Tourist establishments told to accept only foreign exchange

Registered tourist establishments have been instructed to accept only foreign exchange in respect of services rendered to persons resident outside Sri Lanka.

The instructions have been issued by the Central Bank of Sri Lanka following a decision taken by the Monetary Board of the Central Bank of Sri Lanka.

The Monetary Board has decided to adopt several policy measures with the view to strengthening macroeconomic stability.

Accordingly, the Monetary Board decided to instruct registered tourist establishments to accept foreign exchange only in respect of services rendered to persons resident outside Sri Lanka.

It has also decided to increase the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points each, to 5.50 per cent and 6.50 per cent, respectively.

The Monetary Board has also decided to distribute the financing of essential import bills for fuel purchases among the licensed banks in proportion to their foreign exchange inflows, extend the payment of an additional Rs. 8.00 per US dollar for workers’ remittances paid in addition to the incentive of Rs. 2.00 per US dollar offered under the “Incentive Scheme on Inward Workers’ Remittances” until 30 April 2022, reimburse the transaction cost borne by Sri Lankan migrant workers through the payment of Rs. 1,000 per transaction, when remitting money to rupee accounts via licensed banks and other formal channels with effect from 01 February 2022 and introduce higher interest rates for both foreign currency and rupee denominated deposits of migrant workers.

The Monetary Board was of the view that the new measures will curtail the possible build up of underlying demand pressures in the economy, which would also help ease pressures in the external sector, thus promoting greater macroeconomic stability.

In keeping with this policy stance, the Central Bank expects a corresponding increase in interest rates, particularly in deposit rates, thereby encouraging savings, while discouraging excessive consumption, which also fuels imports.

Therefore, financial institutions are urged to swiftly pass on this increase to deposit rates of the customers.

Moreover, the anticipated adjustment in market interest rates will facilitate the reduction in the Treasury bill holdings of the Central Bank through increased market subscriptions, as enunciated in the Six-Month Road Map for Ensuring Macroeconomic and Financial System Stability.

Meanwhile, the materialisation of the expected foreign exchange inflows through bilateral arrangements and other import financing arrangements with friendly countries are expected to ensure a healthy level of gross official reserves in the period ahead and further strengthen the external sector in the economy.

JVP vows to revert agreements signed to sell state assets:Anura

Giving assurance that the Janatha Vimukthi Peramuna (JVP) and its Trade Unions would not remain silent over selling state assets, JVP Leader Anura Kumara Dissanayake said today they would come forward to revert the agreements which had been signed to hand over the Trincomalee Oil Tank Farm to India and transferring of shares of the Kerawalapitiya LNG Plant to a US Company.

He said they would rally round the people to expel the governments that sell state assets and form a government which could manage the state resources under state patronage.

Speaking at a protest march organised against selling of Trincomalee Oil Tank Farm to India, he said plans were afoot to sell commercial lands and buildings in Colombo to foreign Companies.

“Government is planning to sell 13 acres of the land belonging to the Colombo Port to a Chinese Company. Eastern Jetty of the Colombo Port was sold to India’s Adani Group of Companies.The agreement was signed to sell Trincomalee Oil Tank Farm to India on January 6. We will fight to revert these agreements,” he said.

Gazette on extending retirement age to 65 issued

An extraordinary gazette notification was issued yesterday, making it compulsory for all civil public servants to reach the age of 65 years of their retirement age.

The gazette notification Ref. 2263/5 was issued by the Minister of Public Services, Provincial Councils and Local Government, Janaka Bandara Tennakoon.

“Every public servant may be required to retire from the public service on or after attaining the age of 55 years. Sixty-five years of compulsory retirement for all civil public servants, other than the officers whose compulsory age of retirement is specifically defined by the Constitution or any other law, unless a decision is taken by the proper authority to retain the officer further in service. ” the gazette notofication said.

This decision is considered implemented as of January 1, 2022.

Accordingly, those who have worked in the public service and held such an office or post for a period of ten years or more, whether such office or post was permanent or not, may be entitled to receive a pension equivalent to 1/3rd of their salary.

For a period of 10 years and thereafter increased by 1/30th of the salary. For each complete year of service.

in excess of 10 years, up to a maximum of 2/3rd of the last drawn salary for 20 years of service, on the termination of his service on any ground other than inefficiency or misconduct. No commuted gratuity shall be payable to any person who is entitled to a pension, the gazette said.

