China willing to work with financial institutions to ease SL debt crisis

China supports the relevant financial institutions in discussing with Sri Lanka and properly resolving the country’s debt crisis, says the Chinese Foreign Ministry Spokesperson Zhao Lijian.

In a press conference, the Foreign Ministry Spokesperson stated that China feels deeply for the difficulties and challenges Sri Lanka faces and are ready to play a constructive role in the steady economic and social development of Sri Lanka.

Responding to a query regarding China being willing to be treated on par with other Sri Lankan creditors given its inability to repay debts, Spokesperson Lijian said that China also stands ready to work with relevant countries and financial institutions to continue to play a constructive role in easing Sri Lanka’s debt burden and realizing sustainable development.

At the same time, Lijan stated that he hopes and believes that Sri Lanka will work together with the parties concerned and boost its own effort to get through the difficulties, and protect the legitimate rights and interests of foreign investment and financing partners and maintain the stability and credibility of its own investment and financing environment.

Rice stocks only sufficient for two weeks: Anuradhapura Mill Owners

The worsening multiple economic crises have forced over 900 mills to shut, whilst also warning that rice can only be produced for another two weeks with the remaining paddy stocks.

The Small and Medium Mill Owners Association of Anuradhapura pointed out that from over 1,000 mills, at present only 70 of them are operating, following the multiple crises that they had to face.

Given the shortages, the stakeholders called on the Government to stop the use of rice for the beer production process, adding that feeding people ahead of a crisis was more important.

They also feared transportation of rice, pointing out that there are possibilities of getting the stocks looted on the way.

It was also emphasised that the rice mill owners are currently unable to repay their bank loans following the multiple crises faced by the agriculture sector.

They stressed the need to give a grace period to repay loans immediately.

“If the Government does not intervene and provide an extended period to repay loans, the mill owners are definitely not in a position to settle the dues,” they explained.

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PM Modi approves 65,000 metric tons urea consignment to Sri Lanka

High Commissioner of India in Sri Lanka, Gopal Baglay, on Sunday informed that Prime Minister Narendra Modi approved urea consignment of 65,000 metric tons a donation to Sri Lanka, will soon be delivered.
“PM Modi has approved the urea consignment donation which will travel directly to Sri Lanka from its origin in Oman. The Indian High Commissioner assured that Sri Lanka would receive the consignment as soon as possible,” said Baglay.
Sri Lanka Minister of Agriculture, Mahinda Amaraweera recently called upon the Indian envoy Baglay and sought help from India for food security and environmental protection, the Colombo Page reported.
The two held discussions on the problems related to the country’s agricultural sector, and the 65,000 metric tons of urea promised by India last month, to avoid any disruption to the current Yala season.
During the discussion, Baglay reiterated that Government of India will extend its full support to Sri Lanka to address the problems in the country’s agricultural sector, the Colombo Page reported.
Despite an export ban of urea fertilizer from India, the Indian government, at the request of the Sri Lankan government, agreed to provide 65,000 metric tons of Urea to the crisis-ridden island country under the existing USD 1 billion Indian line of credit.

The Sri Lankan High Commissioner to India, Milinda Moragoda, last month, held a meeting with the Secretary in the Department of Fertilizers of India Rajesh Kumar Chaturvedi where the issue was discussed.
Earlier, the Sri Lankan government as a part of its plan to transit toward organic agriculture had banned the import of chemical fertilizers the previous year. However, the sudden economic crisis mixed with the inadequate supply of organic fertilizers heavily impacted the agricultural output reported Daily Mirror.

Notably, this was the reason for the Sri Lankan government to revoke the ban on several key crops, reported the Daily Mirror.
The Government of India is continuously providing humanitarian supplies to the island nation as ongoing support to the people of Sri Lanka in multiple forms such as financial assistance, forex support, material supply and many more.
These efforts prove that Prime Minister Narendra Modi’s ‘Neighborhood First’ policy which places people-to-people engagement is still active. These are complemented by the people of India who have also been donating generously to their brothers and sisters in Sri Lanka, according to the Colombo Page.

India is becoming a stronger and more mutually beneficial partner to Sri Lanka. Apart from assistance during the pandemic and fertilizer chaos, India is also donating the basic products for island nations.
Currently, Sri Lanka is facing its worst economic crisis since independence with food and fuel shortages, soaring prices, and power cuts affecting a large number of the citizens. (ANI)

CSE trading halted after S&P index dropped over 5%

Trading at the Colombo Stock Exchange has been halted and will remain closed for the rest of the day.

