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The US expresses willingness to enhance bilateral trade, investment, and tourism.

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The US expresses willingness to enhance bilateral trade, investment, and tourism.

Sri Lanka and the United States convened the fourth Sri Lanka-US Partnership Dialogue today (March 23), in Colombo, renewing their shared commitment to economic prosperity, sustainable development, democracy, human rights, and the rule of law.

Acknowledging that the US is already the largest market for Sri Lankan exports, both delegations reiterated their intent to explore new opportunities to enhance market access, bilateral trade, investment, and tourism.

The meeting was co-chaired by Minister of Foreign Affairs Prof. G.L. Peiris and the Under Secretary for Political Affairs of the US Department of State Victoria Nuland.

Both delegations reaffirmed their commitment to the bilateral relationship, firmly rooted in shared values as fellow democracies, and their intent to work together to further strengthen the partnership.    

Sri Lanka expressed its deep appreciation to the United States for the donation, in partnership with COVAX, of 3.4 million vaccines, and the provision of over USD 18 million in health equipment and other relief to address the COVID-19 pandemic in the past year.

The United States expressed its commitment to enhancing opportunities for the economic empowerment of women.

To that end, Sri Lanka welcomed the role of the US International Development Finance Corporation (DFC), which has increased its portfolio to USD 265 million in loans designed to support Sri Lanka’s small and medium enterprises, particularly women-owned businesses.

Sri Lanka also appreciated the provision of US funding to launch the first business accelerator in Sri Lanka, specifically aimed at women entrepreneurs.

Both countries committed to working together to address climate change and other environmental challenges. 

The United States welcomed Sri Lanka’s goal to produce 70 percent of electricity from renewable energy by 2030, and to attain carbon neutrality by 2050.

Ongoing US grant assistance to help meet these goals, including a five-year USD 19 million Sri Lanka Energy Program and support towards a floating solar plant, were noted with appreciation.

The United States informed its intent to continue supporting the sustainable development of Sri Lanka through the US Agency for International Development.

The US delegation reaffirmed its commitment to promote school nutrition and literacy among Sri Lankan children, in consultation with the Sri Lankan Government.

Sri Lanka appreciated the successful nutrition campaign conducted by Save the Children in 2021 which benefited over 106,000 primary grade students.

Sri Lanka and the United States resolved to continue cooperation on maritime security and work together to ensure a safe maritime domain in the Indian Ocean through the rules-based international order. In this context, the US strategy towards a free, open, and prosperous Indo-Pacific region, which promotes freedom of navigation and overflight, was noted as an important initiative.

Sri Lanka welcomed the impending arrival of the third High Endurance US Coast Guard Cutter transferred through the US Excess Defense Articles program. 

The United States noted the recently announced King Air program to strengthen Sri Lanka’s maritime monitoring capacity and respond to humanitarian and post-disaster needs. Sri Lanka welcomed US support in the prevention of smuggling and other illegal activities.

Both delegations welcomed ongoing bilateral defense and security sector cooperation, including US support for humanitarian demining and disaster relief, joint military engagements, human rights training for Sri Lankan officers, and exchange of visits, including by US ships and military officials. The United States resolved to explore opportunities to further expand counter-terrorism cooperation with Sri Lanka

The United States welcomed action taken by Sri Lanka to promote reconciliation and human rights in pursuit of development and prosperity. Sri Lanka outlined its progress in reconciliation, in promoting and protecting human rights, and in strengthening democracy, democratic institutions and practices, good governance, justice and the rule of law. The United States acknowledged progress in these areas, including efforts to reform the Prevention of Terrorism Act (PTA), the release of long-term PTA detainees, the justice reform agenda, and engagement with civil society representatives. The United States encouraged Sri Lanka to continue making progress on its commitments to reconciliation and human rights

Clearance of  imported food containers under Indian credit delayed 

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Clearance of  imported food containers under Indian credit delayed 

The use of the US $ 1 billion Indian credit line for the release of around 1500 containers of essential food commodities already imported from India and stuck at the port has been hampered since some of the shippers are not ready to accept payment in Indian rupees, a spokesman said.

