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IMF says the economy in Sri Lanka still remains vulnerable despite reforms bearing fruit

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By: Staff Writer

March 30, Colombo (LNW): Julie Kozack, Director of the Communications Department at the IMF said that reforms in Sri Lanka are bearing fruit.

Sri Lanka ran a current account deficit in the last quarter of 2024, and reserves were run down to repay debt, official data shows, after large volumes of money were printed to push down interbank rates by a few basis points in the period.

Sri Lanka’s imports surged in December 2024 in particular, after three months of excess liquidity from being injected to bring to the middle of a policy corridor or single policy rate

“The economic recovery is gaining momentum. Inflation remains low in Sri Lanka, revenue collection on the fiscal side is improving, and international reserves are continuing to accumulate. Economic growth reached 5 percent in 2024, and that was after two years of economic contraction. And we do expect the recovery to continue in 2025 in Sri Lanka.

These are all very positive developments for Sri Lanka and for the people of Sri Lanka,” she said at a media briefing in Washington.

Kozack said that the economy still does remain vulnerable, and therefore it is critical that the reform momentum be sustained to ensure that macroeconomic stability and debt sustainability are durably achieved.

On February 28th, the IMF Executive Board approved the Third Review under the EFF (Extended Fund Facility) arrangement for Sri Lanka. And this provided the country with immediate access to $334 million of support.

Once the Board approved that Third Review, the $334 million was made available to Sri Lanka to support its economic policies and reforms. And with this $334 million, it brings total financial support from the IMF to Sri Lanka to $1.34 billion

Sri Lanka ran a current account deficit in the last quarter of 2024, and reserves were run down to repay debt, official data shows, after large volumes of money were printed to push down interbank rates by a few basis points in the period.

Sri Lanka’s imports surged in December 2024 in particular, after three months of excess liquidity from being injected to bring to the middle of a policy corridor or single policy rate.

The liquidity was injected to push down interbank rates and undermine a scarce reserve regime as economic activities recovered.

The current account is a man-made accounting identity, which is a mirror image of the financial account in balance of payments accounting.

In the absence of money printing, any financial account inflows, invested domestically, also leads to imports, automatically triggering a deficit in the current account by increasing the availability of dollars from outside current inflow.

Reserve collecting central banks can run balance of payments deficits when printed money turns into credit and imports.

 Countries can also be forced to repay debt by fresh borrowings or run down reserves including for imports themselves when interest rates incompatible with the BoP are maintained by ‘rate cuts’ enforced with inflationary open market operations.

Telecommunication Levy Write-Off Sparks Controversy in Sri Lanka

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By: Staff Writer

March 30, Colombo (LNW): A recent audit report by the National Audit Office (NAO) has raised concerns over a major telecommunications company’s decision to write off Rs. 77.71 million in telecommunication tax dues as bad debts. 

This development has sparked criticism regarding financial transparency and tax collection practices within the Telecommunications Regulatory Commission (TRC).

The sum in question comprises taxes collected from three private companies under the prominent telecommunications firm, originally intended for remittance to the TRC. 

The breakdown of the amounts written off includes Rs. 35.77 million, Rs. 30 million, and Rs. 11.93 million. However, the company has informed both the Treasury and the TRC that the total will not be settled, as it has been classified as bad debts.

The NAO has criticized the failure to record this amount as a telecommunication tax receivable in financial statements, citing Section 3 of Part I of the Telecommunication Levy Act No. 21 of 2011. 

The audit office has urged immediate measures to recover the outstanding tax, emphasizing the serious implications of allowing such write-offs.

In response, the TRC management explained that the amount was omitted from financial statements because an explanation letter was not received before the preparation of the 2023 accounts. 

Consequently, despite a letter from the Competition Division to the Treasury, the sum was not included as a receivable. Additionally, as of December 31, 2023, trade debtors owed Rs. 372.76 million.

The audit report also reveals long-standing outstanding balances, including Rs. 15.10 million owed since 1976. 

Furthermore, Rs. 174.80 million (46% of total debts) has been owed by another private company since 1993, while Rs. 145.25 million (40% of total debts) remains unpaid by the Sri Lanka Broadcasting Corporation since 1976. 

The NAO attributes this issue to the absence of a structured system for recovering overdue frequency income.