Trading was halted after a sensitive index dropped 5.1-pct today with index heavy stocks coming under selling pressure.

The Colombo Stock Exchange in a notice said “Please note that the market has been halted due to the S&P SL20 index dropping over 5% from the previous close, as set out in SEC Directive dated 30th April 2020”.

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Election Commission calls meeting with party secretaries

A discussion between the Election Commission and the secretaries of political parties is scheduled to be held today (06).

The discussion will be held at 10.00 am today at the Elections Secretariat in Rajagiriya, the Elections Commission said.

The discussion will focus on the certification of this year’s electoral register, the constitutional documents of the political parties and the current social and political situation in the country.

The Election Commission has informed all political parties in writing to participate in today’s discussion.

Meanwhile, this year’s voter list revision process has already begun and its certification is scheduled to take place on October 31.

Accordingly, the list of names that will be removed from the electoral roll and included will be displayed from the 15th of this month to the 12th of July.

The Elections Commission stated that claims and objections will also be made during this period.

Meanwhile, the Elections Commission has instructed the public to contact the Grama Niladhari Officer of their area and take necessary action if there is any problem regarding the revision of the Electoral Rolls or to come to the District Elections Office and inquire about it.

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Foreign Minister calls for continued Chinese support

Ambassador of China in Sri Lanka Qi Zhenhong had briefed Minister of Foreign Affairs Prof. G.L. Peiris on the assistance provided to Sri Lanka and discussed matters about bilateral engagements and current developments in the country.

The Minister of Foreign Affairs Prof. G.L. Peiris had discussions with the Ambassador of China in Sri Lanka Qi Zhenhong at the Ministry on 02 June 2022.

While appreciating the generous assistance and support extended by China, particularly during the current situation, Foreign Minister requested continued support from the Government of China to mitigate the economic challenges in Sri Lanka.

Both parties appreciated the multifaceted relations and the close friendship between the two countries.

Senior officials of the Ministry of Foreign Affairs and officials of the Embassy of China were present during the meeting.

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“I can’t go as a failed president,” – Sri Lankan President Rajapaksa Vows to Finish Term, Won’t Run for Re-Election

Sri Lankan President Gotabaya Rajapaksa vowed to finish the remaining two years in his term despite months long street protests calling for his ouster, but won’t stand for re-election as he focuses on fixing a financial mess that tipped Sri Lanka into its worst-ever economic crisis.

“I can’t go as a failed president,” Rajapaksa said Monday (6) in a wide-ranging interview at his official residence in Colombo, his first with a foreign media organization since the crisis unfolded. “I have been given a mandate for five years. I will not contest again.”

The defiance comes in the face of slogans of “Gota Go Home,” with protesters blaming Rajapaksa and his family for decisions that led to severe shortages of everything from fuel to medicine, stoking inflation to 40% and forcing a historic debt default. Thousands of demonstrators have camped outside the president’s seaside office since mid-March, forcing him to retreat to his barricaded official residence about a kilometer away.

The economic tailspin spiraled into political turmoil with the resignation of the president’s old brother — Mahinda Rajapaksa — as the nation’s prime minister, after clashes between government supporters and the protesters turned bloody in May.

Gotabaya Rajapaksa and his new Prime Minister Ranil Wickremesinghe are now seeking about $4 billion in aid this year from the International Monetary Fund and countries including India and China. Sri Lanka’s rupee has lost about 82% over the past year and the central bank on Monday flagged the possibility of a further correction. The nation’s debt is trading in deep-distressed territory.

The president said he wanted to replicate his previous successful stints serving the nation. Gotabaya Rajapaksa oversaw the urban development authority and was Sri Lanka’s defense secretary under then-President Mahinda Rajapaksa, when they crushed a 30-year civil war in 2009.

The president reiterated his controversial goal to push through “natural agriculture,” a short-lived move to ban chemical fertilizers that caused crop output to slump.

Gotabaya Rajapaksa was also skeptical about the success of a planned amendment to the constitution, which seeks to contain the executive presidency. Cabinet is due to approve the proposals as early as Monday, which would rollback wide-ranging powers Gotabaya Rajapaksa pushed through parliament shortly after he was elected president in 2019.

