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Govt pauses key state enterprise reforms until post-election period

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October 14, Colombo (LNW): The Sri Lankan government has placed major decisions concerning the restructuring of state-owned enterprises, including SriLankan Airlines and the potential transfer of Mattala International Airport, on hold until after the general election, a report by Daily Mirror claimed citing a senior official.

The election, scheduled for November 14, 2024, has prompted the government to delay actions on key initiatives.

Under the previous administration, the State-Owned Enterprises Restructuring Unit was set up to oversee the divestment of 130 state-run businesses.

Amongst these were significant entities like Sri Lanka Insurance, SriLankan Airlines, Sri Lanka Cashew Corporation, and Sri Lanka Telecom.

However, following the change in leadership under President Anura Kumara Dissanayake, the board of the restructuring unit resigned, leaving its future uncertain, according to report.

When asked about the status of the restructuring unit, a high-ranking official from the current administration stated that no decision regarding the unit or any state-owned enterprise would be made until after the general election.

This pause reflects the government’s decision to approach these issues with caution during the election period.

One of the focal points is SriLankan Airlines, the national carrier, which has been struggling financially.

The official clarified that the airline would not be sold off outright, but its future will be discussed in consultation with a newly appointed management team.

This approach signals a potential shift in strategy, away from privatisation towards a more collaborative model of development.

Additionally, the previous government had planned to transfer operations of Mattala International Airport—a project valued at $209 million and initiated during the tenure of former President Mahinda Rajapaksa—to a joint India-Russia venture.

However, this transfer has been stalled, pending approval from the Attorney General’s office for the commercial agreement.

Beyond these major entities, other significant infrastructure projects are also in limbo. The construction of the Colombo-Ratnapura expressway and stages three and four of the Central Expressway, which connects Kurunegala to Kandy and Dambulla, remains uncertain.

Progress on the Kadawatha-Meerigama stretch of the Central Expressway has been delayed due to ongoing negotiations with the EXIM Bank of China, which has not yet disbursed funds following the country’s recent debt restructuring efforts.

Whilst the government acknowledges the importance of these initiatives, its current focus is on stabilising the political climate through the upcoming election.

The decisions regarding these critical state-owned enterprises and infrastructure projects are expected to be revisited after the elections, with further clarity on the future direction of the country’s economic and development policies.

SL’s economy sees signs of stabilisation as financial risks ease: CB

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By: Isuru Parakrama

October 14, Colombo (LNW): The Central Bank of Sri Lanka (CBSL) has reported encouraging signs of economic recovery, noting a steady reduction in domestic macro-financial risks.

Whilst challenges remain, the gradual restoration of financial stability is being facilitated by the country’s declining inflation, lower interest rates, and strengthened currency, creating a more favourable business environment.

The Central Bank attributes much of this improvement to its accommodative monetary policy, which has helped correct interest rate anomalies and reinvigorate credit growth.

The reduction in risk premiums and enhanced credit availability, particularly for the private sector, have bolstered the economic recovery.

Additionally, a shift in financial exposure away from the public sector and towards the private sector indicates better resource allocation, further supporting this progress.

Sri Lanka’s fiscal performance in 2024 has exceeded expectations, despite the significant challenges it continues to face. Key fiscal balances have improved due to robust revenue-based consolidation efforts.

The successful Domestic Debt Optimisation (DDO) process completed in 2023 and the forthcoming External Debt Restructuring (EDR) finalisation in 2024 are expected to reduce uncertainty and restore confidence among investors.

The stock market also reflects these positive trends, with the All Share Price Index showing a year-to-date increase after a period of uncertainty linked to the ongoing election cycle.

Financial institutions have demonstrated resilience during the first half of 2024, with banking sector indicators, such as credit quality, liquidity, and capital adequacy, showing marked improvements.

Bank profitability has been significantly boosted by an increase in net interest incomes, although the non-performing loan (NPL) ratio remains a concern.

The improved provision coverage ratio indicates banks are better prepared to manage potential risks.

Amid falling interest rates and a gradual resurgence in domestic demand, the banking sector has witnessed renewed credit growth, particularly within the private sector.

Meanwhile, the state-owned enterprises’ (SOE) reliance on banking sector credit has decreased, largely due to the Central Government’s intervention in absorbing certain SOE credit facilities.

