Prime Minister Mahinda Rajapaksa says that the government is ready to hold discussions with the protesting youth groups at Galleface Colombo.
Accordingly, the Prime Minister has told Derana that he would invite them for discussions.
Extraordinary Gazette issued extending restrictions on 367 types of imported goods
An Extraordinary Gazette Notification has been issued extending the import restriction period for 367 non-essential import items.
This gazette notification has been issued by the Minister of Finance Mohamed Ali Sabri.
Many types of food, including fruits and dairy products, electrical appliances and beauty products are subject to these restrictions.
Youth’s protests for democracy should be properly understood – Sajith (VIDEO)
Opposition Leader Sajith Premadasa says that the youth have taken to the streets for democracy and that their protests should be properly understood.
Although the government took steps to save the lives of war heroes, the world knows who took revenge on war heroes, including Sarath Fonseka, who won the war, he said, adding that everyone knew who betrayed the dignity of war heroes.
The Leader of the Opposition said that he would not hesitate to take any constitutional decision beyond the no-confidence motion, an impeachment motion for democracy, to abolish the 20th Amendment and strengthen the 19th Amendment, and to abolish the executive presidency.
Sajith Premadasa has said that there is an opportunistic transfer of MPs and ministers today and that this is not what the people of this country are demanding.
The Leader of the Opposition made this statement to the media at the office of the Leader of the Opposition yesterday (12).
Maithripala Sirisena says SLFP will not have any more dealings with Government
Former President Maithripala Sirisena yesterday said the SLFP did not want to have any dealings with the Rajapaksas, and recollected that he was the first person to have broken ties with them.
“We will not have any dealings with this Government. We will not send them any more letters or have anything to do with them. All our meetings and discussions with the Government are over,” Sirisena said while addressing the SLFP’s Colombo District members.
He said the SLFP had made several proposals to the Government to help those who are badly affected economically, but they have been ignored.
“We are with those carrying placards for the Rajapaksas to go home,” he said.
He added that SLFP MP Shantha Bandara who took a State Ministerial post has committed political suicide. “Joining an unpopular Government like the present one is the end of his political career.“
Protestors prepare to celebrate Sinhala and Tamil New Year at Gotagogama
The protest that started on April 09th near the Galleface in Colombo to protest against the President and the government continues to be active today (13).
During the past four days, people from various parts of the island have set up tents near the Galleface and have been staying there, despite the rains.
They have named the protest camp ‘Gotagogama’ and are preparing to celebrate the Sinhala-Tamil New Year from there.
The protest is being organized by the people voluntarily without the leadership of any political party and is receiving the support of various professionals, artists and religious leaders.
This protest is sure to be marked as a new experience in the political history of Sri Lanka so far.
Essential food importers struggle to settle US $ 50mn owed to suppliers
Sri Lanka’s essential food importers are struggling to settle US $ 50 million owed to their suppliers, imported under credit terms, due to the ongoing foreign exchange shortage while facing large exchange losses, owing to the depreciation of rupee.
“US $ 50 million worth of essential items that we have brought through credit terms have already sold, based on Rs.203/US dollar exchange rate.
We were not informed there were no US dollars when we imported these goods. At the same time, the rupee has depreciated by 40-50 percent over the period, with increasing threat of bankruptcies among our trades,” Essential Food Importers and Traders Association (EFITA) Spokesperson Nihal Seneviratne told reporters in Colombo on Friday.
Although earlier suppliers shipped their goods based on trust, Seneviratne noted that the suppliers are now demanding payments in advance to ship essential goods, limiting essential food imports to the country.
At present, there are stocks of essential imported food items (except for food items) sufficient for a one-month period in the country. Thereafter, Seneviratne noted that the country needs to rely on essential goods imported from India, under the US $ 1 billion credit line.
“We are currently in negotiations with the Trade Ministry. We are still not aware of the allocation for essential food items under the US $ 1 billion Indian credit line,”
he added.
According to the EFITA, the country requires US $ 200 million to import essential goods per month.
Sri Lanka is facing a shortage of essential commodities such as rice, sugar, dhall, chickpeas, coriander etc as imported stocks are stuck in the Port of Colombo (as far back as November 2021), not being able to clear it in the current foreign exchange crisis, commodity importers complained.
They noted that port rent and container demurrages are accumulating on a daily basis (in some instances the cost per kg was Rs. 35-40), they pointed out.
Members of the Essential Food Commodities Importers and Traders Association have also imported and distributed food items such as dhall and rice on “Suppliers Credit” (DA terms) which are overdue for settlement and some suppliers are requesting payment.
This issue has been brought to the notice of the President in a letter dated March 1, 2022, P.M. Abeysekera, Consultant of Essential Food Commodities Importers and Traders Association said.
He added that there was a serious threat for food security in the country as most suppliers are reluctant to ship goods to Sri Lanka unless paid in advance.
As the Sinhala and Tamil New Year is fast approaching, the association has urged the President to intervene in this matter of clearing these food items from the port to avoid price hike due to short supply.
