October 23, Colombo (LNW): IMF Managing Director Kristalina Georgieva expressed optimism yesterday over Sri Lanka’s continued commitment to reforms aimed at safeguarding the hard-won progress made under the IMF-supported program.

Speaking after a meeting with Sri Lankan officials in Washington, Georgieva highlighted the importance of maintaining the momentum for reform.

“I had a comprehensive discussion with Sri Lanka’s delegation. I’m encouraged by the authorities’ commitment to continue their reform efforts to safeguard the hard-won gains under the IMF-supported program,” she said.

Georgieva emphasized that the IMF remains dedicated to supporting Sri Lanka in building a brighter future for its citizens.

The U.S. Embassy in Colombo has imposed travel restrictions on its personnel in Arugam Bay, located in Eastern Sri Lanka, following a credible threat of an attack targeting tourist areas.

In light of this, U.S. citizens have been strongly advised to avoid traveling to the region until further notice.

The Embassy has urged individuals to take precautionary safety measures, including reporting any suspicious activities to local authorities by dialing 119, maintaining heightened vigilance, and trusting their instincts.

Citizens are also advised to keep communication devices easily accessible and stay updated by monitoring local news.

Sri Lankan law enforcement has not yet issued a formal statement regarding the threat.

October 23, Colombo (LNW): The South Asian Apparel Leadership Forum, part of the Sri Lanka Design Festival (SLDF), is gearing up to explore the theme “Knowledge & Innovation Hub – Gateway to South Asia.” 

This year, the forum will spotlight the region’s potential to become a global leader in apparel through innovation-driven solutions. The discussions will emphasize ways to strengthen South Asia’s textile value chain, focusing on regional synergy, design thinking, and cutting-edge technology to ensure sustainability and speed, especially in a post-pandemic world.

Sri Lanka’s apparel industry, known for its resilience, will be presented as a model for adaptive practices, demonstrating how the country integrates sustainability, regional collaboration, and advanced technologies. The overarching vision of the forum is clear: to fuel South Asia’s growth and position Sri Lanka as a key knowledge and innovation hub, offering strategic pathways for global partnerships.

Industry Experts Lead the Charge

The forum will feature a series of deep dives into the global apparel landscape, led by prominent industry figures. Malik Ahamadeen, Chief Growth Officer at MAS Holdings, will chair the event, leveraging his extensive experience in creating new opportunities in the fashion sector. Ahamadeen will guide the forum’s dynamic discussions, ensuring a forward-thinking approach.

Regular contributors, Martin Raymond and Chris Sanderson, co-founders of The Future Laboratory, will present A World in Flux. They will explore how Social, Technological, Economic, Environmental, and Political (STEEP) factors are shifting consumer mindsets and reshaping the apparel industry. Their insights will help companies stay ahead of global trends and position themselves for success.

Ben Cavender, Managing Director of China Market Research Group, will provide insights into China’s apparel industry transformation post-pandemic in his presentation Reshaping the Apparel Landscape Post-Pandemic – The China Perspective. Cavender will highlight how Chinese brands have harnessed innovation and local creativity, offering valuable lessons for global brands.

Hasitha Premaratne, Managing Director of Brandix Lanka Ltd., will present Sri Lanka Apparel – Story of Resilience and Grit. 

Premaratne will showcase how Sri Lanka’s apparel sector has navigated numerous challenges to remain a leader in sustainability and ethics. 

His presentation will inspire participants to embrace innovation and resilience in the face of adversity.

Design Thinking and Innovation

The forum will also feature an interactive panel discussion on embedding innovation and design thinking into apparel businesses. 

The panel will include design experts such as V. Sunil, co-founder of Motherland Joint Ventures, Aimee Kyffin, a UK-based user experience designer, Sarah Tranum from OCAD University in Canada, and Noud Sleumer, an artist and designer from the Netherlands. 

These experts will share practical insights into fostering a design-led culture that transforms organizations and boosts competitiveness.

Participants will learn how to integrate innovative practices and design thinking to create sustainable solutions that address current challenges in the apparel industry. The session promises to be a dynamic exchange of ideas, equipping businesses with the tools they need to thrive in an ever-evolving market.

Future Prospects for South Asia’s Apparel Industry

The forum will conclude with a panel discussion focused on unlocking regional synergies to solidify South Asia’s position as a global apparel powerhouse.

