro plans to normalise ties. Many fear that Mr Petro’s plans to “democratise” Colombia’s institutions means stuffing them with his followers.

Mr Petro’s win is also part of a wider regional shift. Following the elections of left-wing candidates in Mexico, Peru and Chile, Latin America’s recent political swing has drawn comparison to the “pink tide” of the early 2000s, when left-leaning presidents dominated the region. But their recent success owes less to ideology than to strong anti-incumbent sentiment and a growing distrust of conventional politics. According to one poll 81% of Colombians see corruption as one of the country’s main problems, ahead of inequality (58%) and insecurity (57%). Only 5% have a favourable opinion of the country’s political parties. In 2019 and 2021 protests that racked the country were ferociously repressed by the police, apparently with the government’s approval. That left many younger people distrustful of the political establishment.

Many observers had feared that violence would also plague the election. But the vote was peaceful. Mr Hernández made a short concession speech shortly after the polls closed. Mr Petro struck a conciliatory tone at his victory rally, promising that his opponents would be welcome to discuss policy and that he would not bully his critics.

As night fell in Cali, a city badly affected by last year’s protests, the streets reverberated to the sound of cars honking in celebration. “Petro represents change,” said Paola Quiñonez, a human-rights activist who took part in the demonstrations. “If the economy suffers, that’s ok. The people have lived through hunger, poverty and insecurity before. The people will hold on.”■

The Economist

CoPE to obtain oath from officials summoned to Committee

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The Committee on Public Enterprises (CoPE) has decided to obtain an oath from officials summoned to the Committee. The decision was made during the special CoPE meeting held today (21).

Accordingly, from thereon all officials entering CoPE will be subject to an oath on their testimonies at the Committee.

Chairman of the Ceylon Electricity Board (CEB) M.M.C Ferdinando who attended the CoPE on June 10 subsequently withdrew a statement he had made regarding the President, leading to controversy.

It is in this backdrop has the CoPE made the above decision.

The CEB Chairman has been summoned to appear before the Committee on June 23, based on the letter he had submitted to the Committee on June 11. CoPE Chief Charitha Herath noted that a decision regarding the withdrawal of Ferdinando’s comments about the President from the Committee report will be made thereafter.

MIAP

PM holds discussions with Deputy Ambassador of China

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Prime Minister Ranil Wickremesinghe held discussions with the Deputy Ambassador of China, H.E. Hu Wei, this morning (21).

During the discussions the Prime Minister re-iterated Sri Lanka’s adherence to the “One China Policy”. He also stated that Sri Lanka was looking forward to discussing the debt restructuring with China.

The Chinese Deputy Ambassador inquired about Sri Lanka’s food security programs and re-assured the Prime Minister that China would be donating rice to Sri Lanka to help ease the food crisis.

Prime Minister’s Media Division
21st June 2022