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Sri Lanka to reach US $13bn debt restructure agreement with official creditors soon

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By: Staff Writer

January 28, Colombo (LNW): Sri Lanka is aiming to negotiate a debt restructuring with holders of its defaulted US dollar bonds within “a couple of months”, the Governor of the Central Bank Nandalal Weerasinghe said  despite complaints by private creditors that they are being left in the dark.

CB Governor further mentioned that Sri Lanka needs to reach an agreement “within a couple of months” on restructuring the USD 13bn of debt, but he went on to dismiss worries that negotiations have become bogged down.

 “There’s a lot of interest from private creditors to finish this as soon as possible. But because of the procedure it takes a certain time . . . We also want to do that fast,” the CB governor has said.

He noted that Sri Lanka must “ensure whatever proposals we have exchanged are consistent with the [IMF’s] debt sustainability analysis and also comparable [with] we have been discussing with other creditors. That’s a bit of a complicated process.”

Sri Lanka will need to show it is still talking to bondholders in good faith in order to secure the next $330mn tranche of the IMF programme, which is up for review in March.

The island also faces the risk that it will be meeting some creditors in the courts rather than around a negotiating table.

Hamilton Reserve Bank, a St Kitts and Nevis-based creditor that is not part of the bondholder committee, has been seeking immediate repayment on about $250mn of Sri Lanka debt through the US courts.

In November, a judge stayed the case until February 29 in order to allow negotiations with other bondholders to proceed.

In response to a question on how the lawsuit might affect the debt negotiations, Dr. Weerasinghe has said that those are “two parallel processes running independently”.

He has ensured that Sri Lanka is “taking into consideration and being mindful about any implications of delay or not delay in judgment”.

Citing people familiar with bond holders’ thinking, he   said a ruling in Hamilton Reserve Bank’s favour would complicate talks even if its claim would be difficult to enforce, and might lead other frustrated creditors to turn to the courts.

If Sri Lanka does not secure a deal soon, “you’re going to see pressure building on bondholders to abandon the consensual process and start looking after themselves”, a person familiar with discussions was quoted as saying.

Under its IMF programme, Sri Lanka is undergoing a series of economic reforms including raising taxes and privatising state companies such as its national carrier Sri Lankan Airlines. 

Indo-SL to conclude ETCA soon with Kochi-Col LNG pipeline on the way

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By: Staff Writer

January 28, Colombo (LNW): India has expressed the belief for the early conclusion of the Economic and Technology Cooperation Agreement (ETCA), which seeks to add to the existing free trade agreement with Sri Lanka, to pave the way to boost the island’s export potential while working on setting up a Liquefied Natural Gas (LNG) pipeline from Kochi to Colombo to bring down electricity costs in the island.

Indian High Commissioner to Sri Lanka, Santosh Jha, addressing an event held in Colombo, said: his country hopes to enhance our economic partnership and enhance Sri Lanka’s export potential through early conclusion of the Economic and Technology Cooperation Agreement.

Moreover the free trade agreement (FTA) between the two countries opened new export opportunities for Sri Lanka to India, which now stands at more than 1 billion dollars, he added.

The remarks came during an evening reception hosted by Mr. Jha at India House in Colombo on the occasion of 75th Republic Day of India on Friday (Jan.26).

He said India’s Security and Growth for All in the Region (SAGAR) policy is at the heart of its approach towards Sri Lanka.

“The India-Sri Lanka partnership has been built on civilizational ties, geographical proximity, cultural connect, strong sense of solidarity and age-old goodwill.”

Recalling the measures taken by the two nations to build a stronger economic partnership with connectivity as the central theme, Mr. Jha said since July 2023, India and Sri Lanka have launched daily flights between Jaffna and Chennai, as well as a ferry service.

Commenting on advancing multiple energy initiatives, the Indian high commissioner said the two nations are now working on power grid connectivity to enable Sri Lanka to export power to India, the multi-product petroleum pipeline to develop Trincomalee as an economic hub and the virtual LNG pipeline from Kochi to Colombo to bring to electricity costs in Sri Lanka.