 Industry leaders such as Omega Line Managing Director Felix Fernando and Brandix Apparel Ltd. Executive Director Rajiv Malalasekara will discuss how Sri Lanka’s ethical production capabilities can align with India’s retail market strengths. 

These discussions will further emphasize Sri Lanka’s potential as a knowledge and innovation hub, setting the stage for South Asia to emerge as a leader in the global apparel and fashion industries.

October 23, Colombo (LNW): The Engineering Council of Sri Lanka (ECSL) has ordered the suspension of development projects supervised by the District Coordination Committees, which are managed under the oversight of Provincial Governors, citing a violation of election laws. 

The Commission’s decision comes as the Provincial Governors are political appointees, and their involvement in these projects during the election period could influence voters, thereby breaching election protocols.

The controversy began after the President’s Secretary N.S. Kumanayake issued a directive to the Public Administration Ministry, asking it to instruct District Secretaries to resume activities of the District Coordination Committees. 

These Committees had become inactive following the dissolution of Parliament. The Secretary’s letter emphasised the need to complete the stalled development projects, many of which were funded through the decentralised budget allocated to MPs under the 2024 budget.

The District Coordination Committees are responsible for overseeing development projects at the district level, monitoring their progress, and ensuring timely completion. However, due to the political nature of the Provincial Governors’ appointments, the ECSL has now deemed their involvement in these projects inappropriate during the election period. 

As a result, plans to hold District Coordination Committee meetings next week in the five Northern Province districts – Jaffna, Mullaitivu, Mannar, Kilinochchi, and Vavuniya – have been suspended following the Commission’s intervention. The ECSL communicated its objections to District Secretaries verbally, advising that these projects could only resume after the completion of the Parliamentary elections.

ECSL Chairperson R.M.A.L. Ratnayake has confirmed that the matter will be further discussed during a meeting scheduled for Wednesday, 23 October, where the Commission will assess the broader implications of the President’s Secretary’s move.

South Asian Apparel Leadership Forum at SLDF presents Gateway to Growth: Shaping of a Knowledge and Innovation Hub

October 23, Colombo (LNW): The Home Lands Group of Companies is set to make a historic milestone by becoming the first Sri Lankan real estate developer to host a Property Investment Forum in Australia.

 This event aims to capture the interest of both Sri Lankan expatriates and local Australian investors by showcasing a range of residential investment options in Sri Lanka. 

The forum is scheduled to take place at Springvale City Hall in Melbourne on October 25, targeting high-end investors.

The forum will be an invite-only event, expecting over 450 prominent investors. The Home Lands Group plans to highlight a variety of real estate investment opportunities, not only appealing to the Sri Lankan community in Australia but also to Australian investors unfamiliar with Sri Lankan properties. 

This initiative seeks to bridge the gap between the two regions and promote Sri Lanka’s growing real estate market on an international platform.

The investment portfolio presented will cater to both short-term and long-term investors, offering a broad spectrum of real estate options. These include beachfront resort properties, which are aligned with Sri Lanka’s rising tourism industry, and urban real estate investments in key city centers (CBD). 

The portfolio also highlights retirement villa options that offer cost-effective yet luxurious lifestyles, time-sharing opportunities, and premium golf compounds for leisure and sporting enthusiasts.

Nalin Herath, Chairman of the Home Lands Group, expressed his pride in being the first Sri Lankan company to venture globally in the real estate sector on such a scale. He emphasized that this forum is a response to the high demand for the company’s investment portfolio, which has seen significant growth in the past year. 

Herath added, “We are excited to showcase Sri Lanka’s real estate investment potential to the world and proud to be recognized as the country’s first multinational real estate company.”

In addition to showcasing investment opportunities, the event promises a vibrant social component. The evening will kick off with cocktails and networking sessions, featuring entertainment by the popular Sri Lankan band Marians and a comedy act by Blok and Dino. 

The night will culminate in a gala dinner, with SriLankan Airlines serving as the airline partner and ANZ Bank providing financial backing.

Earlier this year, the Home Lands Group took a significant step by expanding into the Australian market, establishing Home Lands (Melbourne). With a permanent office in Blackburn, Melbourne, the company offers a full range of real estate services. Specializing in both land and apartment sales, the Melbourne branch is dedicated to meeting the diverse real estate needs of customers across Australia.