However, despite these positive trends, lingering effects from previous economic challenges, such as elevated price levels, reduced real income, and rigid labour market conditions, continue to pose obstacles to sustained macroeconomic and financial stability.

Looking ahead, the Central Bank anticipates that the financial system will continue to improve, with asset quality expected to strengthen and capital buffers to grow.

The CB urges careful risk management as the economy stabilises further and moves towards long-term recovery, despite the ongoing challenges posed by both domestic and global factors.

Sri Lanka vehemently condemns Israeli attacks on UN Peacekeepers in Lebanon, calls for investigation

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By: Isuru Parakrama

October 14, Colombo (LNW): Sri Lanka, together with 39 other nations, has vehemently condemned recent Israeli attacks on the United Nations peacekeeping mission in Lebanon (UNIFIL), calling for a thorough investigation into the incidents.

Amongst those injured in the escalating violence are two Sri Lankan peacekeepers, prompting an outcry from Sri Lanka’s Foreign Affairs Ministry.

The attacks occurred in southern Lebanon, where Israeli forces have launched a ground offensive against Hezbollah militants.

At least five UNIFIL peacekeepers, including the two Sri Lankans, have been wounded as a result of the conflict.

In response, the Sri Lankan Foreign Affairs Ministry issued a stern statement on Friday, expressing deep concern for the safety of its peacekeepers and the inviolability of UN premises.

Sri Lanka strongly condemns the attack on UNIFIL’s headquarters in Naqoura, South Lebanon, which injured two Sri Lankan peacekeepers. We are in contact with UNIFIL to ensure they receive immediate medical attention and wish them a swift recovery,” the statement read.

The ministry reaffirmed Sri Lanka’s commitment to upholding the safety and security of UN personnel worldwide and underscored the nation’s pride in its peacekeepers’ brave contributions to global peace missions.

The joint statement issued on Saturday by 40 countries, including Sri Lanka, echoed the call for immediate cessation of attacks on peacekeeping forces. The statement demanded an investigation into the incidents, stressing the vital role UNIFIL plays in mediating and supporting peace during the ongoing conflict.

Such actions must stop immediately and should be thoroughly investigated,” it stated.

The countries also urged all parties involved in the conflict to guarantee the security of UN personnel so they can continue their essential work.

Several nations, including Spain, France, and Italy, have already condemned the attacks as “unjustifiable,” whilst U.S. President Joe Biden called for Israel to cease targeting UN peacekeepers, adding global pressure to the situation.

UNIFIL has reported multiple attacks on its facilities, including shots deliberately fired at its headquarters in Naqoura.

As tensions rise in the region, Sri Lanka and the international community remain firm in their demand for the protection of peacekeeping forces and the continuation of their mission in Lebanon.

Decision on controversial Grade 05 Scholarship Exam leak expected today (Oct 14)

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By: Isuru Parakrama

October 14, Colombo (LNW): A final decision regarding this year’s Grade 05 Scholarship Examination, following allegations of a question paper leak, is expected to be announced today (14).

The Commissioner General of Examinations is scheduled to hold a special press conference to address the matter.

Reports suggest that despite the allegations, authorities have opted not to reconduct the examination. This decision comes after investigations revealed that only three questions were leaked, rather than the entire paper as initially feared.

The evaluation of answer sheets, which had been temporarily halted amid the controversy, is set to resume immediately following the announcement.

Several committees were appointed to investigate the matter, and they concluded that the leak was limited to just a few questions.

In addition to the internal investigation, the Criminal Investigation Department (CID) launched its own probe into the alleged leak.

The matter has sparked widespread concern among parents, some of whom held press conferences and staged protests, claiming the entire exam had been compromised.

The issue gained further attention when the concerned parents raised their grievances with President Anura Kumara Dissanayake, resulting in the temporary suspension of answer sheet evaluations.

The upcoming announcement is expected to bring much-needed clarity on how the examination process will move forward amidst these concerns.

Over 130,000 affected by severe weather as relief efforts intensify across island

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By: Isuru Parakrama

October 14, Colombo (LNW): The Disaster Management Centre (DMC) has reported that a staggering 134,484 individuals from 34,492 families across 12 districts in Sri Lanka have been severely impacted by the ongoing adverse weather conditions.

The heavy rains and flooding have so far claimed three lives, with rescue and relief operations continuing in affected areas.

