December 22, Colombo (LNW): The Chinese People’s Liberation Army Navy hospital ship, Peace Ark, docked in Colombo on Saturday (21) for a formal visit, marking another significant step in the strengthening of Sino-Sri Lankan naval relations.

The Sri Lanka Navy welcomed the vessel according to traditional naval protocols, as outlined in a statement from the Sri Lankan Navy.

The Peace Ark, an imposing 178-metre-long hospital ship, is crewed by 310 personnel and commanded by Captain Deng Qiang.

This specialised vessel, which is equipped with state-of-the-art medical facilities, is renowned for its humanitarian missions, offering medical assistance to countries in need.

During its stay in Sri Lanka, the Peace Ark will collaborate with the Chinese Embassy in Sri Lanka to provide medical services to the local population.

Onboard medical teams, along with personnel from the Sri Lanka Navy Medical Department, will run clinics offering a variety of healthcare treatments.

These medical outreach initiatives are part of China’s broader commitment to humanitarian assistance in the region, aimed at strengthening bilateral ties.

In addition to the medical activities, the crew of the Peace Ark will also have the opportunity to explore Sri Lanka’s cultural and tourist attractions.

Their visit is expected to foster goodwill and provide a chance for the Chinese and Sri Lankan naval forces to engage in social and cultural exchanges.

The Sri Lanka Navy has planned several events to enhance camaraderie between the two forces, including joint activities and briefings on naval operations.

Furthermore, Sri Lankan Navy personnel, along with officer trainees from the Naval and Maritime Academy and the Kotelawala Defence University, will be given the chance to learn from the Peace Ark crew.

They will participate in briefings to gain insight into the operational aspects of hospital ships and how such vessels contribute to humanitarian efforts and military cooperation.

The Peace Ark is scheduled to remain in Sri Lanka until December 28, after which it will continue its mission elsewhere.

By: Isuru Parakrama

December 22, Colombo (LNW): Showers or thundershowers may occur at several places in Western, Sabaragamuwa, Southern and Uva provinces and in Nuwara-Eliya, Kandy and Ampara districts during the evening or night, the Department of Meteorology said in its daily weather forecast today (22).

A few showers may occur in Northern and North-western provinces and in Anuradhapura district.

Misty conditions can be expected at some places in Central, Sabaragamuwa, Southern, Uva and Eastern provinces during the morning.

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:

1. President Anura Kumara Dissanayake will visit China in January for talks, following the completion of a foreign debt restructuring: China, which held over half of Sri Lanka’s bilateral debt during the 2022 economic crisis, plays a crucial role in the island’s recovery: Dissanayake’s first overseas visit as president was to India, a key regional rival to China: Fitch Ratings recently upgraded Sri Lanka’s credit rating, though challenges with high government debt remain.
   
2. The Criminal Investigation Department (CID) has launched an inquiry into the erroneous listing of Justice Minister Harshana Nanayakkara’s title on the parliamentary website: A CID team visited Parliament on December 20 to record statements from officials and obtain relevant documents: Nanayakkara had filed a complaint about being listed as “Dr.” on the website, calling it defamatory: Parliament acknowledged the mistake, attributing it to incorrect data.
   
3. Former President Ranil Wickremesinghe clarified that during his tenure (2022-2024), private requests for medical aid from public representatives were processed through standard administrative procedures under the Presidential Fund: Except for one case, no individual received over Rs. 1 million in aid: Notable disbursements included heart surgeries for former officials and Rs. 5 million for actress Malini Fonseka’s treatment in India: Over Rs. 100 million was allocated for various medical treatments during this period.
   
4. NPP MP Nilanthi Kottahachchi stated that people have the democratic right to challenge truths and expose falsehoods, and to critique or praise the government’s actions: Speaking in Kalutara, she emphasised that individuals are entitled to see both positive and negative aspects of government actions: Kottahachchi also defended the NPP’s honesty during the election campaign, rejecting claims of misleading voters.
   