Ex-IGP Pujith informed 4 DIGs about possible terror attack

Although there was no direct information provided by then Chief of National Intelligence (CNI) Sisira Mendis and then State Intelligence Service (SIS) Director Nilantha Jayawardena regarding the Easter Sunday terror attacks of 21 April 2019, four Deputy Inspectors General of Police (DIGs) in the Western Province (WP) had received prior information about a possible terror attack from then Inspector General of Police (IGP) Pujith Jayasundara, claimed Senior DIG (SDIG) in charge of the WP Deshabandu Tennakoon.

Jayasundara had conveyed the information through a letter to then SDIG in charge of the WP Nandana Munasinghe, the latter who had then sent the same letter together with his (Munasinghe) notes, to the four DIGs in the WP including Tennakoon.

Tennakoon was testifying before the Colombo High Court Trial-at-Bar when the case against Jayasundara for his alleged failure to take action to prevent the Easter Sunday terror attacks was taken up on 18 January 2022. The case was taken up before Judges Namal Balalla, Adithya Patabendi, and Mohamed Irshadeen.

Tennakoon, who was the DIG in charge of WP – North at the time of the said terror attacks, also claimed that the letter received by his office on 11 April 2019 stating that there was a possibility of a terrorist attack in the next few days, was not serious and seemed merely another letter from the top.

He said that he had, on 3 April 2019, applied for leave from 18 to 21 April 2019, and was on leave at the time of the terror attacks. He also told the court that the DIG in charge of the WP – South covered his duties during his vacation.

The court asked the witness as to whether the Police could have prevented an attack only if they had received information about the date, time, and place of the attack. In response, the witness stated that he and other officials receive such information on a daily basis. “Although the Criminal Investigations Department had photographs of the suspects involved in the Easter Sunday terror attacks, prior to the attacks, the rest of the Police did not have such information. So even if we met the suspects face to face, it would have been hard to identify them,” he claimed.

Testifying further, Tennakoon said that the letter sent to him by Munasinghe had been received by his office on 11 April 2019. The said letter, according to Tennakoon, contained intelligence that National Thowheeth Jama’ath organisation Leader Zahran Hashim was planning to carry out a suicide terror attack. He testified that after receiving the letter, he had forwarded it to the Senior Superintendents of Police (SSPs) under him on 12 April 2019.

He was then cross-examined by Attorney-at-Law Roshan Dehiwala who appeared for Jayasundara, and Tennakoon said that there was no information regarding a possible terror attack from the then CNI and the then SIS Director. However, Jayasundara had sent information to four DIGs in the WP regarding a possible terror attack, he added.

On 21 April 2019, Easter Sunday, three churches (St. Sebastian’s Church in Katuwapitiya, St. Anthony’s Church in Kochchikade, and Zion Church in Batticaloa) and three luxury hotels in Colombo (Cinnamon Grand Colombo, The Kingsbury Colombo, and Shangri-La Colombo) were targeted in a series of co-ordinated suicide bombings. Later that day, another two bomb explosions took place at a house in Dematagoda and the Tropical Inn Lodge in Dehiwala. A total of 269 people excluding the bombers were killed in the bombings, including about 45 foreign nationals, while at least 500 were injured.

Visiting UK minister gets wakeup call from Tamil mothers

Tamil mothers in Sri Lanka’s north and east have chided a visiting British minister for ignoring the victims of war in an apparent bid to improve bilateral trade with the debt-ridden nation that is yet to fulfil its accountability commitments.

The British Minister of State for South and Central Asia, United Nations & the Commonwealth and Prime Minister’s Special Representative on Preventing Sexual Violence in Conflict, Lord Tariq Ahmed is in an official visit ‘to discuss our shared interests and to explore future opportunities’.

On the eve of his arrival the minister penned an opinion piece in a Sri Lankan daily setting out his agenda.

“The UK has a renewed focus on the importance of the Indo Pacific region to global trade and investment, and our mutual security, wrote Lord Ahmed in Colombo based Daily Mirror.

“The UK is building a network of economic partnerships and will look to work with Sri Lanka on these issues. I am also keen to support those in Sri Lanka striving for good governance and for strengthening human rights for all citizens.”

“Set aside dark memories’

Women leaders from all the eight districts comprising the war torn north and east who are on a continuous campaign to find the truth about their loved ones who are victims of enforced disappearances were highly critical of the minister’s approach.

“It’s clear from this article that your priority is engagement with a State that has and continues to violate human rights rather than any empathy for the victims,” Association for Relatives of the Enforced Disappearances (ARED) wrote in a jointly signed letter, of which JDS has a copy.

“At no point do you mention the burning ongoing issue of enforced disappearance in Sri Lanka – the country with the second largest number of cases reported to the UN. We represent the Tamil families who lost their loved ones most recently in vast numbers, particularly at the end of the war in 2009 when they surrendered to the Sri Lankan Army. The disappeared include babies and children. No answer has been given regarding their fate.”