Through this event and its recent expansion, the Home Lands Group is set to attract a new wave of international interest in Sri Lankan real estate. The combination of Sri Lanka’s natural beauty, growing tourism, and the innovative real estate offerings from Home Lands Group positions it as an appealing choice for global investors looking for diverse and profitable opportunities.

October 23, Colombo (LNW): The Election Commission has reported a significant rise in postal voting applications for the upcoming General Election compared to the previous Presidential Election. According to the Commission’s Chairman, R.M.A.L. Ratnayake, an additional 25,731 postal voting applications have been received for this election.

The total number of applications submitted stands at 738,050. However, 21,160 of these applications have been rejected.

The Commission announced that the printed postal ballot papers are set to be handed over to district returning officers today, as preparations for the election continue.

1. Control prices of rice will remain unchanged, President Anura Kumara Dissanayake said during a meeting with rice millers and officials from the Department of Agriculture. He also highlighted that plans are underway for a long-term program to create an organized agricultural plan, which would provide greater benefits to farmers.
2. The Cabinet has granted approval to designate the Eastern Container Terminal (ECT) project as a “Special Project.” This decision was made based on a proposal by the Minister of Transport, Highways, Ports, and Civil Aviation. The Sri Lanka Ports Authority (SLPA) will develop the ECT in phases as part of the Colombo South Port project, operating it as a fully-owned terminal of the SLPA.
3. The Supreme Court has granted permission to name former President Ranil Wickremesinghe as a respondent in Fundamental Rights (FR) petitions filed regarding the alleged police attack and dispersing of a protest organized by the Socialist Youth Union (SYU) in 2022.
4. Samagi Jana Balawegaya (SJB) leader Sajith Premadasa stated that his party could renegotiate the current IMF agreement to benefit the people, something the past and present governments failed to do. Addressing a gathering in Borella, Premadasa emphasized that even from the opposition, SJB has engaged in multiple discussions with the IMF, reaching several understandings.
5. The Chinese Ambassador to Sri Lanka, Qi Zhenhong, met with President Anura Kumara Dissanayake at the Presidential Secretariat in Colombo. During their meeting, Ambassador Qi made a donation of LKR 30 million (USD 100,000) as emergency flood relief to assist those affected by the recent flooding in the country
6. Former President of Sri Lanka, Gotabaya Rajapaksa, has expressed his willingness to provide testimony in any court in the country, except the Jaffna Magistrate’s Court, regarding the disappearance of two human rights activists in 2011. This statement was made through his lawyer, Romesh de Silva, during a hearing at the Supreme Court.
7. The Supreme Court has announced that it will deliver its decision today (23) regarding the petition submitted by the Democratic National Alliance (DNA), seeking a writ order invalidating the decision of the District Returning Officer to reject their nomination for the Vanni Electoral District in the General Election.
8. Rev. Fr. Cyril Gamini Fernando, Director of Communications for the Archdiocese of Colombo, says that they reject the report of the Committee of Inquiry, chaired by retired High Court Judge A.N.J. De Alwis. He made this statement in response to comments made by Pivithuru Hela Urumaya (PHU) leader and former MP Udaya Gammanpila during a press conference where he disclosed the contents of a previously unreleased report regarding the Easter Sunday terror attacks.
9. The Buddha Sasana, Religious and Cultural Affairs, National Unity, Social Security and Media Ministry has organized the 2024 Presidential Media Awards to honor and encourage journalists’ contributions to fostering a strong media culture in Sri Lanka. The awards will cover multiple categories, including print, radio, television, web platforms, media research, and school media, with a total of 54 awards planned, including four lifetime achievement awards. Only media creations published or broadcast between January 1 and December 31, 2023, will be eligible for consideration.
10. The BLACKCAPS have called upon a promising all-rounder and an up-and-coming wicketkeeper-batsman for next month’s white-ball tour of Sri Lanka. Wellington Firebirds bowling-allrounder Nathan Smith and Canterbury wicketkeeper-batsman Mitch Hay have earned their maiden BLACKCAPS call-ups, joining a 15-strong squad led by Mitchell Santner for two T20Is and three ODIs starting in Dambulla on November 9.

Article’s purpose and background

This short article highlights how high domestic interest rates inappropriate for the economy have become the key reason for continuously high borrowing by the new government.

• The media is full of comments why the new government also borrows in large amounts despite its anti-borrowing stance. 