The government signed an agreement with India to secure the credit line to import food items and medicines from India. In the wake of signing the agreement, Trade Minister Bandula Gunawardana said he gave instructions for the initiation of steps to get these cargoes released using the credit line.

However, a spokesman for the Essential Food Commodities Importers and Traders Association said a lot of formalities remain to be completed for the credit line to materialize.

He said payments should be made in Indian currency to shippers.

“Some of the shippers insist on payments in US dollars. We face this problem in securing the release of items already stuck at the port. We may be able to overcome this problem for future imports,” he said.

The importers had a meeting with the Finance Ministry yesterday and the day before in this regard.

Besides, he said a lot of paperwork remains to be done in this exercise even involving the Indian High Commission for approval of the suppliers.

Also, the spokesman said the prices of imported food commodities had increased at least by 30-40 percent due to the depreciation of the rupee value against the US dollar.

Dhal price has increased to 375-380 a kilo in the wholesale market. The prices of sugar, rice and spice varieties have also increased similarly “Imported rice prices range from Rs.130-160 a kilo,” he said. 

Power cuts of over 6 hours scheduled for today(24)

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Power cuts of over 6 hours scheduled for today(24)

Power cuts of 6 hours and 20 minutes for some areas in Sri Lanka and 5 hours for other areas were approved in two blocks for March 24 Thursday, Public Utilities Commission Chairman Janaka Ratnayake said as a forex crisis creates power shortages in the dry season.

Areas ABCDEFGHIJKL will have power cuts of 3 hours and 20 minutes from 0800am to 0600pm and 1 hour and 40 minutes from 600pm to 1100pm.

Areas PQRSTUVW will have power cuts of 4 hours from 30 minutes from 830am to 0530pm and 1 hour and 50 minutes from 0530pm to 1100pm.

A note for Ranil Wickremesinghe’s 73rd Birthday…

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A note for Ranil Wickremesinghe’s 73rd Birthday…

Former Prime Minister Ranil Wickremesinghe’s 73rd birthday falls today (24). This note is for his 73rd birthday.

After a two-year hiatus, Ranil Wickremesinghe was able to draw the attention of the entire political audience to the country yesterday. He was the ‘political star’ or the ‘man of the match’ at yesterday’s All Party Conference.

Wickremesinghe in his fully channelled consciousness on what he was doing and with good forethought attended the conference and hit the arrow directly piercing the brains of the Governor of the Central Bank of Sri Lanka (CBSL), Ajith Nivard Cabraal and the Minister of Finance, Basil Rajapaksa.

Yesterday can be considered as an opportunity for Ranil to show his potential as an individual, even though the UNP has suffered the biggest setback in its history and won only one National List seat. In fact, the UNP suffered the same fate because of Ranil’s mistakes. However, despite all these mistakes, Ranil proved yesterday that he is a person who cannot be ignored in the political arena.

In fact, the gist of yesterday’s All-Party Conference was that it was only Ranil Wickremesinghe who came forward with a clear mind and maturity to face the current economic crisis, while others, of all things, are either blinded by power already bestowed upon them or chasing a power that lies in a future reality. Those of neither tendencies may have no idea what the crisis befallen the country actually is.

In the midst of all the drama, Ranil stood out with his vast experience.

Ranil has already proven to be a failed leader in organizing a political party and attracting people to a party. But it should not be an obstacle for the country to take advantage of his vast political experience and international relations. His uncanny experience in politics and the relationships of the aforesaid nature are invaluable to the country, especially at a time when the country is facing a critical crisis regarding its future.

Ranil of the Opposition and Ranil of Power

Another thing to be reminded of is that Ranil of the Opposition and Ranil of Power in our experience so far are completely two different individuals, two personas that contradict with each other resembling a Jekyll and Hyde scenario.

Ranil’s version of Power so far has gathered his inner circle and let them play the game their way to the point in which his consciousness and concern on the power seized so hard being swept away is null. This reminisces the famous Sri Lankan proverb of a man being ‘brainless in power and powerless in brains.’

Ranil, therefore, should learn to secure his enlightened brain in the Opposition in Power as well.

Two years ago we wrote to Ranil adding wishes to his birthday and asking him to retire from politics. Given the current situation, we will not write it this time.

We wish Ranil Wickremesinghe on his 73rd birthday and wish him all the best for the sake of the country.

