Sri Lanka in talks for billion dollar equivalent Indian rupee swap

Sri Lanka is in talks with India for a billion US dollar equivalent Indian rupee central bank swap, to facilitate trade, Indrajit Coomaraswamy, ad advisor to the government said.

“The amount is still uncertain it could be up to the equivalent of a billion US dollars,” Coomaraswamy told an online forum hosted by Sri Lanka’s central bank.

The money will be used to facilate India Sri Lanka trade, he said.

India has been trying to popularize the use of Indian rupees for external trade and also encouraged Sri Lanka banks to set up Indian rupee VOSTRO accounts.

However the first step in popularizing a currency for external trade is to get domestic agents, especially exporters, to accept their own currency for trade, like in the case of the US or EU, analysts say.

India’s billion US dollar credit to Sri Lanka given during the 2022 crisis is settled in Indian rupees (transaction need).

However the Indian government itself has chosen to denominate it in US currency for debt purposes (future value).

In most South Asian nations, receivers of remittances are willing to accept domestic currencies, leading to active VOSTRO account transactions.

Sri Lanka is expected to repay a 400 million US dollar swap with the Reserve Bank of India next year under an International Monetary Fund backed program for external stability and debt re-structuring.

Central bank swap proceeds sold to banks, which are then sterilized with inflationary open market operations, can trigger forex shortages and currency crises, analysts warn.

Sri Lanka went to the International Monetary Fund after two years of inflationary monetary operations by the central bank’s issue department (money printed to suppress interest rates) triggered the biggest currency crisis in its history and external sovereign default.

Sri Lanka had gone to the IMF 16 times with similar external troubles except for the April 2003 extended fund facility under Central Bank Governor A S Jayewardene which was a purely reform-oriented program with the World Bank (PRGF/PRSP) program at a time when he was collecting reserves with deflationary monetary policy and perhaps the lowest inflation since the Bretton Woods collapsed.

Mano says LG and PC elections equally important

Tamil Progressive Alliance (TPA) leader Mano Ganesan, MP, has thanked the Colombo-based diplomatic community for their respective roles as friends and development partners of Sri Lanka during this crisis period in obtaining IMF assistance. Lawmaker Ganesan was among the Opposition delegation that met diplomats at the meeting arranged by the office of Leader of Opposition Sajith Premadasa.

Sajith led the opposition MPs group that included Mano Ganesan, Rauf Hakeem, M.A. Sumanthiran, G.L. Pieris, Harsha de Silva, Eran Wickremaratne, Kabir Hasheem and Lakshman Kiriella. The US, India, UK, Japan, EU, Canada, France, News Zealand and Italy were represented.

Ganesan said, on the subject of restoration of democracy, his party while stressing on LG elections, considers PC elections that are shelved, as equally important. He also said that the government agreed to conduct PC elections under proportional system at the select committee on electoral reform.

TPA leader insisted that all conditional grant-assistance of development partners meant for welfare beneficiaries shall reach the most vulnerable poverty stricken food insecure plantation sector under affirmative principles to serve the very purpose. Current listing process of beneficiaries is politically flawed, Ganesan noted to the DPL community.

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Will summon EC for a meeting over uncertainty of LG polls: Dinesh

The Elections Commission will be summoned for a meeting to discuss the matters with regard to the uncertainty of the commission about holding the Local Government election, Minister of Provincial Councils and Local Government and Prime Minister Dinesh Gunawardena said today.

He told Parliament that the Elections Commission had not been able to come to a conclusion on holding the LG polls where the discussion had ended with looming uncertainty.

“I hope to call the Elections Commission for a meeting soon about the uncertainty of the Commission regarding the LG polls,” he said responding to questions of the opposition.

The Prime Minister said the opposition and the Elections Commission had filed several cases in the Supreme Court regarding the LG polls and added that the government would respect the court decisions and act accordingly.

When asked about allocating funds to the LG polls, he said the government has several priorities to meet in the coming days where two salaries of government workers and pensions have to be paid before the New Year.

Dollar rate goes up against Sri Lankan Rupee

The Central Bank of Sri Lanka (CBSL) announced the official exchange rates today (24).

Accordingly, the buying rate was declared as Rs. 314.74, while the selling rate was recorded as Rs. 331.37.