5. Fitch Ratings has upgraded Sri Lanka’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘RD’ (Restricted Default), citing the completion of international sovereign bond restructuring and improved macroeconomic outlook: The Local-Currency IDR was also upgraded to ‘CCC+’ from ‘CCC-‘, reflecting reduced default risk on local debt: The restructuring covers 96% of external commercial debt, converting it into a mix of macro-linked and governance-linked bonds.
   
6. Sri Lanka has repaid defaulted local bondholders with floating-rate rupee bonds, part of the restructuring of International Sovereign Bonds (ISBs), completed on December 20: The country issued 8 tranches of bonds worth Rs. 155.7 billion, with no principal reduction for local bondholders, primarily banks: These bonds will carry a coupon rate 50 basis points above the Central Bank’s Standing Lending Facility rate.
   
7. Gold prices in Sri Lanka have risen, with the price of a pound of 22-carat gold increasing to Rs. 193,200 from Rs. 190,500 in two days: Additionally, the price of 24-carat gold has gone up by Rs. 2,000, reaching Rs. 210,000 per pound, according to the latest market data from the Colombo Gold Centre on December 21.
   
8. A surprise inspection by the Jinthupitiya MOH office and Public Health Inspectors on December 21 revealed serious hygiene violations in restaurants on Bodhiraja Mawatha, Pettah: Issues such as rat droppings in kitchens and food preparation areas, and cats roaming in these spaces, were found: Restaurant owners were criticised, with some blaming the rat surge: Strict warnings and legal actions were issued, with instructions to improve sanitation.
   
9. The Trade Association of the Peliyagoda Central Fish Market Complex has reported a significant rise in fish prices due to adverse weather conditions: According to Chairman Jayasiri Wickramarachchi, the price of mackerel has surged to Rs. 2,200 per kilogramme, while seer fish is now selling for 2,500 rupees per kilogramme.
   
10. Glamorgan County Cricket Club has signed Sri Lankan fast bowler Asitha Fernando for the first seven matches of the 2025 Vitality County Championship, pending a No-Objection Certificate from Sri Lanka Cricket: Fernando, a key bowler in all formats for Sri Lanka, has impressed internationally, including a five-wicket haul at Lord’s in 2024: He expressed excitement about joining Glamorgan, while Director of Cricket Mark Wallace welcomed him as the club’s first Sri Lankan player.

LankaLeader : With Sri Lanka having officially exited sovereign default, Treasury secretary Mahinda Siriwardena emphasised the critical need to manage the economy with a cautious policy approach without sacrificing hard-earned economic stability.

On December 20, 2024, Sri Lanka achieved a significant milestone in its economic recovery by officially exiting sovereign default. This development was marked by Fitch Ratings upgrading the country’s long-term foreign-currency default rating from ‘restricted default’ (RD) to ‘CCC+’.

The journey to this point has been arduous, involving painful reforms and a complex debt restructuring process. Sri Lanka defaulted on its foreign debt in May 2022 amid high debt levels and low foreign exchange reserves, leading to severe shortages of essentials and a deep economic crisis.

The debt restructuring plan, approved by creditors, encompasses a $12.55 billion overhaul anticipated to save the country $9.5 billion in debt service payments over four years. This plan includes swapping defaulted bonds for new fixed-income instruments, with potential interest rate reductions tied to governance targets.

Siriwardana, also Secretary to the Ministry of Finance, expressed optimism about this development.

He tweeted yesterday, “Today marks a pivotal moment in Sri Lanka’s economic recovery as we officially exit sovereign default. This achievement reflects the resilience and commitment of our nation to overcome challenges and build a sustainable future.”

He also emphasised the critical need to manage the economy with a cautious policy approach without sacrificing hard-earned economic stability.

The International Monetary Fund (IMF) has been crucial in Sri Lanka’s recovery efforts. In March 2023, the IMF approved a $3 billion Extended Fund Facility (EFF) arrangement for Sri Lanka, providing an initial tranche of $330 million. This support was contingent upon the implementation of significant reforms, including major tax increases and debt restructuring, which, although widely unpopular, were deemed necessary to stabilise the economy.