Nonetheless, it should also be noted that we do not know how this crucial moment will end.

President Gotabhaya invites Tamil Diaspora to join to develop the North

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President Gotabhaya invites Tamil Diaspora to join to develop the North

President Gotabhaya Rajapaksa has invited the Tamil Diaspora to invest in development activities in the Northern Province.

The President made this request when he called on the Assistant Secretary of State for Political Affairs of the United States Department of State Victoria Nuland who is on a visit to Sri Lanka yesterday (23).

Gotabhaya Rajapaksa briefed Nuland on the progress made at yesterday’s All Party Conference, its progress and the discussions to be held with the TNA on Friday.

Appreciating the move, the US Assistant Secretary of State pointed out the importance of holding talks with the Diaspora in Canada, the United States and European countries, and President Gotabhaya Rajapaksa has stated that he is keen to hold discussions with the Diaspora.

Following is a note posted on the President’s official Facebook page in this regard.

President Gotabhaya Rajapaksa’s new approach is a step forward in considering the situation facing the country over the decades and the efforts made to find a solution to it.

Import Licenses aggravate Sri Lanka’s Economic Crisis – Advocata

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Import Licenses aggravate Sri Lanka’s Economic Crisis – Advocata

367 goods determined as “non-essential” by the Ministry of Finance are allowed to import only by obtaining import license from the controller general of imports and exports control.

This move tightens already existing import restrictions on a series of imported goods ranging from electronic goods to fruits such as apples and oranges.

This policy change comes into effect in a market that is already facing acute shortages of essential goods. Imposing such a system of licensing will have a significant negative impact on an economy facing a severe crisis.

This step is the latest in an ever-tightening list of restrictions that have been imposed over the past two years. There is no evidence to suggest that this latest move will address the problem of the trade deficit any better than the previous policies in the same vein.

The authorities still seem to hope that an inflow from tourism will solve the balance of payments problem but current policies are threatening the long term sustainability of the export sector.

The proposed license regime will add to the costs of doing business. Net economic losses in the wider economy will increase as this restricts competition.

These economic inefficiencies will be transferred as costs that will have to be borne by consumers through higher prices, fewer jobs and reduced economic activity. This will add to the country’s economic woes and lead to new black markets and corruption.

The introduction of a licensing regime on imports has a negative impact on exports. This is due to some important items needed to produce exports need to be imported and because the profitability of import substitutes increases due to scarcity.

Advocata’s Academic Chair Dr. Sarath Rajapatirana comments that “Research done by Jagdish Bhagwati shows that a country’s trade strategy must be an export-oriented trade strategy. Implying equal incentives for export promotion as for import substitution”.

Therefore the current policy is counterintuitive. Investments will move away from exports to import substitutes and non-tradable goods sectors. Those who get import licenses will make high profits that will also induce what is called “rent-seeking”: A negative aspect of import licensing.

Import restrictions have caused market power to become concentrated among a few players in the supply of commodities such as tiles, rice, maize etc allowing them to enjoy supernormal profits, to the detriment of SME’s and consumers.

Costs of creating an import licensing regime include, losses in jobs as businesses will be put out of business, losses in output and misallocated resources.

The Advocata Institute calls for the immediate revocation of the policy decision. The government has taken some steps to address the macroeconomic imbalances, this needs to continue and be supported by comprehensive economic reform.

Macroeconomic reforms remain the key to addressing the foreign exchange crisis. Short term alternatives will further worsen economic conditions for both businesses and consumers alike.

With sound macro economic policy there will be no necessity for import controls. Advocata urges the government to eliminate import controls on consumer goods and if import restrictions are subject to some tariffs, apply the same rate to raw materials A lower rate tariffs on raw material will raise effective rate of protection and distort production and worsen shortages.

Existing import controls can jeopardize the future export potential of the country whilst significantly harming consumers.A large number of jobs will be lost as businesses are already experiencing the impact of shortages.Licensing creates a breeding ground for racketeering and corruption

UNP leader Ranil Wickremesinghe says the current crisis will continue for 5 years

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UNP leader Ranil Wickremesinghe says the current crisis will continue for 5 years

United National Party (UNP) leader and former Prime Minister Ranil Wickremesinghe fears the current crisis will continue for 5 years.