“There are other clean energy projects in the private sector as well as the one by the NTPC in Sampur.”

Mr. Jha went on to emphasize that India is also Sri Lanka’s largest trading partner, adding that in 2022, bilateral trade stood at USD 6 billion. He said in recent years, India has also been the largest foreign investor in Sri Lanka and that it continues to be the largest source of foreign tourists in Sri Lanka.

Speaking further, Mr. Jha said: “Till date, we have contributed over 5 billion US dollars towards our development partnership, which has touched every single district of Sri Lanka.

We are working on projects for solar electrification of religious places across Sri Lanka, assisting in modernization of Sri Lanka railways, constructing houses for the poor, enhancing Sri Lanka’s health and education infrastructure, and engaging in ports and airports development.

Unprecedented Crises Grip Sri Lanka as Government Policies Take a Toll on Economic and Social Fabric

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The people of Sri Lanka are facing unprecedented crises, as the government’s policies aimed at addressing economic challenges and social issues have led to widespread suffering among the population. The situation is dire, and various aspects of daily life – from food security to human rights and freedoms are affected.

The government’s response to economic challenges in compliance with conditions set by the International Monetary Fund (IMF) has come under intense scrutiny for undermining human rights and exacerbating the plight of the people rather than alleviating their hardships.

A shocking revelation is that more than 17 percent of the population is grappling with some form of food insecurity, requiring urgent assistance. According to the United Nations, an alarming 31 percent of children under the age of 5 are malnourished, highlighting the severity of the crisis.

With ongoing issues of corruption, wastage, and mismanagement, the economic burden on the citizens is further intensified by the doubling of the Value Added Tax (VAT). An 18% VAT has been introduced even for basic needs such as food and textbooks. Measures of social protection are not only inadequate but are also politicised, leaving vulnerable communities in dire straits. And the burden of the economic recovery process falls disproportionately on individuals with low incomes, exacerbating inequality.

Adding to the growing concerns are new repressive measures aimed at curtailing freedoms of expression and association. A proposed counterterrorism law threatens to grant authorities sweeping powers to suppress dissent, raising fears about the erosion of democratic values. Disturbingly discriminatory policies and social exclusion of non-majority communities persist, deepening social divisions.

Furthermore, the Online Safety Commission that will be established under the new Online Safety Act is set to control social media, impose over-censorship, and may demand removal of content within 24 hours without judicial oversight. Online satirical jokes may no longer be able to be used to expose corrupt and dishonest politicians. We vehemently condemn these measures, which use executive powers to undermine democracy and impose them without inclusive consultation.

We urge the various civil society groups in Sri Lanka, the diaspora community, and like-minded international organizations to take notice of the unfolding crises and stand in solidarity with the people of Sri Lanka who are facing the full brunt of these challenging times. Humanitarian assistance and diplomatic efforts are essential to address the pressing issues and to ensure that the government adopts just policies that prioritize the well-being of its citizens.

Signed:
Dr Lionel Bopage
President, Australian Advocacy for Good Governance in Sri Lanka
Australia

State Minister calls for workforce optimisation, directs institutions to prioritise redeployment for enhanced efficiency

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January 28, Colombo (LNW): State Minister of Provincial Councils and Local Government Janaka Wakkambura has issued directives urging institutions to prioritise the redeployment of redundant or surplus employees rather than engaging in new recruitment, in a move to enhance the efficiency of government workforce management.

State Minister Wakkambura emphasised the importance of maximising the utilisation of existing personnel within the government sector, and instructed the heads of institutions to proactively identify vacant positions within government entities and recommend suitable redundant employees to fill these roles.

Furthermore, the directive discourages the surpassing of pre-established employee quotas for specific positions.

This measure is intended to streamline government staffing, ensuring a judicious allocation of resources.

Wakkambura cited the current surplus of development officers as a noteworthy example of untapped potential within the existing workforce.

This strategic approach aims to optimise the government’s human resources and improve overall operational efficiency.

SL and India to reintroduce passenger ferry service after four-decade hiatus

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January 28, Colombo (LNW): The age-old maritime connections between Sri Lanka and India are poised for rejuvenation as plans are underway to reintroduce a passenger ferry service between the two nations.

