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Central Bank Strengthens Foreign Reserves amid Economic Recovery

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By: Staff Writer

December 05, Colombo (LNW): Sri Lanka is intensifying efforts to bolster its foreign reserves to cover $5 billion in debt obligations over the next 12 months, with expectations of improved foreign inflows in 2025 creating healthier liquidity in the domestic foreign exchange market.

Central Bank Governor Dr. Nandalal Weerasinghe emphasized that meeting 100% of the country’s short-term service obligations through reserves ensures financial stability.

Speaking to Central Banking, Weerasinghe highlighted two key metrics for assessing foreign reserves: import coverage and the ability to cover debt obligations for the upcoming year.

He noted that achieving $10 billion in reserves would provide ample coverage for two years, particularly given Sri Lanka’s flexible exchange rate system, which demands less reserve support than a fixed exchange rate.

While the International Monetary Fund (IMF) targets $13.5 billion in reserves by the end of its programme, Weerasinghe affirmed that Sri Lanka is well-positioned to meet this benchmark.

Under the IMF agreement, foreign exchange reserve payments are capped at 4.5% of GDP, further supporting the Central Bank’s strategy.

Strong inflows from worker remittances, tourism, and export performance are expected to accelerate reserve accumulation in 2025, enabling the Central Bank to purchase dollars from the domestic market to build reserves further.

Sri Lanka’s official reserves have been on a sharp upward trajectory. By December 2023, reserves reached $4.4 billion, a 23% increase fueled by disbursements from the IMF, World Bank, and Asian Development Bank.

By April 2024, reserves had climbed to $5.4 billion, the highest level in three and a half years, driven by record-high Central Bank dollar purchases, which outpaced sales since late 2023. This trend has significantly appreciated the Sri Lankan rupee since early 2024.

The tourism sector remains a key contributor to economic recovery. Projected earnings from tourism are expected to rise to $3 billion by the end of 2024, up from $2.1 billion in 2023, as tourist arrivals surpass 2 million. Expanded airline and cruise operations, along with targeted promotional campaigns, have fueled this growth.

Sri Lanka has also emerged as a favored destination over the Maldives, further boosting its appeal. The surge in tourism activity strengthens the local currency through increased foreign exchange transactions, contributing to a favorable current account balance and attracting foreign investments.

As Sri Lanka anticipates economic recovery and potential debt sustainability by August 2024, the country is poised for a credit rating upgrade. These developments, coupled with robust reserve management and growing investor confidence, reinforce Sri Lanka’s path toward financial stability and sustainable growth.

US DFC Yet to Disburse Loan for Adani’s Sri Lankan Port Project

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By: Staff Writer

December 05, Colombo (LNW): The US International Development Finance Corporation (DFC), which pledged a $553 million loan last year to the Adani Group for developing a port in Sri Lanka, has yet to release any funds.

“The project has not reached financial close or signed a loan agreement,” a DFC official stated, responding to inquiries. “We continue to conduct due diligence to ensure all aspects of the project meet our rigorous standards before any disbursements are made,” the official added via email.

The loan was intended to support the Colombo West International Terminal (CWIT), a deep-water container terminal at Colombo Port. The terminal is being developed by a consortium that includes Adani Ports, Sri Lanka’s John Keells Holdings Plc., and the Sri Lanka Ports Authority.

The project, seen as a strategic move by the US to counter Chinese influence in Sri Lanka while boosting the local economy, is progressing according to the Adani Group.

 “Phase 1 is on schedule and nearing completion, with commercial operations expected by Q1 2025,” an Adani spokesperson confirmed.

Meanwhile, GQG Partners, a major US-based investor in the Adani Group with over $8 billion in holdings across seven Adani companies, cited DFC’s loan commitment as a positive signal for the group.

The announcement follows allegations by US authorities against Adani Group founder Gautam Adani and others, accusing them of paying $250 million in bribes to secure Indian solar power contracts.

Despite the charges, Adani Ports, a key entity in the Sri Lankan project, has not been implicated. The DFC refrained from commenting on whether it would withdraw from the project or seek a new partner but emphasized its commitment to ensuring integrity and compliance in its ventures.