Speaking at the All Party Conference heldon Wednesday 23 , Wickremesinghe said that the two issues Sri Lanka is facing are to stabilize the economy in the next 2 years and to consolidate economic recovery.

“The reversal of economic policies has shaken the confidence between both the foreign and local investors.

This has resulted in many of our youth leaving the country. The only way to reverse the damage is if there is a consensus regarding the principles in relation to the country’s economic policy. Political parties must operate within this framework,” he said.

He said that the parties in Parliament must reach a national consensus on the short-term, medium term, and long-term policies for the country.

“This must be an open dialogue, where the Government should take the lead while the Opposition must be ready to respond.

To date we have not seen any transparency or commitment from the Government. They have failed to provide us with the relevant data nor have the tabled the full IMF report in Parliament,” Wickremesinghe said.

Wickremesinghe also said that the Central Bank and the Ministry of Finance must adhere to a single strategy and speak publicly in one voice

CTCLSA calls for  restructure of domestic debt not only foreign borrowing 

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CTCLSA calls for  restructure of domestic debt not only foreign borrowing 

 In the wake of mounting domestic  borrowings , stockbroking firm CTCLSA  has suggested the government to restructure domestic debt along with foreign  debt restructuring as both issues aggravated to critical level. 

   The Finance Ministry has tightened domestic borrowing while controlling expenditure of ministries, departments and state institutions owing to its rising debt payments this year.

As per the existing budgetary estimates, the government debt to GDP ratio is to decline to 101.7 per cent of GDP in 2022 from 102.8 per cent in 2021.

The Sri Lanka Government debt is projected to trend around Rs. 1.95 trillion in 2022 and Rs. 2.2 trillion in 2023 from Rs.1.65 trillion in 2021, according to econometric models and provisional estimates of the Finance Ministry.

The domestic debt service payment this year is around Rs.80.72 billion and it is expected to increase to a high level if the government fails to control its domestic borrowings.

Restructuring of foreign debt must be accompanied by a similar exercise on domestic debt to derive fuller benefits opines stockbroking firm CTCLSA.

 Following President Gotabaya Rajapaksa, indicating seeking International Monetary Fund’s (IMF) assistance to fix the ongoing economic crisis, CTCLSA believes the IMF may suggest a Debt Restructure for Sri Lankan debt given its classification of the same stands at an “unsustainable” state.

In a research note, CTCLSA said with Sri Lanka’s Public debt to Gross Domestic Product (GDP) ratio standing at 119% as of 31 December 2021, a restructure of both domestic and external debt would be ideal for the economy to move ahead with acceptable reforms that could avert any similar crisis in the foreseeable future.

However, IMF data from 1980-2020 for Domestic Debt Restructures (DDR) and External Debt Restructures (EDR) suggest that if restructured by averting a banking crisis, the economy under restructure would manage to avert any real contraction in GDP following such reform.

CTCLSA argued that a domestic debt restructuring can be designed to limit bank losses. 

For example, the impact of a sovereign domestic debt restructuring on banks’ balance sheets has in some cases been limited when the restructuring did not involve any principal haircut but was designed as reprofiling with moderate loss. 

CTCLSA said most of the Sri Lankan foreign debt is in the form of International Sovereign Bonds (ISBs,) whilst the domestic debt is in Treasury Bonds.

Therefore ministries, departments and state institutions have been directed to control spending for development projects by cutting down overheads throughout 2022, ministry guidelines revealed.

A ceiling on domestic borrowing is now under consideration due to adverse effects on economic growth and effective usage of public debt is essential for Sri Lanka at present, a senior official of the ministry said. 

A large amount of funds was mobilised from the domestic money market by the Central Bank (CB) on behalf of the government to meet debt service requirements as well as to meet essential expenditure of the government.

The CB also provided required financing to the government arising from the shortfall in government revenue and increased expenditure.

 Total domestic borrowings will be raised by way of issuing Treasury Bonds, Treasury Bills, Sri Lanka Development Bonds (SLDBs) and Provisional Advance of the CB.