The Ministry of Ports, Shipping, and Aviation has officially announced that the ferry service, operating from Kankasanthura in Sri Lanka to Nagapattinam in Tamil Nadu, India, is scheduled to recommence on February 15th, 2024.

This initiative signifies a momentous milestone, marking the resumption of passenger ferry operations after a hiatus of four decades between the two countries.

Previous suspension of the service was attributed to various internal circumstances in Sri Lanka.

With concerted efforts and the approval from the Indian government, the reinstatement of the ferry service heralds a new era in bilateral connectivity.

Moreover, this development is anticipated to provide a cost-effective means of travel to India, fostering enhanced ties and facilitating increased accessibility between the two nations.

State Minister Sanath Nishantha’s final rites today: Public pays respects at residence before ceremony

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January 28, Colombo (LNW): In the aftermath of a tragic road accident earlier this week, the final rites of the late former State Minister Sanath Nishantha are scheduled to take place this (28) afternoon at Holy Family Church Rajakadaluwa.

Respects from the public can be paid at Nishantha’s residence in Arachchikattuwa until 2 pm today, preceding the funeral ceremony and burial.

The untimely demise occurred in a car accident near the 11th kilometer post on the Colombo-Katunayake Expressway, where Nishantha’s vehicle collided with a container truck travelling in the same direction.

This unfortunate incident claimed the lives of both Nishantha and his police constable bodyguard, Anuradha Jayakodi.

In recognition of Constable Jayakodi’s dedicated service, the Sri Lanka Police has extended a financial contribution of Rs. 1.5 million to his bereaved family.

Additionally, as a posthumous tribute, Constable Jayakodi was promoted to the rank of sergeant on the 26th.

The driver of the jeep involved in the accident has been arrested on charges of reckless driving and failure to avoid an accident.

Currently undergoing treatment at the Ragama Teaching Hospital, the driver faces legal consequences for his alleged role in the tragic incident.

‘Yukthiya’: 803 more suspects apprehended

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January 28, Colombo (LNW): Sri Lankan authorities have apprehended 803 more suspects within the last 24 hours under ‘Yukthiya’ (Justice), an island-wide operation launched in December last year to crack down the drug menace in the country.

Among the apprehended, a notable 562 suspects were actively engaged in drug-related offences, with 241 identified as priority targets by the Crimes Divisions in their ongoing drug enforcement endeavours.

Additionally, the operation led to the arrest of 225 individuals with outstanding warrants.

The successful execution of Yukthiya saw security forces confiscating a substantial quantity of illegal narcotics, including approximately 212 grams of heroin and 101 grams of methamphetamine (‘ice’).

Further investigations are currently underway to ascertain the legal status of five additional individuals detained during the operation, who are currently held under detention orders.

World’s largest cruise ship ‘Icon of the Seas’ embarks inaugural voyage amid environmental concerns over LNG-powered emissions

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January 28, Colombo (LNW): The world’s largest cruise ship, Icon of the Seas, embarked on its inaugural voyage from Miami, Florida, owned by the Royal Caribbean Group.

The vessel, spanning 365 meters (1,197 feet) with 20 decks and a capacity for up to 7,600 passengers, is powered by liquefied natural gas (LNG).

Despite the grandeur of the seven-day island-hopping journey in the tropics, concerns have arisen regarding potential methane emissions from the LNG-powered ship.

Environmentalists caution that such emissions pose a threat to the environment.

Bryan Comer, Director of the Marine Programme at the International Council on Clean Transportation (ICCT), expressed reservations, stating, “It’s a step in the wrong direction.” According to Comer, the use of LNG as a marine fuel may result in over 120 per cent more life-cycle greenhouse gas emissions than traditional marine gas oil.

This concern is substantiated by a recent report from the ICCT, highlighting that methane emissions from LNG-fueled ships surpass current regulatory assumptions.

Although LNG is considered a cleaner alternative to conventional marine fuels, the risk of leakage remains.

Methane, a potent greenhouse gas, traps 80 times more heat than carbon dioxide over a 20-year period. Mitigating such emissions is crucial in the global effort to address climate change.

