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Government Defends Retaining Key State Officials Amid Transition Period

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By: Staff Writer

October 03, Colombo (LNW): The incumbent Government, under the leadership of President Anura Kumara Dissanayake, justified its decision to retain key state officials despite earlier pre-election criticisms. Cabinet Spokesman and Minister Vijitha Herath, during the new administration’s first post-Cabinet media briefing, explained that removing these officials before the formation of a new government could disrupt vital state functions.

Herath emphasized the importance of the roles held by Central Bank Governor Dr. Nandalal Weerasinghe, Treasury Secretary Mahinda Siriwardana, and Government Printer Gangani Liyanage, noting their involvement in essential state mechanisms.

Specifically, Dr. Weerasinghe and Siriwardana are overseeing the country’s International Monetary Fund (IMF) program, while Liyanage is responsible for managing the upcoming general elections, with her term ending in December 2024.

Responding to questions about whether retaining these officials indicated approval of their actions under former President Ranil Wickremesinghe’s administration, Herath clarified that the priority was maintaining stability during the transition period. He further explained that the number of ministries has been reduced from 28, and many secretaries have been retained to avoid unnecessary disruption.

Herath acknowledged allegations against certain ministry secretaries and public servants, stating that while no immediate legal action would be taken during the interim period, such cases may be revisited in the future. He assured that the government would make careful decisions regarding public officials, especially in relation to sensitive matters like the IMF program.

Additionally, Herath highlighted the Central Bank’s independent functioning, with its governor appointed through a separate system, justifying the decision to keep Dr. Weerasinghe in his role.

The three officials Central Bank Governor Dr. Nandalal Weerasinghe, Treasury Secretary Mahinda Siriawardana and Government Printer Gangani Liyanage are currently involved in managing some of the critical functions in the State mechanism. The Government has assessed how we should act during this period and we do not wish to change everything immediately and disrupt the State machinery,” he stressed.

Herath said the Central Bank Governor and Treasury Secretary are involved in the International Monetary Fund (IMF) program, whilst the Government Printer is responsible for the upcoming General election, adding that her extended term is in any case coming to an end by December 2024.

The Sri Lankan delegation set to visit Washington, D.C., will include the President’s economic advisers Duminda Hulangamuwa, Anil Fernando along with the Treasury Secretary Mahinda Siriwardana and the Central Bank Governor Dr. Nandalal Weerasinge.

 Among the key issues on the agenda is a framework agreement on International Sovereign Bonds (ISBs), which is in the final stage of negotiation.

“Despite claims by the previous Government that the ISB was finalised, it is still in its last phase of completion,” the Cabinet Spokesman said.

Herath said the delegation will also address domestic debt restructuring, following criticism and concerns about the current approach to managing the country’s debt.

IMF Calls for Reform in Debt and Tax Policies in Sri Lanka  

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By: Staff Writer

October 03, Colombo (LNW): Sri Lanka’s primary dealers in government securities are heavily relying on the central bank’s standing facilities to fund their portfolios, even after being excluded from liquidity auctions, according to an International Monetary Fund (IMF) report.

These dealers, primarily non-bank institutions, have been using the Standing Lending Facility (SLF) extensively to support their holdings of government securities, with such activity accounting for 46% of SLF usage as of April 2023, amounting to approximately 76 billion Sri Lankan rupees (LKR).

The IMF recommends that the Central Bank of Sri Lanka (CBSL) gradually reduce the availability of these monetary instruments to support the development of the LKR bond market.

According to the report, the central bank’s standing facilities should be limited to one-day transactions and not used as long-term funding sources. Ideally, primary dealers should clear their borrowings by selling securities to actual investors rather than continuing to rely on these facilities for extended periods.

In Sri Lanka’s unique market environment, Treasury bills are often offloaded onto dealers after initial auctions, leaving them without sufficient funds to pay for these securities.

This reliance on central bank liquidity contributes to systemic issues, such as balance of payments (BOP) deficits and inflation, as liquidity injected to support dealers, banks, or the government leads to unsustainable financial practices.

State-owned banks, in particular, have historically been the largest users of central bank credit facilities, contributing significantly to the country’s economic crisis.

While some private banks and foreign institutions maintain better reserves and are less reliant on these instruments, the heavy use of central bank credit by state-owned banks highlights the broader challenges facing Sri Lanka’s financial system.

In addition to monetary policy concerns, Sri Lanka is undergoing significant fiscal reform under the IMF’s Extended Fund Facility (EFF).

The government has agreed to introduce new taxes and reform existing tax structures as part of its efforts to achieve fiscal consolidation. One major change involves the introduction of an Imputed Rental Income Tax (IRIT), set to be implemented by 2025.

 This tax will apply to rental income from owner-occupied and vacant residential properties, which are currently not subject to direct taxation.