According to the latest data released by the Finance Ministry and published by the CB, the country’s total debt stock had ballooned to Rs.17.05 trillion by the end of October 2021, from Rs.15.12 trillion at the end of 2020, an increase of Rs.1.93 trillion during the nine months

Fourth Session of the Sri Lanka – United States Partnership Dialogue

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Fourth Session of the Sri Lanka – United States Partnership Dialogue

The following statement is released by the Governments of Sri Lanka and the United States of America on the occasion of the Fourth Sri Lanka – U.S. Partnership Dialogue held on 23 March, 2022 in Colombo. 

Sri Lanka and the United States convened the Fourth Sri Lanka – U.S. Partnership Dialogue on 23 March, 2022, in Colombo, Sri Lanka, renewing their shared commitment to economic prosperity, sustainable development, democracy, human rights, and the rule of law.  The meeting was co-chaired by the Minister of Foreign Affairs of Sri Lanka Prof. G.L. Peiris and the Under Secretary for Political Affairs of the U.S. Department of State Victoria Nuland. 

Both delegations reaffirmed their commitment to the bilateral relationship, firmly rooted in shared values as fellow democracies, and their intent to work together to further strengthen the partnership.   

Sri Lanka expressed its deep appreciation to the United States for the donation, in partnership with COVAX, of 3.4 million vaccines, and the provision of over $18 million in health equipment and other relief to address the COVID-19 pandemic in the past year. 

Acknowledging that the U.S. is already the largest market for Sri Lankan exports, both delegations reiterated their intent to explore new opportunities to enhance market access, bilateral trade, investment, and tourism.  The United States expressed its commitment to enhancing opportunities for the economic empowerment of women.  To that end, Sri Lanka welcomed the role of the U.S. International Development Finance Corporation (DFC), which has increased its portfolio to $265 million in loans designed to support Sri Lanka’s small and medium enterprises, particularly women-owned businesses.  Sri Lanka also appreciated the provision of U.S. funding to launch the first business accelerator in Sri Lanka, specifically aimed at women entrepreneurs. 

Both countries committed to working together to address climate change and other environmental challenges.  The United States welcomed Sri Lanka’s goal to produce 70 percent of electricity from renewable energy by 2030, and to attain carbon neutrality by 2050.  Ongoing U.S. grant assistance to help meet these goals, including a five-year $19 million Sri Lanka Energy Program and support towards a floating solar plant, were noted with appreciation.   

The United States informed its intent to continue supporting the sustainable development of Sri Lanka through the U.S. Agency for International Development.  The U.S. delegation reaffirmed its commitment to promote school nutrition and literacy among Sri Lankan children, in consultation with the Sri Lankan Government.  Sri Lanka appreciated the successful nutrition campaign conducted by Save the Children in 2021 which benefited over 106,000 primary grade students.  

Sri Lanka and the United States resolved to continue cooperation on maritime security and work together to ensure a safe maritime domain in the Indian Ocean through the rules-based international order.  In this context, the U.S. strategy towards a free, open, and prosperous Indo-Pacific region, which promotes freedom of navigation and overflight, was noted as an important initiative.  Sri Lanka welcomed the impending arrival of the third High Endurance U.S. Coast Guard Cutter transferred through the U.S. Excess Defense Articles program.  The United States noted the recently announced King Air program to strengthen Sri Lanka’s maritime monitoring capacity and respond to humanitarian and post-disaster needs.  Sri Lanka welcomed U.S. support in the prevention of smuggling and other illegal activities.      

Both delegations welcomed ongoing bilateral defense and security sector cooperation, including U.S. support for humanitarian demining and disaster relief, joint military engagements, human rights training for Sri Lankan officers, and exchange of visits, including by U.S. ships and military officials. The United States resolved to explore opportunities to further expand counter-terrorism cooperation with Sri Lanka.

The United States welcomed action taken by Sri Lanka to promote reconciliation and human rights in pursuit of development and prosperity.  Sri Lanka outlined its progress in reconciliation, in promoting and protecting human rights, and in strengthening democracy, democratic institutions and practices, good governance, justice and the rule of law.  The United States acknowledged progress in these areas, including efforts to reform the Prevention of Terrorism Act (PTA), the release of long-term PTA detainees, the justice reform agenda, and engagement with civil society representatives.  The United States encouraged Sri Lanka to continue making progress on its commitments to reconciliation and human rights.   