The Central Bank has told banks not to request dollars from the banking regulator’s depleted foreign currency reserves, and instead find it in the cash-short market as the country faces a major scarcity of dollars in the forex market.
This has resulted in several private banks being unable to open Letters of Credit (LCs) to importers even for essential items such as pharmaceutical products.
According to a Central Bank directive, commercial banks dealing in the inter-bank foreign exchange market have been restricted in maintaining foreign currency reserves and managing foreign exchange liquidity within the banking system.
SL’s inflation to peak at 28% in coming months before subsiding
Sri Lanka’s headline inflation could peak at 28 percent in the next couple of months from the 18.7 percent in March, as the full effects of the rupee float and the festive demand amid higher global commodities prices could set off a lengthy stretch of hotter prices.
The inflation rate as measured by the Colombo Consumers’ Price Index or CCPI that covers the prices in the Colombo District, has accelerated to 18.7% at end-March 2022, up from 15.1% a month earlier.
The food inflation in this index has also jumped from 25% to 30%. These increases in food prices have not been fully reflected in the overall inflation because of the low weightage assigned to food category at 28.1%.
Contrary to this, in the National Consumer Price Index or NCPI which covers the whole island has a higher weight at 44% for the food category. That index had recorded an inflation rate of 17.5% at end-February.
Once its numbers are released later in this month, the national inflation might accelerate to about 20%. Whatever the index used, it shows the signs of setting a galloping inflation – a sudden jump in the inflation rate from month to month – in Sri Lanka.
Though it is feared that it might degenerate to a hyperinflation – an increase in the inflation rate by 50% or more a month – the present case does not show evidence of reaching that level soon.
According to Dr. Nandalal Weerasinghe, who took over as Central Bank Governor last week, the headline inflation could climb to 25 percent and then up to 28 percent before any easing happens.
“Things would get worse before it gets better,” he said in response to a question from a reporter last Friday.
The 28 percent headline inflation is the highest since June 2008 when the headline inflation measured by the Colombo Consumer Price Index read as 28.2 percent.
Thereafter, the prices started easing before settling at single digit levels about 13 years starting from February 2009 to November 2021, when the inflation was recorded at 9.9 percent.
In March 2022, Sri Lanka recorded its highest headline inflation of 18.7 percent since November 2008.
“The inflation in the next three months has already taken place. It’s already too late for anyone to prevent inflation reaching 20 percent, 25 percent and 28 percent in the next three months,” Dr. Weerasinghe cautioned.
In an attempt to anchor the expectations, he also said that no one should believe that today’s actions would result in inflation turning the opposite direction tomorrow.
The monetary policy typically has a time lag and Dr. Weerasinghe said the results would only become visible after about several months.
The Central Bank on Friday gave a shock treatment to the Sri Lankan economy by raising the key policy rates by 700 basis points to deal with demand side inflationary pressures.
Govt extends begging bowl to foreign expatriates for few dollars more
Sri Lanka has decided to accept donations from the country’s expatriates in its quest of begging for a few dollars more while temporarily suspending its debt repayment pending a restructuring of those obligations consistent with an economic adjustment program supported by the International Monetary Fund (IMF).
The island nation’s foreign reserves stood at a paltry $1.93 billion at the end of March, with foreign debt payments of around $4 billion due this year, including a $1 billion international sovereign bond maturing in July.
In this background, the Central Bank has decided to accept US dollar donations from the Sri Lankans living abroad who were expressing their willingness to support the country at this crucial juncture by donating much needed foreign exchange to the Sri Lankan’s foreign reserves.
The well-wishers have been requeted make foreign exchange transfers to the following accounts maintained at respective banks by the CB, and it assures that such foreign currency transfers will be utilized only for importation of essential imports including food, fuel and medicines.
| Bank Name | Account Number | Swift Code |
| Deutsche Bank Trust Company Americas | 04015541 | BKTRUS33XXX |
| Bank of Ceylon London | 00088001249 | BCEYGB2LXXX |
| HSBC London | 39600144 | MIDLGB22XXX |
| BHF Bank – Germany | 0000739854 | BHFBDEFF500 |
Sri Lanka is now facing social, economic and financial distress leading to disturbances to normal lives of the people.
The authorities are taking measures to address the current situation of the country including taking steps to actively manage its debt obligations, finding immediate financial assistance from friendly nations and progressing with the discussions with the International Monetary Fund for a comprehensive programme.
, the positive impacts of such measures will be enjoyed by our people only in the medium to long term. However, urgent measures are needed to enhance the country’s foreign reserves position to meet day-to-day essential imports including food, fuel and medicines.
The Finance Ministry said that Sri Lanka has had an unblemished record of external debt service since independence in 1948.
Recent events, however, including the effects of the Covid-19 pandemic and the fallout from the hostilities in Ukraine, have so eroded Sri Lanka’s fiscal position that continued normal servicing of external public debt obligations has become impossible.
Late last month, the IMF assessed Sri Lanka’s debt stock as unsustainable. Although the Government has taken extraordinary steps in an effort to remain current on all of its external indebtedness, it is now clear that this is no longer a tenable policy and that a comprehensive restructuring of these obligations will be required.