• Analyst’s provide reasons of own fantasy. The borrowing to repay debt and interest raised by previous governments, mismanagement of debt by past governments and high exchange rates involved in repayment of foreign debt are cited as popular reasons.

• Although the Ministry of Finance has the full set of information, it does not provide clarifications to the public on the facts.

Real reason – high domestic interest rates

I provide high domestic interest rates as the prime reason for rising indebtedness of the new government. A graphical presentation is given below based in statistics published by the Central Bank (CB).

Highlights of the statistical evidence are as follows.

• Domestic debt holds a dominant share in total debt. Treasury bills and bonds which face market interest rates in line with the CB monetary policy are the major debt categories.

• Therefore, interest payment on domestic debt led by Treasury bills and bonds is the burden on the government which has to borrow newly for interest payment in addition to amortization (or debt repayment). Domestic debt amortization is the biggest component. In fact, foreign debt service (interest and amortization has declined in the recent past. The trend will continue till 2028 due to ongoing default and restructuring of foreign debt. However, borrowing to repay debt at the maturity or to amortize cannot be separately identified as such borrowing is not a budgetary expenditure that is counted in the deficit.

• The budget deficit which is the cause for new debt is almost the interest cost. However, the debt stock has increased in 2022 unreasonably, mainly due to increase in foreign debt, without any association with budget deficit, interest payment and amortization.

• Therefore, unusually high interest rates maintained by the CB for its monetary policy in 2022 and 2023 as well as in many years in the past two decades are behind the significant rise in borrowing. Interest rates around 10% or above have been the key burden to successive governments in their fiscal operations.

• The interest paid at red hot rates (i.e.,15% to 33%) on huge volume of borrowing through Treasury bills in 2022 and 2023 (Total Treasury bill turnover of around Rs. 9,970 bn) (and Treasury bonds) should be accumulating as new borrowing while the govt. does not have income or a fiscal space to retire these Treasury bills.

• Information on maturity profile of debt with contractual interest rates is necessary do assess the extent of the problem. This information is not publicly available. 

• As such, high exchange rate (or currency depreciation) is not a noteworthy reason for new borrowing as the need for the government to service foreign debt is low while same exchange rate is a good source of domestic proceeds on continued foreign borrowing from supra-national institutions for fiscal operations.

Remarks

• Inappropriately high domestic interest rates are the prime cause of high debt burden. Interest rates are driven by the CB’s monetary policy which has no consideration over fiscal and supply side requirements of the economy. The monetary policy effectiveness for the price stability or inflation control through the demand side of the economy is also not established, other than the citation of the old monetary hypothesis.

• However, nobody is dare to question the appropriateness of the CB’s interest rate policy, possibly thinking that such interest rates are divine-determined with no room for any policy error.

• Therefore, whatever the vision of the new government for a new economic system to replace the old system, the heritage of debt problem will no doubt cripple the new government too as already seen from political comments on continued borrowing. The newly cleaned up Parliament expected in the middle of November will not be able to fix this economic governance problem as nobody can lawfully influence in the CB’s independence or the fiscal space fixed by the IMF network. Therefore, as the new public debt law provides for non-market borrowing, the new government also may resort to such borrowings to reduce the cost in the similar manner of pre-2015 placement systems that were highly regarded by CB’s front-running economists as supportive of the control of interest rates.

• However, no government can recover the presently bankrupted economy under the current fiscal and monetary system unless, at least, Rs. 3 trillion of new money is created at low interest rates for credit distribution required across the priority sectors over few years ahead.

(This article is released in the interest of participating in the professional dialogue to find out solutions to present economic crisis confronted by the general public consequent to the global Corona pandemic, subsequent economic disruptions and shocks both local and global and policy failures. All are personal views of the author based on his research in the subject of Economics which have no intension to personally or maliciously discredit characters of any individuals.)

P Samarasiri

Former Deputy Governor, Central Bank of Sri Lanka

(35 years of staff grade service in the Central Bank, a former Director of Bank Supervision, Assistant Governor, Secretary to the Monetary Board and Compliance Officer of the Central Bank, Former Chairman of the Sri Lanka Accounting and Auditing Standards Board and Credit Information Bureau, Former Chairman and Vice Chairman of the Institute of Bankers of Sri Lanka, Former Member of the Securities and Exchange Commission and Insurance Regulatory Commission and the Author of 13 Economics and Banking Books and a large number of articles published.)

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