Both delegations expressed strong support for ongoing cooperation between the two countries in education and culture.  The United States emphasized the value of educational exchanges, highlighting the 70th anniversary of the U.S.-Sri Lanka Fulbright Program and its contribution to Sri Lanka’s development. The United States expressed interest in working together to further expand opportunities for university partnerships and overseas study for Sri Lankan students that would benefit both countries.  Both delegations welcomed ongoing efforts to preserve and celebrate Sri Lanka’s rich cultural heritage through cultural heritage funding received from the U.S. over the last 17 years.  The delegations decided to continue collaboration to provide English Language teaching, teacher training, curriculum development, and other support to strengthen Sri Lanka’s education sector.  

Sri Lanka and the United States emphasized the importance of the bilateral relationship, and decided to continue cooperation on a broad range of areas to further strengthen the partnership for mutual benefit. 

Ambassador Kananathan presents Credentials in Guinea

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Ambassador Kananathan presents Credentials in Guinea

Sri Lanka High Commissioner in Kenya Veluppillai Kananathan presented the Letter of Credence appointing him as the Ambassador of Sri Lanka to Guinea with residence in Kenya, to His Excellency Mamady Doumbouya, President of Guinea at the Presidential Palace in Conakry on 11th March, 2022.

After the presentation of credentials ceremony, President Doumbouya invited the Ambassador of Sri Lanka to a brief meeting to exchange views on the status of bilateral relations and other issues of common interest. At the outset the President of Guinea said that he was delighted to receive Ambassador Kananathan as the first Ambassador from Sri Lanka presenting Credentials in Guinea and remarked it as ‘historic’ in the bilateral relations between the two countries.

Ambassador Kananathan conveyed the greetings and best wishes of President Gotabaya to President Doumbouya. In response, President Doumbouya thanked the Ambassador and requested him to convey his felicitations and sincere good wishes to President Gotabaya Rajapaksa.

After sharing views on the prospect of maintaining close relations between the two countries, the President and the Ambassador underlined the need to activate the diplomatic relations between the two countries into a performing cooperation involving promising economic activities to reach its true potential.

Ambassador Kananathan informed the President of Guinea that the Sri Lanka government headed by President Gotabaya Rajapaksa in Sri Lanka had successfully handled the COVID-19 pandemic including the new variant in Sri Lanka with effective governance, strategy for epidemic prevention and control measures as well as inoculated more than 81% of the population against the COVID-19. President Doumbouya commended the effective and dynamic vaccination drive lead by President Gotabaya Rajapaksa in Sri Lanka and wished him every success in his efforts to swiftly revive the pandemic affected economy.

Further, Ambassador Kananathan briefed the President of Guinea on the progress achieved in addressing the post-conflict issues and the commitment of the Government of Sri Lanka to address all remaining issues expeditiously. He also said that the internal mechanisms established in this regard are performing well to reach the goals efficaciously. The President of Guinea responded saying that Guinea will support Sri Lanka at the multilateral forums in order to recognize Sri Lanka’s efforts to achieve the identified targets to resolve the post-conflict issues.

President Mamady Doumbouya recalling Ambassador Kananathan’s connections with Guinea as an entrepreneur in Africa and his past role as Adviser on Investments to the former President of Guinea Alpha Condé, thanked him for bringing in foreign investments in maize cultivation and sugar industry through the Investment Promotion Agency of Guinea (APIP). The President further said that as Ambassador to Guinea he could bring more investments to Guinea from Sri Lanka to invest in diverse fields under the most beneficial and lucrative terms and conditions presented for FDIs in Guinea, which will create a win-win situation.

The President remarked that as a friend of Guinea who was familiar with Africa and in particular with Guinea and well-informed of the potential areas for cooperation to be developed, Ambassador kananathan had the exceptional capacity to enhance the political and economic relations between Sri Lanka and Guinea for the benefit of both countries. The meeting ended with President assuring the Ambassador Kananathan of his government’s support and wishing him good luck to achieve the identified goals and objectives in the relations between Sri Lanka and Guinea.

High Commission of Sri Lanka

Nairobi

23 March, 2022

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