In response to these concerns, a spokesperson for Royal Caribbean emphasised that Icon of the Seas exceeds energy efficiency standards set by the International Maritime Organisation by 24 per cent.

The company further outlined plans to introduce a net-zero emissions ship by 2035.

Notably, the ship’s naming ceremony on Thursday featured Lionel Messi, Argentina’s World Cup-winning captain currently playing for Inter Miami.

Messi partook in the traditional christening by placing a football on a specially-built stand, triggering the “good luck” breaking of a champagne bottle against the vessel’s bow.

Icon of the Seas, with a construction cost of $2 billion (£1.6 billion), boasts an array of amenities, including seven swimming pools, six waterslides, and over 40 restaurants, bars, and lounges.

Police award Rs. 1.5 mn to family of late Constable Jayakody, Security Officer for State Minister Sanath Nishantha

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January 28, Colombo (LNW): In a gesture of compassion and support, the Police force has extended a monetary contribution of Rs. 1.5 million to the grieving family of Police Constable J.A.A. Jayakodi, the security officer of the late State Minister Sanath Nishantha.

Constable Jayakodi tragically lost his life in a road accident on the Katunayake Expressway.

Acting Inspector General of Police (IGP) Deshabandu Tennakoon paying his respects visited the residence of Constable Jayakodi in Hedeniya, Galagedara.

During this somber occasion, the Acting IGP presented a cheque for Rs. 1.5 million to the bereaved wife of the constable, offering both condolences and financial support to assist the family during this difficult time.

Sri Lanka Original Narrative Summary: 28/01

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  1. Farmer organisations urge Govt to lift the palm oil plantation ban: say that will result in reactivation of the plantation sector and save about USD 300 mn spent on importing around 220,000 MT of palm oil: palm oil cultivation in SL was abruptly banned in 2020 when Dr Ramesh Pathirana was Plantations Minister.
  2. National Medicines Regulatory Authority Chairman Dr Ananda Wijewickrama raises concerns over the Health Ministry’s recent decision to allow State hospitals to directly purchase medicines: claims such unregulated purchases bypasses NMRA oversight and compromises public health.
  3. CB Governor Nandalal Weerasinghe says SL hopes to negotiate a debt restructuring deal with holders of its defaulted USD 13bn ISBs within “a couple of months”: analysts point out that the Governor and other leaders have regularly said that agreement is to be reached with external creditors in “a few months” since July 2022, but none of those assurances have realised: asserts that his assurances therefore now lack credibility.
  4. Decision said to have been reached through “mutual consensus” at meeting between SL officials and visiting IMF delegation that President’s Chief of Staff and Senior Advisor Sagala Ratnayaka will be responsible to oversee and ensure proper implementation of the financial reform process in SL.
  5. Urban Development Authority Deputy Director General E A C Piyashantha says the UDA had not taken any steps to expropriate the land leased out for the Krrish Project: confirms that the lease between the UDA and investors remains in force.
  6. Couple who have been in hiding after allegedly defrauding Rs.5 bn through Pyramid schemes arrested in Pilimathalawa by the Police Illegal Asset Investigation Division.
  7. Fishing trawler with 6 crew members which had left Sri Lanka from the Chilaw Dikkowita Fisheries Harbour on 12th January, abducted by Somalian pirates in the Arabian Sea area.
  8. Prisons Dept Media Spokesman G Dissanayaka says discussions are underway to open 2 new prisons in the Western and Southern Provinces as the number of prisoners has doubled during the past 2 years.
  9. Deputy Treasury Secretary R M P Rathnayake says Govt plans to give some relief to the public in relation to indirect taxes such as VAT: asserts however that the timeline for such relief would depend on the generation of revenue from direct taxes from High-Net-Worth Individuals (HNWIs).
  10. Medical Supplies Division Deputy Director General Dr. G Wijesuriya admits there is a shortage of cancer medicines to a certain extent: says that as of now, 28 varieties of cancer medicines have been imported and are waiting to be accepted by the MSD, but due to a delay in related documents, distribution has been suspended.