The government plans to establish specific thresholds and a rate schedule for the IRIT under the Inland Revenue Act (IRA), and anti-avoidance measures will be introduced to prevent tax evasion through the use of residential companies and discretionary trusts. The capital gains tax exemption for primary residences will be replaced with a threshold that align

s with the IRIT threshold, while the exemption for listed companies on the stock exchange will also be removed.

In addition, an increase in stamp duties on land leases from 0.1% to 0.2% is under consideration, following a review of affordability and lease amounts.

The government is also exploring the introduction of an electricity usage tax by sharing data between the Ceylon Electricity Board (CEB) and the Inland Revenue Department (IRD).

Collaboration between the Surveyor General, the Government Valuation Department (GVD), and local authorities is expected to improve data collection on properties and taxpayers, which will help in implementing these reforms.

Furthermore, the treatment of residential property transactions under VAT will be aligned with international standards, exempting resale and rental contracts but taxing first-time sales.

Although these tax reforms are expected to increase government revenue, the short-term impact on reducing the need for central government transfers is expected to be minimal, at less than 0.05% of GDP. 

Sri Lanka and the Netherlands Strengthen Cultural Ties through Return of Colonial Artefacts

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By: Staff Writer

October 03, Colombo (LNW): Sri Lankan Ambassador to the Netherlands, Rekha Gunasekera, recently met with Eppo Bruins, the Minister of Education, Culture, and Science of the Netherlands, to discuss the repatriation of a second set of colonial artefacts.

The meeting took place in The Hague, where Ambassador Gunasekera presented a list of artefacts identified by Sri Lanka for the next phase of repatriation. She highlighted that the first batch of returned artefacts, now displayed at the Colombo National Museum, has attracted many visitors, including Dutch tourists.

During the meeting, the Ambassador emphasized the importance of continued cooperation between the two nations in the process of returning colonial artefacts. She noted that this effort reflects the goodwill between Sri Lanka and the Netherlands and strengthens cultural diplomacy between the countries. Ambassador Gunasekera expressed her desire to maintain the positive momentum in this collaboration.

Minister Bruins echoed these sentiments, expressing his government’s commitment to the policy of returning artefacts that were taken during the colonial era.

He emphasized that the return of these objects goes beyond a symbolic gesture; it represents a sincere effort by the Netherlands to address its colonial past and promote a future of understanding and partnership with Sri Lanka.

The Minister assured that the list of artefacts would be forwarded to the Advisory Committee on the Return of Cultural Objects from Colonial Context for further review.

The recent collaboration between Sri Lanka and the Netherlands is part of an ongoing effort to repatriate artefacts taken during the colonial period.

In December 2023, the Netherlands returned six colonial-era items to Sri Lanka, including the Lewke Cannon, a Golden Royal Kasthane (a traditional Sri Lankan sword), a Royal Silver Kasthane, a Golden Royal Knife, and two wall guns.

These items, taken by the Dutch East India Company in 1765 following the siege of Kandy, had been part of the collection at the Rijksmuseum in the Netherlands for centuries.

The process of reclaiming these artefacts began with thorough international research conducted in April 2022, which confirmed their Sri Lankan origins.

The diplomatic initiative was spearheaded by Sri Lanka’s Minister of Buddhasasana, Religious, and Cultural Affairs, Vidura Wickramanayake, whose efforts helped facilitate the return of these precious items.

Sanuja Kasthuriarachchi, the Director General of the Department of National Museums, emphasized the significance of this return, noting that it showcases the importance of international collaboration in preserving cultural heritage.

The artefacts are now on display at a special exhibition gallery at the Colombo National Museum, further strengthening cultural ties between the two countries and paving the way for future returns of Sri Lankan treasures.

 The artefact return represents a meaningful milestone in Sri Lanka’s ongoing efforts to recover its cultural heritage and serves as an important reminder of the power of international cooperation in addressing historical injustices.

Apparel & Textile exports top USD 500 million after two years in August 2024

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By: Staff Writer

October 03, Colombo (LNW): As per the provisional data released by the Sri Lanka Customs,otably, Apparel & Textiles exports surpassed the US$ 500 million mark in August 2024, after a gap of two years..Furthermore, export performance in August 2024 increased by 3.1 % compared to July 2024.

Earnings from export of Apparel & Textile have increased by 1.28 % to US$ 3,358.05 Mn during the period of January to August 2024 compared to the same period in 2023. Further, earnings from export of Apparel increased by 2.31 % in January to August 2024.

Garment exports from Sri Lanka were valued at $2,206.3 million during the first six months of 2024, marking a decline of 1.4 per cent compared to the $2,236.7 million exported during the same period in the previous year, according to statistics released by the Central Bank of Sri Lanka.