Other currencies, including the Australian Dollar, the Great British Pound, the Japanese Yen and the Euro, too, went up against the Sri Lankan Rupee.

Meanwhile, the Middle Rate of the USD/LKR SPOT exchange rate stood at Rs. 318.63 today.

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Sri Lanka repays part of Indian credit with first IMF loan tranche

Sri Lanka has used 121 million US dollars from the proceeds of an International Monetary Fund loan to repay an Indian credit line, State Minister for Finance Ranjith Siyambalapitiya said.

Sri Lanka got 331 million dollars from the IMF in the first tranche.

Unlike in the past where the IMF funds went to the central bank, this time the money came to a Treasury account, Siyambalapitiya said.

Sri Lanka has been given permission to use IMF funds for budgetary purposes.

India gave some credit lines to Sri Lanka after the country defaulted on its debt in April 2022 and the money is outside the debt re-structuring parameter.

Sri Lanka is negotiating with India to repay the funds separately.

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Sajith appeals to include Sithadthan in Constitutional Council

Opposition Leader Sajith Premadasa appealed to Speaker Mahinda Yapa Abeywardena to include Tamil National Alliance (TNA) nominee Dharmalingam Sithadthan in the Constitutional Council.

He told Parliament today that the TNA has nominated MP Dharmalingam Sithadthan to be included in the Constitutional Council.

Premadasa said that the Constitutional Council has only 9 members now and needs to have 10.

As a result, he requested the Speaker to confirm Dharmalingam Sithadthan as the 10th member.

He said that the refusal to include Sithadthan in the Constitutional Council will send the wrong signal.

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Sri Lankan envoy discusses collaboration in transport sector with Indian Minister

High Commissioner of Sri Lanka to India Milinda Moragoda met with Indian Minister of Road Transport and Highways, Shri Nitin Gadkari, in order to discuss opportunities for bilateral cooperation in the transport sector.

The meeting took place in New Delhi, and centered on a range of matters pertaining to the collaboration and partnership between the two countries in the transport sector.

High Commissioner Moragoda requested the assistance of Minister Gadkari in sharing India’s experience in public-private partnerships in the highways sector with Sri Lanka, and proposed to set up a platform through which this experience could be shared with the relevant stakeholders in Sri Lanka.

Moragoda also suggested that Indian investors be encouraged to look at investment opportunities in Sri Lanka’s infrastructure sector.

Minister Gadkari expressed his support to these proposals, explaining that as India aims to become a developed economy by 2047, its government has focused on boosting infrastructure, including highways and road networks.

India’s spending on infrastructure has increased significantly over the last decade, and is expected to hit a record Rs. 10 trillion for the next financial year.

Meanwhile, cooperation in the electric mobility sector was also discussed, exploring the possibility of India sharing its experience, expertise and best practices of the electrical vehicle industry with Sri Lanka.

High Commissioner Moragoda also sought the assistance of Minister Gadkari in encouraging Indian private companies from the electric mobility sector to invest in Sri Lanka.

Briefing the Indian Minister on Sri Lanka’s road to economic recovery, Moragoda highlighted India’s pivotal role therein, and presented a copy of his policy roadmap the “ Integrated Country Strategy for Sri Lanka Diplomatic Missions in India 2021/2023” to Minister Gadkari.

The Minister, in turn, presented a copy of his latest book ‘Unmasking India’ is a compilation of thought articulated by him during the Coronavirus pandemic on the Armanirbhan Bharath through a series of webinars.

Hailing from the State of Maharashtra, Shri Nitin Gadkari is the longest serving Minister for Road Transport and Highways of India currently running his tenure for over eight years since 2014.

While having authored several books, he also served as the President of the Bhartiya Janata Party (BJP) from 2009 to 2013, and has held the ministerial portfolios of Micro, Small & Medium Enterprises; Shipping; Water Resources, River Development & Ganga Rejuvenation; and Rural Development & Panchayati Raj.

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Sri Lanka first country to light firecrackers for receiving IMF loan

Sri Lanka is probably the first country to light firecrackers for receiving a loan from the International Monetary Fund (IMF), former Minister Wimal Weerawansa told Parliament today.