The fiscal report released on February 17 indicates that as of October 2024, the Telecommunication Levy (TL) has achieved 73.3% of its annual revenue target, collecting Rs. 13.6 billion out of a projected Rs. 18.5 billion. 

This shortfall highlights concerns about the efficiency of revenue collection. Compared to the same period in 2023, TL revenue has declined by 9.8%. In contrast, other tax revenues have increased by 34.6% to Rs. 106.4 billion, mainly due to higher cess charges and import-related taxes.

Despite these findings, TRC Director General Air Vice Marshal Bandula Herath stated he was unaware of the tax issue cited in the NAO report. 

Furthermore, he confirmed that the matter had not been discussed at the TRC Board level, raising further questions about oversight and accountability in the sector.

Ex-Minister Tiran Alles summoned by CID over Weligama shooting

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March 30, Colombo (LNW): The Criminal Investigation Department (CID) has summoned former Minister of Public Security, Tiran Alles, to provide a statement regarding the fatal shooting of a police sergeant near a hotel in Weligama, Matara, in 2023.

The former minister is scheduled to appear before the CID tomorrow (31), according to reports.

Authorities suspect that Alles may have knowledge relevant to the ongoing investigation and are seeking clarification on certain aspects of the incident.

The inquiry centres on the death of a police sergeant attached to the Colombo Crimes Division (CCD), who was shot dead outside the W15 Hotel in the Pelena area of Weligama on December 31, 2023.

The case has already led to the arrest and remand of former Inspector General of Police (IGP) Deshabandu Tennakoon, who is amongst eight police officers named as suspects.

The Matara Magistrate’s Court recently ordered the arrests, underscoring the gravity of the case and the involvement of high-ranking officials.

Sri Lanka’s Foreign Relations Challenges and the Geneva UN Human Rights Conference

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By: Staff Writer

March 30, Colombo (LNW): Sri Lanka’s foreign relations have faced significant challenges in recent years, particularly concerning human rights issues and international scrutiny. The country’s engagement with the United Nations Human Rights Council (UNHRC) in Geneva has been a focal point of its diplomatic struggles, as various nations and international bodies have raised concerns about past conflicts, accountability, and reconciliation efforts.

A primary issue in Sri Lanka’s foreign relations is the continued pressure from Western nations and human rights organizations regarding alleged war crimes and human rights violations during the final stages of the civil war in 2009. The UNHRC has passed several resolutions calling for accountability, justice for victims, and implementation of reconciliation measures. While successive Sri Lankan governments have engaged with the UNHRC, their responses have varied, ranging from cooperation to outright rejection of international involvement.

In Geneva, Sri Lanka has often found itself defending its sovereignty against allegations of insufficient progress in addressing wartime atrocities. The government has emphasized its commitment to a domestic mechanism for reconciliation, arguing that international intervention undermines national sovereignty. However, critics argue that the lack of tangible progress and delays in justice mechanisms have led to continued scrutiny and diplomatic strain.

The government has sought support from key allies, including China, Russia, and several South Asian nations, to counterbalance pressure from Western nations. These allies have often defended Sri Lanka’s stance in the UNHRC, advocating for a non-intrusive approach that allows the country to handle its internal matters independently. However, this geopolitical balancing act has also affected Sri Lanka’s economic and trade relations, as Western nations have linked human rights concerns with trade agreements and foreign aid.

Economic challenges have further complicated Sri Lanka’s diplomatic engagements. The country has been reliant on international financial assistance, and strained relations with Western financial institutions could impact much-needed economic recovery efforts. The European Union, for example, has reviewed its trade preferences for Sri Lanka based on human rights concerns, adding another layer of complexity to foreign relations.

Despite these challenges, Sri Lanka has also made attempts to improve its international standing. The government has periodically engaged in dialogue with the UN and international partners to demonstrate willingness to address human rights concerns. Domestic efforts, such as setting up truth and reconciliation mechanisms, have been proposed, though implementation has been slow and met with skepticism.

As Sri Lanka continues to navigate its diplomatic landscape, its participation in the Geneva UN Human Rights Conference remains a crucial aspect of its foreign policy. The outcome of these engagements will influence not only its global reputation but also its economic prospects and regional alliances. Moving forward, balancing national interests with international expectations will be key to stabilizing Sri Lanka’s foreign relations.