During January-June 2024, textile exports from the island nation dropped by 15.0 per cent year-on-year, totalling $146.6 million. The exports of other made-up textile articles were valued at $55.2 million during the same period, an increase of 7.3 per cent, as detailed in the bank’s report titled ‘External Sector Performance – June 2024’.

Exports of textiles, garments, and other manufactured textile articles collectively accounted for 49.78 per cent of all industrial exports from Sri Lanka during the reviewed period, the report indicated. All textile product exports amounted to $2,408.1 million in January-June 2024, while Sri Lanka’s total industrial exports were valued at $4,837.2 million in the same period.

In June 2024, all textile product exports from the country increased by 4.0 per cent year-on-year, totalling $447.2 million. Category-wise, garment exports increased by 4.0 per cent to $409.1 million, while textile exports rose by 4.3 per cent to $29.0 million. Exports of other manufactured textile articles edged up by 3.2 per cent, amounting to $9.1 million.

On the other hand, imports of textiles and textile articles increased by 11.2 per cent to $1,327.5 million, while imports of clothing and accessories edged up by 16.0 per cent, amounting to $99.0 million in January-June 2024. In June 2024, imports of textiles and textile articles increased by 20.2 per cent to $233.3 million, while imports of clothing and accessories rose by 4.2 per cent to $14.7 million.

In 2023, garment exports from Sri Lanka were valued at $4,440.6 million, which was 19 per cent lower than the exports of $5,483.1 million in 2022. The imports of textiles and textile articles had declined by 22.6 per cent to $2,371.2 million, and Sri Lanka’s imports of clothing and accessories were down by 21.1 per cent, amounting to $170 million in 2023.

Election Commission prepares for long-awaited Local Govt Elections following General Polls

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By: Isuru Parakrama

October 03, Colombo (LNW): The Election Commission has confirmed its readiness to conduct the long-overdue 2023 Local Government Elections, which are set to take place soon after the conclusion of the upcoming General Elections.

In an official statement, the Commission announced that the exact dates for the Local Government polls will be disclosed after the General Elections are completed.

This development comes after a series of legal battles and financial negotiations surrounding the allocation of funds necessary for the election process.

The Commission assured that they have engaged in preliminary discussions with key stakeholders to ensure the smooth execution of the elections.

The delay in the Local Government elections has been a point of contention, with various political and public entities calling for clarity on the matter.

The Commission has now confirmed that all preparatory work has been finalised, paving the way for the elections to proceed without further setbacks.

The Commission also reaffirmed its commitment to ensuring a transparent and efficient electoral process, highlighting that all the logistical and administrative groundwork has been laid.

This announcement will likely ease concerns over the extended delay, as many local bodies have been functioning without elected representatives for a considerable period.

The public eagerly anticipates these Local Government elections, which will play a critical role in revitalising local governance and addressing community-level issues.

241 MPs sat in last Parliament from Aug 2020 to Sep 2024

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October 03, Colombo (LNW): The Ninth Parliament of Sri Lanka, which commenced on 20 August 2020, officially dissolved on 24 September 2024, marking a notable period in the country’s political history.

Over its four-year tenure, the Parliament experienced a total of 19 vacancies, four prorogations, and held 390 sitting days.

According to a statement released by the Parliament, the vacancies were filled in accordance with Article 66 of the Constitution. In total, 16 new Members of Parliament were appointed across 18 different occasions to fill the vacant seats.

During this time, 241 individuals represented the Ninth Parliament, reflecting significant shifts in its composition.

Amongst these changes, Jayantha Katagoda, initially elected from the national list, resigned, paving the way for Basil Rajapaksa to take his place.

Following further resignations, Katagoda was reappointed, replacing Ajith Nivard Cabral. Similarly, A.H.M. Fowzie replaced Mujibur Rahman after the latter’s resignation, only for Rahman to be reappointed when Diana Gamage’s seat was vacated by a court ruling.

Despite these shifts, no replacement was made for the seat vacated by Harin Fernando.

One of the most significant events during this parliamentary term was the resignation of President Gotabaya Rajapaksa, which culminated in Ranil Wickremesinghe’s election as the 8th Executive President of Sri Lanka.

Wickremesinghe’s ascension to the presidency created another vacancy in Parliament, which was subsequently filled by a new appointee.

The Ninth Parliament also saw four prorogations, two initiated by Gotabaya Rajapaksa during his presidency and two by his successor, Ranil Wickremesinghe. These prorogations marked important intervals in the legislative process, highlighting the shifting political landscape during a time of economic and social challenges in Sri Lanka.

Throughout its five sessions, the Ninth Parliament convened for a total of 390 days. The first session spanned from August 2020 to December 2021, followed by successive sessions held through to September 2024.

Each session contributed to the legislative and governance efforts amid a backdrop of political turbulence, economic challenges, and public scrutiny.