The strategically important port project in Sri Lanka serves as both an effort by the United States to counter China’s growing influence in the region and a means to boost the local economy.

According to a spokesperson for the Adani Group, the Colombo West International Terminal (CWIT) project is progressing as planned, with Phase 1 nearing completion and expected to be operational by the first quarter of 2025. The spokesperson requested anonymity.

Last week, GQG Partners informed its investors that it had increased its stakes in Adani Group companies following new developments, including the U.S. International Development Finance Corporation’s (DFC) decision to invest in the Sri Lankan port project alongside Adani Ports and SEZ Ltd in November 2023.

GQG Partners, a U.S.-based investment firm, is a major supporter of the Adani Group, with over $8 billion invested in seven of its listed companies.

In a note to investors, GQG viewed this development as a positive signal, if not an endorsement, of the Adani Group. However, it expressed surprise that the U.S. government approved funding and collaboration on projects involving entities under investigation by the Department of Justice (DOJ).

Last week, U.S. authorities indicted Adani Group founder Gautam Adani, his nephew Sagar Adani, and Adani Green Energy’s managing director Vneet Jaain for allegedly paying $250 million in bribes to Indian officials to secure solar power contracts.

The DFC has not clarified whether it will proceed with the project, withdraw, or seek a new partner. However, it emphasized that Adani Ports has not been implicated in the charges brought by U.S. prosecutors.

A DFC official stated, “We remain committed to ensuring our projects and partners adhere to the highest standards of integrity and compliance.”

WB pledges support for “Clean Sri Lanka” initiative

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By: Isuru Parakrama

December 05, Colombo (LNW): The World Bank has reaffirmed its commitment to assisting Sri Lanka with the implementation of its “Clean Sri Lanka” programme, a new national initiative aimed at improving environmental standards across the country, announced the President’s Media Division (PMD).

This assurance was made by World Bank Executive Director Parameswaran Iyer during a meeting with President Anura Kumara Dissanayake at the Presidential Secretariat yesterday (04).

Iyer congratulated President Dissanayake on his recent appointment and the establishment of the new government, expressing his confidence in Sri Lanka’s potential to move forward with its development goals.

He confirmed that all ongoing projects backed by the World Bank will continue without disruption, ensuring that key initiatives in infrastructure, education, and health are carried forward.

The meeting also provided a platform for President Dissanayake to present his government’s priorities for the coming years, with a focus on key areas such as reducing rural poverty, advancing digitalisation, and implementing the ambitious Digital Identity Card initiative.

These initiatives are seen as crucial steps towards modernising the country’s infrastructure and improving governance.

Another major issue discussed during the meeting was the need to address longstanding challenges in the Northern and Eastern provinces, particularly concerning land and housing issues affecting the plantation communities.

The President outlined his administration’s commitment to resolving these matters, alongside efforts to strengthen sectors like agriculture, fisheries, tourism, education, and health—areas he sees as vital for the nation’s economic growth and the enhancement of citizens’ livelihoods.

In response to these priorities, Iyer expressed the World Bank’s readiness to assemble an advisory group that will work closely with the Sri Lankan government to map out strategies for supporting these development objectives.

He also praised the “Clean Sri Lanka” programme, recognising its importance for fostering a cleaner and more sustainable future for the nation.

The meeting was attended by senior officials, including Minister of Labour and Deputy Minister of Economic Development, Professor Anil Jayantha; Deputy Minister of Finance and Planning, Dr. Harshana Suriyapperuma; and Secretary to the President, Dr. Nandika Sanath Kumanayake.

Ex-Minister Lohan Ratwatte and wife granted bail in luxury car case

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By: Isuru Parakrama

December 05, Colombo (LNW): Lohan Ratwatte, the former State Minister, and his wife Shashi Prabha Ratwatte have been granted bail by the Nugegoda Magistrate’s Court today (05) in connection with an ongoing investigation into an illegally imported luxury vehicle.