He noted that banners were also erected in some places congratulating the President for securing the loan.

Weerawansa said that the IMF must be laughing at the drama taking place in Sri Lanka.

The IMF Executive Board had this week approved a 48-month extended arrangement under the Extended Fund Facility (EFF) of SDR 2.286 billion (about US$3 billion) to support Sri Lanka’s economic policies and reforms.

“Sri Lanka has been facing a severe economic crisis as a result of past policy missteps and economic shocks. We have been deeply concerned about the impact of the crisis on the Sri Lankan people, particularly the poor and vulnerable groups, and about the economic costs of the delay in the country’s access to external financing,” the IMF said.

The Board approval marks an important step towards the resolution of the crisis.

Sri Lanka has now receives an initial disbursement of about US$330 million from the EFF arrangement, which is expected to catalyze new external financing including from the Asian Development Bank and the World Bank.

Presidential and LG polls should be held on the same day: Navin

The Parliamentary, Presidential and Local Government Elections should be held together on the same day, former Minister Navin Dissanayake said today.

He said that all three elections should be held together to save money.

During his remarks, he emphasized that local government reforms would be enacted soon.

“The country cannot afford to look after 8,000 Local Government members at the moment and these reforms will be introduced soon,” he said.

“The policy of President Ranil Wickremesinghe is to take on political and economic reforms together,” he added.

Also he charged that some members of SJB tried to sabotage IMF assistance.

“They wanted to use the Local Government Election results for this and show the world that the present Government did not have a mandate,” he said.

Will the renewed Sri Lankan bid to set up a Truth Commission bear fruit? By P.K.Balachandran

At a meeting in Pretoria on Wednesday, the Sri Lankan Minister of Justice Wijedasa Rajapakshe and the Minister of Foreign Affairs Ali Sabry discussed with Rolf Meyer and Ivor Jenkins, the contours of the proposed Truth and Reconciliation Commission (TRC) in Sri Lanka inspired by the South African TRC that functioned between 1995 and 2003.

Sabry tweeted to say that he got “some very insightful inputs,” and added that “a credible and transparent domestic TRC could be the solution to deal with intrusive and agenda-driven attempts.” He was decrying the UNHRC’s attempts to impose on Sri Lanka mechanisms for achieving ethnic reconciliation based on retributive justice dispensed by a judicial process with foreign participation.

This is not the first time that Sri Lanka is trying to set up a TRC. It has been attempted before, but only to be abandoned because Sri Lankan society is too divided to make it work. A TRC would be mooted when there is a temporary need to mollify the international human rights lobby and abandoned after the threat recedes. It was mooted in 2015 and 2022 because of pressure from the UNHRC, but it was not followed up. It is mooted now primarily to please the IMF, but with no intention to actually set it up.

However, on October 16, 2018, a conceptual framework was submitted to the Lankan cabinet. It decided to refer it to the Ministry of Defense. But it went no further. In March 2020, the UNHRC reported that the TRC proposal had not made any progress.

The concept paper had said that the TRC of Sri Lanka (TRCSL) will be established by an Act of Parliament. Justifying this, the concept paper said: “Despite the appointment of numerous ad hoc commissions of inquiry during the past (like the Paranagama Commission, the Lessons Learnt and Reconciliation Commission, the Udalagama Commission, Mahanama Tillekeratne Commission) due to failure to implement recommendations made by those Commissions, it has not been possible to successfully prevent recurrence of conflict, or build confidence amongst all the people of Sri Lanka in the efficacy of measures to ensure non-recurrence, advance national unity and reconciliation or identify and undertake administrative reform interventions that may be necessary.”

The concept paper further said that the proposed Act of Parliament would, inter alia, incorporate statutory provisions to appoint a Monitoring Committee which will “enable all Sri Lankan citizens, irrespective of race or religion, including families of police and security forces personnel, civilians in villages that came under attack by terrorists, security forces personnel and police personnel, and all affected persons in all parts of the country, to submit their grievances suffered during any phase of civil disturbances, political unrest or armed conflict that has occurred in the past, to the proposed TRCSL.”