The debt restructuring also involved negotiations with major creditors, including India, the Paris Club, and China. In November 2023, Sri Lanka reached an ‘agreement in principle’ with India and the Paris Club on debt treatment parameters aligned with the IMF’s EFF arrangement. However, China, the nation’s largest bilateral creditor, reached a separate agreement, restructuring $4.2 billion in debt. These negotiations were complex, with concerns about equitable treatment among creditors, but were essential for the country’s path to economic recovery.

Sri Lanka’s exit from sovereign default positions it as the fourth country to conclude a bond restructuring this year, joining Ghana, Ukraine, and Zambia. This achievement is expected to restore confidence among investors and international partners, potentially reopening access to global capital markets and attracting foreign investment.

Despite this progress, challenges remain. The country must continue implementing structural reforms to ensure economic stability and growth. The government has indicated plans to revitalise key economic sectors, support small to medium-sized enterprises (SMEs), and implement significant social and educational reforms to foster long-term financial resilience.

The public’s response to these developments has been mixed. While there is relief that the country is moving out of default, the reforms have led to increased living costs and economic hardships for many citizens. The government has acknowledged these challenges and emphasised the importance of the reforms for the country’s long-term financial health.

Sri Lanka anticipates a gradual economic upturn with a growth projection of 1.8% for 2024. This outlook reflects cautious optimism as the nation continues its efforts to recover from the severe economic downturn. The government’s commitment to implementing necessary reforms and the support from international partners are expected to play pivotal roles in this recovery process.

Sri Lanka’s exit from sovereign default marks a significant achievement in its ongoing economic recovery journey. While challenges persist, the nation’s resilience and commitment to reform provide a foundation for optimism about its financial future.

The Central Bank of Sri Lanka (CBSL) issued a circular to licensed banks, outlining relief measures for Small and Medium Enterprises (SMEs) adversely affected by the Easter Sunday attack, the COVID-19 pandemic, and the challenging macroeconomic conditions of recent years On December 19, 2024. 

These measures, developed in agreement with the Sri Lanka Banks’ Association (Guarantee) Ltd. (SLBA) during discussions under the Working Committee on Recovery of Loans by Banks (Special Provisions) (Amendment) Act, No. 26 of 2024, aim to assist struggling SMEs.

The SLBA has emphasized that any suspension of Parate execution will be limited to March 31, 2025. The key aspects of the relief package include:

a. The relief measures apply only to SME credit facilities classified as Stage 3 (non-performing) from April 1, 2019, onwards. SMEs must engage with their bank’s Business Revival Units and submit necessary documents by March 31, 2025.

b. Rescheduling of impaired loans for eligible SMEs will depend on their repayment capacity and the presentation of an acceptable business revival plan.

c. Agreements on rescheduled loans must be finalized by June 15, 2025.

d. SMEs with outstanding credit below Rs. 25 million, between Rs. 25–50 million, and above Rs. 50 million as of December 15, 2024, must begin repaying rescheduled loans by December 31, 2025, September 30, 2025, and June 30, 2025, respectively.

e. Unpaid interest (excluding capitalized interest) from April 1, 2019, to December 15, 2024, may be waived.

f. Licensed banks are encouraged to provide additional relief, such as working capital facilities, based on borrowers’ repayment capacities and credible business revival plans.

g. New loan applications under this scheme should not be rejected solely due to adverse CRIB records.

h. In cases of disputes or rejections, banks must inform borrowers of the reasons and advise them on the appeal process to the Financial Consumer Relations Department at CBSL.

i. Borrowers can request a detailed breakdown of their capital, interest, and other charges from banks.

The CBSL has urged licensed banks and borrowers to collaborate effectively to ensure uniform implementation of these measures. Eligible borrowers are encouraged to approach their banks with the required documentation to negotiate repayment plans. Timely repayments, as agreed, are critical to preventing prolonged financial strain on both borrowers and banks.