According to the DMC, 6,963 people from 1,753 families have been forced to seek refuge in 81 established relief centres as the extreme weather continues to disrupt lives and livelihoods across the country.

In response to the crisis, local authorities and humanitarian organisations have ramped up their efforts, ensuring that those displaced are provided with essential supplies, medical aid, and shelter.

The DMC remains vigilant, with teams actively monitoring high-risk areas for further flooding or landslides, and issuing timely alerts to ensure public safety.

Advisory for heavy rain above 100 mm, thundershowers continues (Oct 14)

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By: Isuru Parakrama

October 14, Colombo (LNW): Showers or thundershowers will occur at times in Western, Sabaragamuwa, North-western and Northern provinces and in Galle, Matara, Kandy and Nuwara-Eliya districts, with heavy showers above 100mm being likely to occur at some places in Western, Sabaragamuwa, North-western and Northern provinces and in Galle and Matara districts, the Department of Meteorology said in its daily weather forecast today (14).

Showers or thundershowers will occur at several places elsewhere during the evening or night.

The general public is kindly requested to take adequate precautions to minimise damages caused by temporary localised strong winds and lightning during thundershowers.

Marine Weather:

Condition of Rain:
Showers or thundershowers will occur at several places in the sea areas around the island.
Winds:
Winds will be south-westerly or variable in direction and speed will be (30-40) kmph. Wind speed can increase up to (50-60) kmph at times in the sea areas off the coasts extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota.
State of Sea:
The sea areas off the coasts extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota can be rough at times. Temporarily strong gusty winds and very rough seas can be expected during thundershowers.

Sri Lanka Original Narrative Summary: 14/10

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  1. President Anura Kumara Dissanayake says the National People’s Power (NPP) government has introduced the concept of political “retirement,” as many former MPs have opted out of this election campaign: terms this a transformative shift in Sri Lankan politics: also dismisses opposition criticisms, stating that fears of instability have been disproven within just 21 days of NPP governance.
  2. Former MP Hirunika Premachandra resigns as National Organiser of the Samagi Vanitha Balawegaya, the women’s wing of the Samagi Jana Balawegaya (SJB), citing frustration over accusations that organisers did not perform their duties during the presidential election campaign: Despite stepping down, she remains committed to the party and plans to contest in the 2024 General Election, confident in her political future: In a subsequent retrogression, former MP Karunaratne Paranavithana, an SJB candidate for the Ratnapura District, withdraws from the general election campaign and urges the public not to vote for him in the upcoming election.
  3. Former Minister Keheliya Rambukwella announces his temporary withdrawal from politics due to “recent events,” but remains committed to assisting the public: expresses confidence in being vindicated by the courts and hopes to return to politics once cleared: plans to focus on business while awaiting the legal resolution: He previously served in various ministerial roles and was released on bail in September 2024.
  4. An extraordinary gazette, signed by Western Province Governor Hanif Yusoof, amends the “Rules on Procurement Affairs Relevant to the Provincial Council Fund”: The amendment changes the spending limit for department heads, previously set at Rs. 50 million, as outlined in Section 7 of the 2020 Extraordinary Gazette No. 2186/25.
  5. The Commission to Investigate Allegations of Bribery or Corruption now requires retired MPs to declare their assets and liabilities within two years, as mandated by the new Anti-Corruption Act: An initial report is to be submitted to Parliament within two weeks: Many former MPs, opting not to contest the upcoming general election, must comply with this requirement.
  6. Cinnamon Air announces new daily flights between Kandy, Sigiriya, and the South Coast destinations Koggala and Hambantota, starting from November 1, 2024, until April 30, 2025: These flights, catering to foreign travellers during the winter season, aim to reduce travel time while offering a unique amphibian aircraft experience on the Kandy-South Coast route.
  7. Education authorities announce the closure of all government schools in the Gampaha, Kelaniya, Kolonnawa, and Kaduwela educational zones on Monday (14) and Tuesday (15) due to adverse weather conditions: Schools in the Colombo educational zone will also remain closed on Monday, with earlier announcements extending closures to schools in Kaduwela, Kolonnawa, and Wattala zones.
  8. Health Secretary Dr. Palitha Mahipala reveals Sri Lanka recorded over 33,000 new cancer cases and 19,000 deaths last year, with oral cancer leading among men and breast cancer among women: stresses lifestyle changes could prevent most cancers, whilst warning that global cancer rates may rise by 77% by 2050.
  9. The Sri Lanka Air Force (SLAF) mobilises aircraft and personnel in response to adverse weather conditions: Air Force Commander Air Marshal Udeni Rajapaksa instructs readiness for relief operations, with surveillance aircraft on standby: Additionally, a Bell-412 helicopter is stationed at Ratmalana, while two Bell-212 helicopters are ready at Hingurakgoda and Palali bases, alongside specially trained Special Forces for rescue support.
  10. Mahela Jayawardene has been re-appointed as head coach of the Mumbai Indians, after serving as the franchise’s global head of cricket for two years: Previously, he led the team to three IPL titles between 2017 and 2022: Mumbai Indians finished poorly under Mark Boucher, who is thanked for his contributions as coach over the past two seasons.