The court set a cash bail of Rs. 25,000 for each defendant, along with two personal bonds, each valued at Rs. 1 million. Additionally, Lohan Ratwatte has been subjected to an overseas travel ban, preventing him from leaving the country whilst the investigation continues.

The couple had been arrested earlier in connection with the luxury car, which was found to have been imported and assembled in Sri Lanka without the necessary legal authorisation.

The vehicle was discovered by police during an inspection at a three-storey property in Mirihana, Embuldeniya, which is owned by Shashi Prabha Ratwatte.

The police had been alerted to the presence of a luxury car without number plates, prompting a closer investigation.

During the police inquiry, both Lohan and Shashi Ratwatte explained that the property where the car was found belonged to Shashi’s mother, and that the vehicle had been brought to the location by Ratwatte’s private secretary.

However, the situation took a tragic turn when it was revealed that the private secretary had recently been found dead from gunshot wounds in Katugastota, Kandy, adding an element of mystery to the case.

Special audit on electric vehicle import scheme for expatriate workers

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December 05, Colombo (LNW): A thorough audit has been completed on the scheme designed to facilitate the import of fully electric vehicles (EVs) for Sri Lankan expatriate workers.

Speaker Ashoka Ranwala confirmed that the detailed report on the findings will be tabled in Parliament today (05), offering insights into the management and execution of the programme.

The scheme, which was introduced as part of an initiative to encourage sustainable transportation, ran from May 01, 2022 to September 15, 2023.

During this period, permits were issued to expatriate workers, enabling them to import electric vehicles under specific conditions.

The audit was conducted to assess the efficiency, transparency, and overall effectiveness of the permit distribution process, ensuring that the scheme was executed in line with established regulations.

Govt to probe alleged political bribes involving liquor licences

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December 05, Colombo (LNW): The Sri Lankan government has announced plans to launch an investigation into whether any members of the previous Parliament, or individuals closely connected to them, received liquor licences as part of political bribery schemes under the former regime.

A government spokesperson confirmed this move yesterday, following concerns raised by opposition figures.

Chief Government Whip Nalinda Jayatissa spoke to the media in Parliament, stating that the government would immediately commence an inquiry into the matter.

He clarified that while the liquor licences in question were not directly issued in the names of any MPs, it remains possible that these licences were obtained through proxies or for the benefit of their close associates.

“While none of the licences appear to be issued in the personal names of any MPs, it is highly likely that these individuals may have used others’ names or secured licences for their allies,” Dr. Jayatissa explained. “We are committed to investigating the situation fully to clarify all these concerns.”

The issue surfaced after Leader of the House, Bimal Ratnayake, revealed in Parliament that 361 liquor licences had been issued since January 1, 2024.

According to Ratnayake, these licences were distributed across various provinces, with the highest number being allocated to the Western Province, which received 110 licences.

Other provinces received varying numbers, including 48 for the Southern Province, 45 for the Central Province, and 30 each for the North Western, Sabaragamuwa, and Uva Provinces.

A breakdown of the licences revealed that a significant portion, around 172, were issued for wine stores under the FL 4 category.

These licences were distributed across multiple districts, with notable concentrations in Colombo, Gampaha, and other key urban areas.

In addition to these, licences were also issued to Sathosa outlets and some to the Chairman of Sathosa, as well as to several companies and individuals.

Minister Ratnayake has raised serious concerns about the motivations behind these licences, suggesting that they were part of a larger scheme of political bribery. His allegations are based on a comment made by former President Ranil Wickremesinghe, which implied that such actions were politically motivated.

Ratnayake stressed that the distribution of these licences appeared to be an attempt to secure political favours in exchange for access to lucrative liquor trade privileges.

Should any MPs or officials be found to have engaged in corrupt practices, further legal action will be considered.

CEA says air quality in Sri Lanka expected to improve

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By: Isuru Parakrama

December 05, Colombo (LNW): The Central Environmental Authority (CEA) has announced that air quality in several regions across Sri Lanka is expected to improve further in the coming days.

According to the latest data released by the CEA, the air quality index (AQI) across the country ranged from 44 to 106 as of 6:00 a.m. today (05), indicating a generally moderate air quality level.