Heat Index expected to increase up to caution level

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March 30, Colombo (LNW): Heat index, the temperature felt on human body is expected to increase up to ‘Caution level’ at some places in Northern, North-central, North-western provinces and in Trincomalee, Batticaloa, Colombo and Gampaha districts, the Natural Hazards Early Warning Centre of the Department of Meteorology said in a warning statement today (30).

The public is urged to stay hydrated and take breaks in the shade as often as possible, check up on the elderly and the sick, never leave children unattended, limit strenuous outdoor activities, find shade and stay hydrated, and wear lightweight and white or light-coloured clothing.

Sri Lanka launches first-ever export of locally produced canned fish

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March 30, Colombo (LNW): Sri Lanka has taken a significant step in the fisheries sector with the dispatch of its first-ever export consignment of locally manufactured canned fish.

The landmark event took place at the Ocean Food factory premises in Madurankuliya, where the inaugural shipment was officially flagged off.

The ceremony was held under the patronage of Deputy Minister of Fisheries, Aquatic Resources, and Ocean Resources Development, Ratna Gamage, who hailed the achievement as a milestone in Sri Lanka’s efforts to expand its seafood exports.

This initial batch is destined for the United Arab Emirates, marking the country’s entry into the global canned fish market.

According to the Government Information Department, this export initiative reflects the growing capacity of Sri Lanka’s fisheries industry to meet international standards.

Officials expressed optimism that this breakthrough would pave the way for further exports to other international markets, bolstering the nation’s economy and creating new opportunities for local producers.

Evaluation of O/L Examination scripts to begin on April 01

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March 30, Colombo (LNW): The Department of Examinations has announced that the marking of answer scripts for the General Certificate of Education (GCE) Ordinary Level (O/L) examination will commence on April 01.

This extensive process is set to take place across 1,066 designated evaluation centres and will involve the participation of approximately 16,000 teachers.

The first phase of the assessment will run from April 01 to 10, ensuring a systematic and efficient grading process.

The O/L examinations for this year were conducted from March 17 to 27, with thousands of students sitting for the crucial assessments.

In a related development, the Department of Examinations has confirmed that the results of the 2024 GCE Advanced Level (A/L) examination will be published before April 20.

Govt expands elderly allowance programme to one million beneficiaries

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March 30, Colombo (LNW): The government has taken steps to expand its elderly allowance scheme, increasing the number of recipients to one million eligible individuals.

This move aims to provide greater financial support to senior citizens facing economic hardship.

Deputy Minister of Rural Development, Social Security, and Community Empowerment, Wasantha Piyatissa, confirmed that discussions are already underway to implement the expansion.

The decision is expected to address growing concerns about the financial struggles of the elderly population, particularly in the face of rising living costs.

Israeli Embassy warns of visa scam targeting refugee workers

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March 30, Colombo (LNW): The Israeli Embassy has issued an urgent warning about an elaborate scam targeting individuals working in Israel on refugee visas, with fraudsters falsely promising legal visa conversions in exchange for money.

Sri Lankan Ambassador to Israel, Nimal Bandara, has stressed that such transactions cannot take place without the official involvement of the Israeli Embassy.

He urged workers to remain vigilant and avoid falling victim to fraudulent schemes.

According to reports, the scammers have been demanding payments as high as Rs. 1.5 million from certain individuals, with some victims already having paid significant sums as advance payments.

The operation appears to be preying on the vulnerabilities of those seeking legal residency, exploiting their aspirations for financial gain.

The Embassy has strongly advised the public against making any payments to unauthorised individuals or groups claiming to facilitate visa conversions.

Authorities have also encouraged victims or those aware of such fraudulent activities to report them immediately, warning that legal action will be taken against those responsible for the deception.

Election Commission reports 180 complaints ahead of Local Government Polls

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March 30, Colombo (LNW): The Election Commission has disclosed that it has received a total of 180 complaints related to the forthcoming Local Government election, highlighting concerns over electoral conduct and adherence to regulations.

According to an official statement, these complaints were lodged between 20 and 28 March, with the majority concerning breaches of election laws.

Of the reported cases, 179 involve violations of electoral regulations, while one incident has been classified as an act of violence.

The Commission further noted that efforts have been made to swiftly address these grievances, with 133 complaints already resolved.

Meanwhile, authorities are actively working on the remaining 47 cases to ensure a fair and transparent electoral process.

The Commission has urged all political parties, candidates, and the public to adhere strictly to electoral laws and report any further irregularities.