A draft of the so-called 21st amendment gives some powers back to the parliament and restores independence to commissions in key decisionmaking.

Either the presidency should be abolished or the parliament is kept out of governing, Gotabaya Rajapaksa said.

“You can’t have a mixed system,” he said. “I experienced this and now know. People may blame me when I tell this but that’s the truth.”

Here are some other highlights from the interview. Rajapaksa’s comments are edited lightly for clarity:

The economy:

“We waited too long (to seek help from the International Monetary Fund). If we had gone at least six months or a year earlier, it would not have come to this state.”

“We have appointed financial and legal advisers (for a debt restructure) but that is for the capital markets. Bilaterals we have to go to individually; our major loans are from China, Japan, India and the Paris Club.”

“I have requested help from India and China. I personally spoke to the leaders and wrote to them. Then I have spoken to Middle Eastern leaders personally like Qatar, UAE especially, and want to speak to Saudi and Oman to get help for long term contracts for supply of crude oil.”

“The subsidy system will have to go. We cannot cut down on public servants or the military, we can decrease by cutting down on recruitment.”

His struggles:

“It is political as a president. You know, I am not a politician. Fortunately or unfortunately people when they are in politics for so long you can have so much baggage, you have lot of friends. Lot of people who want help are your supporters. When you go against this — I tried to go against this — you don’t get their help.”

Constitutional amendment:

“What is this executive (powers) of the president? My personal opinion is that if you have a presidency he must have full powers. Otherwise abolish executive presidency and go for full Westminster-style parliament.”

Source: Bloomberg

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In Sri Lanka, even the Rajapaksa heartland is broken -Bloomberg

The road to Hambantota may be paved with Chinese money, but its value is up for debate — now more than ever.

Set among the soft, green rice paddies and coconut palms of Sri Lanka’s deep south, Hambantota is best known as the stronghold of the nation’s Rajapaksa clan, who have spent years using borrowed money to build monuments to themselves. The little-used Mattala Rajapaksa International Airport, the often overgrown Mahinda Rajapaksa Stadium, and a memorial to the Rajapaksa elders that was burned and destroyed by a furious crowd of protesters on May 9, are testament to that terrible waste.

A statue commemorating D.A. Rakapaksa — a former member of parliament and father of President Gotabaya Rajapaksa and the recently resigned prime minister, Mahinda — was also targeted. It now lies on the ground, covered in a tattered piece of orange tarpaulin — another symbol of citizens’ anger against the family. The clocktower in the center of their home town of Weeraketiya has been vandalized, “Gota Go Home” spray-painted on its sides. Until now, it would have been unimaginable to see this sentiment expressed in the Rajapaksa heartland. While some locals say the infrastructure projects have created jobs, others vow they will no longer stand for what they see as such obvious misuse of public funds.

Less than 10 kilometers (6.2 miles) away, local farmers and traders are preparing for the worst. The president’s decision to flick the switch to organic farming overnight by banning chemical fertilizer imports in May last year caught everyone by surprise, and irrevocably harmed those in the agriculture sector in the family bastion. The ban was lifted six months later, but by then, the damage was done — yields were decimated and the country had plunged into a food and foreign reserve crisis that ended with its default on May 19.

“He destroyed his own village with that decision,” says cinnamon farmer and local opposition politician, Anura Vidana Arichi, gesturing to the rice paddies just beyond his house. “These fields have been cultivated for decades — yields have fallen more than 50% this season and we have abandoned the farming for now. Next season only 10% will be planted, and even then we don’t know what will grow without fertilizer.”

As inflation neared 40% last week, the government urged farmers to start planting rice. No matter. This attempt to stave off a an ever deeper food crisis will likely have little effect — there is no money to import fertilizer and without it, the crops just won’t produce anything close to what’s needed to feed the island’s 22 million people. Wickremesinghe has warned of an acute food shortage by September, while the president has asked officials to start stockpiling essentials in preparation.