Bentota Celestia Ayurveda Resort: A New Hub for Wellness Tourism

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By: Staff Writer

October 13, Colombo (LNW): The Bentota Celestia Ayurveda resort, a significant new addition to Sri Lanka’s tourism landscape, involves a substantial investment of Rs. 28 billion. This resort covers over 6 acres of land, offering 65 luxurious rooms, including five exclusive villas. Facilitated by the Board of Investment of Sri Lanka, the resort marks a notable step in the tourism sector, with plans for further expansion in the future.

Global health challenges are driving a surge in interest in holistic healing and wellness tourism. As people’s focus on health, travel, and nutrition grows, coupled with rising disposable incomes, the demand for wellness tourism is set to expand further.

Modern fast-paced lifestyles often result in stress, burnout, and an increase in chronic illnesses, leading more individuals to seek wellness-focused travel options. This rising prevalence of chronic diseases continues to push the demand for wellness tourism.

According to the Global Wellness Institute, the wellness tourism market is expected to grow at the fastest rate in the wellness sector, reaching $1.3 trillion by 2025.

Mr. Chandan Silva, CEO of Celestia, expressed his concern about the increasing levels of stress and unhappiness in people’s lives due to toxic lifestyles, depression, and work-life imbalance. He emphasized the resort’s mission to offer more than conventional healing by promoting the rich Sri Lankan Ayurvedic traditions as a lifestyle to experience the principles of joyful living.

Bentota Celestia Ayurveda resort goes beyond traditional Ayurvedic treatments by integrating modern wellness practices such as yoga, meditation, including nature-focused “beach meditation,” aimed at rejuvenating both mind and body.

The resort also plans to introduce a customized healing menu, developed in collaboration with nutritionists and local doctors, focusing on anti-aging and detoxifying diets made with delicious, healthful foods.

In a unique approach, Celestia offers wedding and honeymoon packages that include a special menu featuring ancient medicinal herbs, rare rice varieties, and tropical fruits, aiming to give couples a healthier start to their journey.

Additionally, Celestia’s commitment to sustainability is evident in its Environmental, Social, and Governance (ESG) program, which includes hiring 80% of its staff from neighboring villages and creating a local supply chain for its food and beverage needs.

The Bentota Celestia Ayurveda resort aims to set a new benchmark in wellness tourism by blending traditional Ayurvedic wisdom with contemporary wellness practices.

Business Initiatives strengthen between Sri Lanka and Indonesia under preferential agreement

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By: Staff Writer

October 13, Colombo (LNW): Sri Lanka plans to sign a preferential trade agreement with Indonesia in March 2025 to enhance its export potential. Negotiators from both countries met in Colombo on July 15-16 and aimed to finalize the agreement by December 2024.

 Sri Lanka already has free trade agreements with Thailand and Singapore, promoting gradual trade liberalization.

Indonesia ranks as the 37th export destination for Sri Lanka, with the latter exporting goods worth USD 49.01 million to Indonesia in 2023.

Imports from Indonesia to Sri Lanka reached USD 375.51 million in the same period, making Indonesia the 8th largest import origin for Sri Lanka. Exports to Indonesia increased by 0.22% in 2023 compared to 2022, while imports saw a significant rise of 12.19%.

Key Sri Lankan exports to Indonesia in 2023 included knitted fabrics, chemical products, edible preparations, petroleum oils, women’s outerwear, motor vehicle parts, cartons, boxes, and rubber tires.