“The proposed TRCSL should have sufficient administrative and investigative powers, including those granted to Commissions of Inquiry. This includes powers to compel the cooperation of persons, State institutions, and public officers in the course of its work. While the TRCSL will not engage in prosecutions, it should be vested with sufficient investigative powers. But the TRCSL’s recommendations shall not be deemed to be a determination of civil or criminal liability of any person.”

However, nothing was done till March 2023, when, at the invitation of the South African High Commissioner in Sri Lanka, Ministers Wijedasa Rajapakshe and Ali Sabry flew to South Africa to study its TRC.

Impediments

Would the ministerial mission bear fruit? The political and ethnic conditions in Sri Lanka do not appear to be conducive for the setting up of a TRC or for getting a favorable result from it. Lankan society is sharply divided ethnically on what was right and wrong during the 30-year armed conflict. Unlike the majority Sinhala-Buddhists, the minorities, especially the Tamils, are hell-bent on retributive justice, not restorative justice which the TRC in South Africa attempted and the Lankan variant would follow.

One of the major disadvantages in Sri Lanka in comparison with South Africa is the absence of an over-arching and towering national leader to move the masses in any particular direction. From 1995 to 2003, when the TRC was functioning in South Africa, it was overseen by icons like President Nelson Mandela and TRC chairman Bishop Desmond Tutu.

However, even under favorable conditions, the South African TRC (TRCSA) was only a partial success, says Samara Auger, author of Healing the Wounds of a Nation: The Truth and Reconciliation Commission of South Africa.

Key takeaways from Auger’s paper:

The TRCSA collected over 21,298 victim statements. Over 7000 offenders applied for amnesty. Of these 7000, 1167 were granted full amnesty and 145 partial amnesty. The TRCSA released an interim report in 1998 and a final report on March 21, 2003.

The fundamental principle informing the TRCSA’s efforts was encapsulated in the indigenous African concept of Ubuntu. As per Ubuntu, jurisprudence is restorative rather than retributive. Ubuntu says: “I am human only because you are human. If I undermine your humanity, I dehumanize myself. You must do what you can to maintain this great harmony, which is perpetually undermined by resentment, anger, and desire for vengeance.”

In the final report of the TRCSA, Ubuntu is reflected. Justice is defined not as punishment, but as “reparations to victims and rehabilitation to perpetrators.”

The Ubuntu approach rests on the acceptance of the concept that the sufferings undergone were “collective”, that everyone suffered equally, regardless of class, race or religion and that people should seek collective redemption, forsaking revenge in exchange for peaceful alternatives. In the “collective approach” society or the nation is placed above the “individual”. The individual victim is expected to subordinate his victimhood to the larger interest of the society or country in securing peace and reconciliation. This is based on the theory that the needs of society are greater than those of individuals because once society is healed, individuals will be healed too.

However, the Ubuntu was met with resistance from the Blacks who thought that equating them with the Whites was grossly unfair. Another drawback in the collectivistic approach was that society (typically represented by the government) sought closure before the concerned individuals were ready.

Despite its outstanding leaders, South African society was ethnically divided. A survey of 3700 South Africans conducted in 2000 and 2001 found that 68% of all races found it hard to understand one another and 56% found the other race untrustworthy. Less than one-fifth wanted to be friends with members of another race.

But, among the races, more Blacks than Whites accepted that the TRCSA promoted reconciliation. A public opinion poll that asked the question: “Did the TRC promote reconciliation?” found 70% of Blacks, 59% of Asians, and 26% of Whites answering ‘Yes’. Similarly, a 2002 survey done by Jeremy Sarkin-Hughes found 70% Blacks, 61% Asians, and 37% Whites providing moderate to strong approval of the TRC’s work. However, the White-Black gap was cause for concern,

In Sri Lanka, ethnic differences are wide and entrenched. There are sharp differences between what is right and wrong. A TRC under these conditions will only help sustain differences. Additionally, there is no leader to bridge the gulf, even partially.

Alternatives

The more practical alternative would be to take the following non- abrasive steps which had been suggested but not implemented: (1) release those Tamils incarcerated for years without cases being filed against them; (2) punish perpetrators of atrocities who are facing credible charges; (3) release public lands acquired by the Security Forces and prevent encroachments on lands by government departments on specious grounds (4) boost the economies of the war-effected areas North and East and motivate the minority youth to stay in the country and develop it and not flee the country.

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