The South Asian nation needs as much as $4 billion to see it through its worst economic crisis since it gained independence from Britain in 1948. Negotiations with the International Monetary Fund and key bilateral creditors, China, Japan and India, are ongoing. But it is going to take a lot to unpick its tens of billions in foreign debt and the tangled web of capital market borrowings and Chinese loans for those unprofitable infrastructure projects. The Rajapaksa government’s decision in 2019 to cut taxes, especially for the wealthy and corporations, led to annual revenue losses of as much as $2.2 billion. The new regime is looking to reverse that decision in order to meet IMF bailout conditions.

In Colombo, doctors and lawyers have joined together in an unprecedented push to convince the government to undertake real reform, not just constituting committees, as new Prime Minister Ranil Wickremesinghe is famous for. Keeping the hospitals, clinics and courts running will be done at all costs. But forcing politicians to abandon the corrupt practices of the past and rebuild Sri Lanka’s public sector will take more sustained efforts, they say. Like the protesters camped in the capital, they want the president to resign.

An urgent letter sent to the nation’s diplomatic community in April that flagged alarming shortages in the medical supply chain of 273 critical items — from anti-cancer drugs to orthopedic implants and reagents used for blood tests — prompted swift action from embassies and high commissions. Some drug donations arrived and stocks of anesthesia were temporarily replenished, but most elective surgery has been canceled due to the crisis. The juggle to maintain treatment regimes for patients with chronic conditions, as well as deal with emergencies and viral illnesses, particularly as the dengue season kicks in, is intense, say doctors like general practitioner Ruviaz Haniffa and senior physician, Ananda Wijewickrama.

“We have been telling the government since last October they had to requisition these drugs, and by January we’d warned them this was becoming acute,” Haniffa says. “We cannot run a health system on donations alone.” Former Maldives President Mohamed Nasheed, who was appointed last month to coordinate relief efforts, is also leading the global appeal for urgently needed medical supplies, Wickremesinghe said June 3.

Is it any wonder people are angry at what they have lost? They have seen the politicians’ mansions and luxury cars and all those wasted billions — and now they are feeling the pain of default in every aspect of their lives. (A court case, in which the president was indicted over the misappropriation of 33 million rupees ($91,000) in public funds to build the museum to his parents, was dropped soon after his election in November 2019. There are other serious allegations against the family and their associates, including money laundering, the illegal transfer of state-owned weapons worth millions and a separate case of mismanagement and corruption at Sri Lankan Airlines. The brothers deny all corruption claims.)

Sri Lanka’s China-baked Port City set back by soft-peg collapse, unrest

Sri Lanka’s China-backed Port City Project has faced a setback due to the unstable situation in the country a top official said after two years of money printing to keep rates down triggered currency collapse and social unrest.

The Port City is a 1.4 billion US dollar sea reclamation project by unit China Communications Construction Company Limited, in partnership with the government of Sri Lanka which will sell a share of land to get revenue. Already 1.2 billion had been spent.

“We had a huge plan to aggressively market and sell Port City from this year but we have been challenged by the country situation,” Assistant Managing Director of CHEC Port City, Thulci Aluwihare told an online forum on May 28 by the Sri Lanka Economics Association.

Sri Lanka has seen progressive downgrades as money was printed to keep rates down and boost growth (stimulus or output gap targeting) under flexible inflation targeting triggering three currency crises in seven years as open market operations became increasingly aggressive.

In the latest crisis, the rupee collapsed to 366 to the US dollars from 200, in a botched float with a surrender requirement after a global pandemic which also delayed the project.

Monetary stability has still not been restored with money printing continuing and shortages seen in energy and medicines.

The Port City’s first large project, a 250,000 square metre office and retail development called the International Financial Centre are due to break ground in the third quarter of 2022, Aluwihare said.

The billion-dollar IFC’s first phase will see 500 million US dollars invested.

A Duty-free Store in association with two international operators, which is currently under construction, will be opened in the fourth quarter of 2022.

Utility connections to the periphery are to be completed by June 2023, he said.

Of the 100 hectares of land ready for development, 4.4 hectares by the Marina were sold for 200 million US dollars to predominantly local investors.

The Marina will be utilised for the development of an international luxury yacht marina and a five-star city hotel, which is also generating interest for residential development, he said.

Investors who get the land will then construct buildings, and permanent economic activities will then begin as businesses and residents occupy the buildings.

The project is slated to generate 143,400 direct jobs, and add 24 billion US dollars in economic value from reclamation and development. It is expected to generate 13 billion US dollars of gross domestic product a year when fully operational.