As the Ninth Parliament dissolves, it leaves behind a legacy defined by significant political transitions, ongoing reform efforts, and a determination to address the country’s pressing issues.

Official exchange rates in SL today (Oct 03)

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By: Isuru Parakrama

October 03, Colombo (LNW): The Sri Lankan Rupee (LKR) indicates depreciation against the US Dollar today (03) contradictory to yesterday’s trend maintaining the selling value below Rs. 300, as per the official exchange rates released by the Central Bank of Sri Lanka.

Accordingly, the buying price of the US Dollar has increased to Rs. 291.94 from Rs. 290.30, and the selling price to Rs. 301.16 from Rs. 299.35.

Court sets hearing date for corruption case against ex Health Minister

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By: Isuru Parakrama

October 03, Colombo (LNW): The Colombo High Court has confirmed that the trial concerning former Health Minister Keheliya Rambukwella and the former Chairman of the State Printing Corporation, Jayampathi Bandara Heenkenda, will proceed on November 29, 2024.

This decision was reaffirmed during a hearing before High Court Judge Sujeewa Nissanka, where Rambukwella made a personal appearance in court.

The case, brought forward by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), alleges that the two individuals misappropriated public funds during Rambukwella’s time as Minister of Mass Media.

Specifically, the charges relate to the misuse of Rs. 230,000 from the State Printing Corporation to cover Rambukwella’s personal telephone bill between March and April 2012.

The accusations have sparked significant public interest, given the scale of the alleged financial misconduct and the high-ranking positions of the accused.

The Bribery Commission’s investigation seeks to hold those in power accountable for their actions, further demonstrating the government’s commitment to tackling corruption at all levels.

Rambukwella, who held the Mass Media portfolio at the time of the alleged incident, faces growing scrutiny, with calls for greater transparency in the handling of public funds.

Law College Principal kicked out for personal reasons?

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By: A Special Correspondent

October 03, Colombo (LNW): In a staggering turn of events, the Law Education Council has decided not to exert a service extension for Dr. Athula Pathinayake, who served as the Principal of the Law College for the past three years contributing to a massive development of the school.

The Council’s refusal to extend Dr. Pathinayake’s term has sparked a wildfire within the Colombo lawyers’ community, in what they described as highly unfair given his reputation within the College.

Dr. Pathinayake’s programme within the College aiming the modernisation of the obsolete managerial structure, timely conduction of examinations, and opening of international opportunities for law students has widely been appraised for, evident within both the legal and educational sectors of Sri Lanka.

Recently, various allegations and slander campaigns have been levelled against Dr. Pathinayake by parties hiding inside the conduit of anonymity, only to meet gradual decimation upon being proven false.

All six lawyers serving the Law Education Council as representatives of the Minister in Charge have not informed Prime Minister Dr. Harini Amarasuriya, who also serves as the Minister of Justice, nor has the Ministerial Secretary attended the decision making process leading to Dr. Pathinayake’s dismissal, further complicating the situation, sources within the government told LNW.

The situation has escalated frustration amongst law students as well as the community, who expect nothing but the well-being of the Law College.

President pledges to reform Public Service, supports officials committed to integrity

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By: Isuru Parakrama

October 03, Colombo (LNW): President Anura Kumara Dissanayake reaffirmed his dedication to empowering public servants who prioritise efficiency and a citizen-focused approach, ensuring they are protected from political retaliation.

Unlike previous administrations, he assured that officials working in the public’s interest would be shielded from any form of political interference.

The President made these statements during a meeting with key ministry officials, after taking office as Minister of Agriculture, Lands, Livestock, Irrigation, Fisheries, and Aquatic Resources.

The session involved an in-depth review of the ministry’s current standing and future strategies, with President Dissanayake highlighting the pivotal role of agriculture in combating rural poverty.

He underscored that the performance and commitment of government officials would be central to achieving this goal.

Reflecting on the recent presidential election, Dissanayake noted that the public had clearly rejected the old political culture, seeking a new direction in governance.

The economic hardships faced by citizens and growing dissatisfaction with public services were instrumental in this shift, he said, signalling a transformative period for the nation.

The President expressed his firm commitment to developing a modern, efficient public service that places people at its core. He emphasised that the government is committed to tackling widespread fraud and corruption, which the public views as key contributors to the nation’s economic decline.

This new mandate, according to Dissanayake, is focused on transparency and preventing such destructive practices.

In his address, he called on public servants to earn the trust of the people by acting with integrity and dedication. The President stressed that the fight against corruption rests heavily on the moral responsibility and commitment of government officials, urging them to play a proactive role in the country’s renewal.

This, he stated, is a pivotal time for the public service, with the nation looking to its officials to deliver on their promises with honesty and efficiency.