Despite the overall positive trend, the CEA reported a slight decline in air quality in the capital, Colombo, where the AQI ranged between 98 and 106.

Whilst this still falls within the “moderate” category, it is a slight drop compared to the previous days.

In contrast, other areas across the island have seen an improvement, with air quality remaining in the moderate range, which is considered acceptable for the general population.

Notably, in Nuwara Eliya, a region known for its cooler and cleaner air, the air quality has returned to normal levels, following some recent fluctuations.

The CEA has assured the public that the overall air quality is expected to stabilise, thanks to favourable weather conditions, including reduced dust and pollutant levels.

US Assistant Secretary of State Donald Lu arrives in SL for official visit

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December 05, Colombo (LNW): Donald Lu, the United States Assistant Secretary of State for the Bureau of South and Central Asian Affairs, has arrived in Sri Lanka today (05) as part of an official visit aimed at enhancing bilateral ties between the two nations.

Accompanied by a senior official from the U.S. Department of State, Lu touched down at Bandaranaike International Airport (BIA) at 2:55 a.m., aboard Qatar Airways flight QR-662, which had arrived from Doha.

Upon his arrival, Lu’s delegation was warmly welcomed by representatives from the U.S. Embassy in Colombo, as well as officials from Sri Lanka’s Ministry of Foreign Affairs.

The visit is expected to pave the way for strengthening cooperation between the United States and Sri Lanka in key areas such as economic growth, governance, and combating corruption.

During his stay in Sri Lanka, Lu will engage in discussions aimed at furthering joint efforts to promote sustainable economic development, bolster anti-corruption initiatives, and foster stronger people-to-people connections, according to a statement released by the U.S. Embassy.

The visit will see Lu joined by other prominent officials, including USAID Deputy Assistant Administrator Anjali Kaur and U.S. Department of the Treasury Deputy Assistant Secretary Robert Kaproth. Together, they will meet with Sri Lanka’s newly formed government and representatives from civil society.

The diplomatic talks are expected to focus on enhancing bilateral relations, particularly in support of Sri Lanka’s ongoing governance and economic reform agenda.

The U.S. delegation will explore ways to provide tailored technical assistance, capacity-building programmes, and development support to Sri Lanka as it strives to achieve its reform goals.

Govt seeks Parliamentary approval for Rs. 1,403 bn Vote on Account (LIVE)

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By: Isuru Parakrama

December 05, Colombo (LNW): The government has presented a vote on account to Parliament a short while ago, seeking approval for an expenditure of Rs. 1,403 billion (Rs. 1,402,886,263,000) to cover the period from January 01 to April 30, 2025.

The proposal, which was formally introduced by Deputy Minister of Economic Development Anil Jayantha, aims to secure the necessary funds for essential public services and ongoing government projects during the first four months of the year.

The vote on account is a critical financial measure, allowing the government to continue operations smoothly until the full national Budget is finalised and approved.

It covers a wide array of expenditures, from recurrent government spending to the allocation for development projects and services that the public relies on.

Deputy Minister Jayantha presented the request to Parliament earlier today, noting that the funds would be essential in ensuring that the government meets its financial obligations and maintains stability during the early months of 2025.

The Parliamentary debate on the Vote on Account is currently ongoing.

SLPP Administrative Secretary arrested over alleged misinformation on Social Media

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December 05, Colombo (LNW): Renuka Perera, the Administrative Secretary of the Sri Lanka Podujana Peramuna (SLPP), has been taken into custody by the Criminal Investigation Department (CID) in connection with allegations of spreading false information.

The arrest follows claims that Perera had posted misleading content related to the ‘Mahaviru’ commemorations in the Northern Province on social media platforms.

According to police sources, Perera is accused of sharing unverified and potentially harmful details about the annual remembrance events, which are held to honour the fallen soldiers of the Tamil militant group during the civil conflict.

The posts in question allegedly misrepresented key aspects of the commemorations, leading to concerns about the possible incitement of unrest or public confusion.