A Sri Lanka–Indonesia Business Council delegation, consisting of 14 business professionals, visited Indonesia from October 6-11, 2024. This mission involved various sectors like food and beverage, logistics, pharmaceuticals, apparel, IT, and travel industries. The delegation participated in business forums, expos, and visited key trade stakeholders.

At the Indonesia–South and Central Asia (INASCA) Business Forum 2024, organized by Indonesia’s Ministry of Foreign Affairs, the Sri Lankan delegation set up a booth that drew significant attention. They also attended the 39th Trade Expo Indonesia, which showcased the country’s growing economic opportunities.

Productive discussions took place with the Indonesia Employers’ Association (APINDO) and the Indonesian Chamber of Commerce and Industry (KADIN) to bolster trade relations between the two nations. The delegation also toured the MM2100 Industrial Town in Cikarang to gain insights into Indonesia’s industrial advancements.

A business networking session hosted by the Association of Sri Lankans Living in Indonesia (ASLI) in Jakarta further facilitated connections between Sri Lankan entrepreneurs in Indonesia. The entire initiative was supported by the Sri Lankan Embassy in Jakarta, aiming to foster stronger economic ties between Sri Lanka and Indonesia.

Sri Lanka’s Power Sector Shake-Up: CEB’s Debt Accumulation Raises Concerns

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By: Staff Writer

October 13, Colombo (LNW): The Ceylon Electricity Board (CEB) is facing scrutiny as it undergoes a significant restructuring process under the Sri Lanka Electricity Act No.36 of 2024. Central to this restructuring is the controversial decision to transfer a large portion of CEB’s debt to its hydropower unit, a move that has raised concerns among experts, politicians, and the public.

Despite reporting a net profit of 93 billion rupees by June 2024, the CEB used these gains primarily to settle its outstanding debts to renewable energy developers, thermal power plants, and coal suppliers. This financial maneuver allowed the utility to lower electricity tariffs, even as its revenue declined. Impressively, the CEB saw a 67 percent profit rise to 34.5 billion rupees in the quarter ending June 2024, mainly due to reduced financial expenses.

However, Fitch Ratings has cautioned that deviating from the current cost-reflective tariff model could weaken CEB’s financial stability and threaten the broader power generation sector in Sri Lanka. It warned that should tariff reductions continue, the CEB might have to slash capital expenditures to meet its debt obligations.

The restructuring plan includes shifting a substantial portion of CEB’s debt to the company responsible for hydropower. This decision is part of the new electricity reforms aimed at keeping hydropower under government control, without opening it to private investments. Critics argue that this move could undermine the financial health of the hydropower sector, which has been a cornerstone of Sri Lanka’s energy stability.

The Power and Energy Ministry, in collaboration with the Treasury, has directed CEB to develop a plan to manage its existing debt. Yet, the precise details of how the debt will be allocated remain unclear. The restructuring strategy is supported by Section 18(3)(b) of the Sri Lanka Electricity Act No.36 of 2024, which stipulates that the financial liabilities of CEB will be distributed among its successor companies, with the hydropower unit bearing a significant portion of these obligations.

The act outlines the formation of several new entities, including a Treasury-owned company for hydropower, another for coal plants, and separate units for thermal and wind power, all operating under the Companies Act No.7 of 2007. This structure is designed to maintain government oversight through significant Treasury ownership.

While the CEB has reported a turnaround in its financial performance with a profit of 61.2 billion rupees for the fiscal year ending December 2023, following a loss of 298 billion rupees in the previous year, its rising fuel and thermal generation costs continue to pose challenges. Critics argue that the debt allocation to the hydropower unit jeopardizes one of the country’s most sustainable and cost-effective energy sources.

Amid the ongoing restructuring debate, concerns have also been raised about the lack of transparency and public involvement in the decision-making process. Questions are mounting over whether short-term financial relief is being prioritized over the long-term stability of Sri Lanka’s energy sector.

This restructuring plan has led to fears that once the sector opens to private investment, electricity tariffs will inevitably rise, as investors prioritize profitability over national energy responsibilities. Critics argue that if the restructuring goes ahead as proposed, it could place a disproportionate financial burden on the public and jeopardize the country’s long-term energy affordability and stability.