Confronted by this hard reality, the Government has approached the IMF for assistance in designing an economic recovery program and for emergency financial assistance.
Government is also seeking financial help from its other multilateral and bilateral partners in order to alleviate the suffering that this extraordinary situation has imposed on the citizens of Sri Lanka
The Government intends to pursue its discussions with the IMF as expeditiously as possible with a view to formulating and presenting to the country’s creditors a comprehensive plan for restoring Sri Lanka’s external public debt to a fully sustainable position.
The Finance Ministry said that it shall therefore be the policy of the Sri Lankan Government to suspend normal debt servicing of all affected debts, for an interim period pending an orderly and consensual restructuring of those obligations in a manner consistent with an economic adjustment program supported by the IMF.
China reiterates its utmost help to debt-ridden Sri Lanka
China on Tuesday reiterated that it is doing its ”utmost” to provide assistance to debt-ridden Sri Lanka.
Asked about the reported request of Sri Lanka to China for monetary help to tide over the present crisis, Chinese Foreign Ministry spokesman Zhao Lijian on Tuesday reiterated his ministry’s previous remarks that China has been doing its utmost for Sri Lanka and will continue to do so.
”Since the establishment of diplomatic ties between China and Sri Lanka, the two countries have lent mutual support and understanding to each other,” Zhao told a media briefing in Beijing.
”China has been doing its utmost to provide assistance for the socio-economic development of SL and we will continue to do so going forward,” he said, reiterating what his ministry said on March 9.
Sri Lanka is not caught in a debt trap by China, according to the ialand nation’s ambassador in Beijing, as the Indian Ocean island nation seeks help to overcome its most severe economic woes in decades, a situation leading to public unrest and a political crisis for the government.
Speaking with the South China Morning Post on Monday,SL envoy Palitha Kohona admitted his country was in a difficult situation and had asked for financial support to help it get through the spiralling economic crisis which had led the government to raise interest rates, devalue its currency and curb imports of non-essential goods.
Sri Lankan Ambassador to China Palitha Kohona: “These things happen in democracies, but it doesn’t mean that the country doesn’t need, or is in the process of discouraging, foreign investments
The anger of its people, who have been struggling with shortages of oil, gas and some food staples, reached a peak in recent days, with protesters defying curfew and taking to the streets, demanding that President Gotabaya Rajapaksa resign.
“The current situation is difficult, but it’s the result of a combination of factors really coming together at this very moment and then, naturally, people of the country are feeling the pressure and the pain, and they have the freedom to protest,” Kohona said.
“The immediate need is to meet our debt repayments, and our crying need is to finance certain imports, like petroleum, gas and other items like that. No economy can last for too long without petroleum and gas, and without electricity.”
Authorities in Sri Lanka have asked for a US$1 billion loan from China to meet the existing repayments to China, and a further US$1.5 billion credit line to buy Chinese goods. Colombo is also expected to discuss a potential loan programme with the Washington-based International Monetary Fund “in the coming days”, according to Kohona.
“In addition, Sri Lanka has asked to use part of its US$1.5 billion currency swap with China to buy the goods it needs and there have been talks over whether Chinese investors can use the scheme to fund their projects in Sri Lanka.
Colombo has decided to resume negotiations on a free-trade agreement with China, which Kohona said was expected to open up the vast Chinese market to Sri Lankan products.
And last month, Chinese ambassador to Sri Lanka Qi Zhenhong said the financial support requested by Sri Lanka was being considered but he offered no details.
China accounts for 10 per cent or less of Sri Lanka’s external debt, and most of its debt is owed to international bondholders, according to Kohona.
Still, China is often accused of trying to overburden poorer countries such as Sri Lanka with debt by pushing its trillion-dollar Belt and Road Initiative.
Supply of 11,000 MT of rice to Sri Lanka
A consignment of 11,000 MT rice, which arrived in Sri Lanka today under the concessional Indian Credit Facility of USD 1 billion, was ceremonially handed over to the Government of Sri Lanka by officials of the High Commission of India. In addition to today’s consignment, 5000 MT of rice has been received in the past few days under the Credit Facility. With this, a total of 16,000 MT rice out of 40,000 MT to be imported by the State Trading Corporation from India, stands delivered.
2. It may be recalled that the USD 1 billion Credit Facility Agreement was signed between the Government of Sri Lanka and the State Bank of India on March 17, 2022. The delivery of rice was affected within less than one month of signing the Agreement. The supply is a part of the multi-pronged support extended from India to Sri Lanka in the last few months, which includes timely supply of fuel, other forms of economic and forex support etc.
3. The expeditious supply, before the Sinhala and Tamil New Year, is in line with the understandings reached regarding India’s support for Sri Lanka’s energy and food security. The assistance comes in the wake of a successful visit by the External Affairs Minister of India to Sri Lanka last month during which India’s continued support to the people of Sri Lanka was reiterated.
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Colombo
12 April 2022