The World Bank Group has confirmed its commitment to continuing all ongoing World Bank-supported projects in Sri Lanka under the country’s new government. Plans are also underway to establish an advisory group tasked with evaluating how best to align World Bank assistance with the new government’s development priorities.

This agenda, presented by the new administration under President Dissanayake, emphasizes reducing rural poverty and addressing longstanding issues in the North and East, including land and housing challenges faced by the plantation community.

 The government has also prioritized economic modernization, as reflected in its push for a Digital Identity Card initiative. 

The World Bank praised the administration’s “Clean Sri Lanka” initiative, reaffirming its support for these environmental efforts.

Deputy Minister of Industries and Entrepreneurship Development Chathuranga Abeysinghe recently met with World Bank Country Manager Gevorg Sargsyan to discuss structural barriers that have hindered industrial growth in Sri Lanka for decades.

These include the absence of a national integrated industrial plan, limited access to capital, weak institutional frameworks, insufficient anti-dumping measures to protect local industries, and a shortage of skilled labor necessary for sustainable development. 

The meeting also addressed the impacts of recent tax policy changes and non-performing debts.

The deputy minister outlined the government’s strategic vision for industrial development, its short-term objectives, and specific assistance needed to meet these goals. 

In response, the World Bank delegates shared details of their ongoing programs and areas where they could provide support, such as the Business Ready Index, technical research assistance, and State-Owned Enterprise (SOE) restructuring. 

They also reaffirmed their commitment to agricultural transformation and offered guidance on how their expertise could align with Sri Lanka’s broader development plans.

The World Bank delegation included key figures such as Lead Economist Gregory Smith, IFC Senior Country Officer Victor Anthonypillai, and Economist Amila Dahanayake. The deputy minister’s team comprised Personal Secretary Yasas Hewage and Coordinating Secretary Melani Augustine.

Sri Lanka has firmly rejected media claims suggesting an agreement was reached to construct an Indian oil pipeline during recent bilateral talks. Foreign Minister Vijitha Herath clarified that no such deal was finalized during President Anura Kumara Dissanayake’s visit to India, dismissing reports as inaccurate.

The controversy stems from Indian Prime Minister Narendra Modi’s statement on November 16, where he outlined plans for enhanced energy collaboration between the two nations, including connecting power grids and laying a petroleum pipeline. Modi’s remarks followed his meeting with President Dissanayake in New Delhi, marking the Sri Lankan leader’s first official visit since assuming office after a decisive election victory in September.

While India’s state-run Petronet LNG has agreed to supply liquefied natural gas (LNG) to Colombo’s power plants via its Kochi terminal for five years, discussions on broader energy projects remain preliminary. According to Minister Herath, a proposal involving India, Sri Lanka, and the United Arab Emirates (UAE) to construct a multi-product energy pipeline has been introduced but is still under review, with no formal agreement in place.

Herath emphasized the importance of continuing dialogue on energy collaboration but dismissed allegations of a finalized deal for Indian oil pipelines in Sri Lanka as false. He made these clarifications during a special briefing held on November 20 at the Department of Government Information.

The official joint statement issued by India’s Ministry of External Affairs highlighted mutual interest in strengthening energy cooperation. Both leaders agreed on the need for reliable and affordable energy to ensure energy security and meet public demands.

 Specific areas of focus include implementing the Sampur solar power project and exploring its expansion based on Sri Lanka’s needs. Other proposals under discussion involve LNG supply, offshore wind power development in the Palk Strait, and a potential high-capacity power grid interconnection.

The Indo-Lanka-UAE pipeline proposal aims to facilitate affordable and sustainable energy supply, addressing regional energy challenges. While the project could hold significant strategic and economic benefits, its feasibility and timeline remain subjects of ongoing deliberations.

While India and Sri Lanka have pledged to deepen energy ties, claims of a concrete oil pipeline agreement are unsubstantiated. The dialogue reflects both nations’ commitment to exploring innovative energy solutions while prioritizing environmental conservation and regional energy security.