At least 29 children below the age of 14 have disappeared at the hands of the military according to data released by ARED. This is apparently the largest number of child disappearances in one day at one place, in Sri Lanka.

The Tamil mothers said that it is imperative that Lord Ahmed ask all those he meets on this trip, including the President of Sri Lanka, who was defence secretary during the war, about the fate of loved ones.

On the day of the UK minister’s arrival, in a policy statement after inaugurating the second session of 9th Parliament the president downplayed the issue of enforced disappearances by saying that “it is not a problem limited to one party alone”.

“What we need now is to set aside the dark memories of the past and build a secure country where all sections of the community can co-exist in peace,” said Gotabaya Rajapaksa.

‘Insulted, abused & threatened’

However, the mothers from north and east making it clear that they are not prepared to move on without answers about the tens of thousands of disappeared Tamils, did not take the British minister’s ‘passing reference to accountability’ lightly.

“Imagine if it was your child who disappeared and just asking what happened meant you were insulted, abused, threatened and told it was your fault you didn’t have more information about who took them. We have been treated with utter disrespect for the last thirteen years and your emphasis on engagement and the economy – and only a passing reference to accountability – is just another abuse we suffer.”

Prior to his arrival, Lord Ahmed had displayed an optimism that the Sri Lankan government will deal with issues of the past.

“Dealing with issues of the past is essential to lasting peace, and building an inclusive future,” said Lord Ahmed writing in Daily Mirror.

“The Geneva process provides an essential framework for all those supporting Sri Lanka’s progress on peace, accountability, reconciliation, and social cohesion following the civil war. The UK supports the promotion of human rights in Sri Lanka, for all groups of people.”

However, the Tamil mothers who did not share the visiting minister’s enthusiasm called for sanctions against perpetrators.

“Do you really think this government is going to engage seriously with the past through the Geneva process? We want the UK government to help us achieve justice using universal jurisdiction cases as Germany did for the Syrians – and in the meantime sanction the military men involved in enforced disappearance,” they said in their letter.

Sri Lanka’s Tamil MPs seek PM Modi intervention on political solution

Prominent Tamil legislators from Sri Lanka’s north and east have written to Prime Minister Narendra Modi seeking India’s help in ensuring that Colombo addresses the island’s long-pending Tamil question with a lasting political solution.

A delegation of MPs, led by senior Tamil politician and Tamil National Alliance (TNA) leader R. Sampanthan, met the Indian High Commissioner in Colombo on Tuesday, and handed over the letter.

The seven-page letter foregrounds the many unkept promises, made by different governments in Colombo, to implement the 13th Amendment and go beyond it to ensure meaningful power devolution. Signed by TNA’s constituent party leaders — Mavai Senathiraja (ITAK), Dharmalingam Sithadthan (PLOTE), Selvam Adaikalanathan (TELO) — with others including former Northern Province Chief Minister C.V. Wigneswaran and former MP Suresh Premachandran (EPRLF), the letter traces past attempts, from the time of the Indo-Lanka Accord of 1987, to bring about a constitutional settlement, based on proposals developed by various expert committees.

It also mentions the interventions made by the Indian political leadership at different points, including PM Modi’s address to the Sri Lankan Parliament in 2015, when he spoke of his firm belief in “cooperative federalism”.

Federal structure

“We remain committed to a political solution based on a federal structure that recognises our right to self-determination in the areas of our historic habitation for which we repeatedly obtained a mandate from the Tamil People in the north and east where they have always been the majority. We have consistently placed this as our proposal for constitutional reform,” the signatories have said.

Flagging heightening attacks and threats to land owned by Tamils in the north and east, and language rights of Tamil-speaking people, including Malaiyaha Tamils living in the hill country, the parliamentarians have appealed to PM Modi “to urge the government of Sri Lanka to keep its promises to fully implement the provisions of the 13th Amendment to the Constitution, which ensures a measure of power devolution”.

They have also sought Indian pressure to ensure implementation of “the clear commitments made by all sections of government from 1987 onwards and enable the Tamil speaking peoples to live with dignity, self-respect, peace and security in the areas of their historic habitation, exercising their right to self-determination within the framework of a united, undivided country.”

The letter is the outcome of deliberations among Tamil MPs. Prominent Malaiyaha Tamil and Muslim leaders, who were part of the exercise earlier, exited it following differences over the emphasis of the letter. They wished to peg the letter to the 13th Amendment, which followed the 1987 Accord, and is frequently dismissed by key members of the ruling Rajapaksa administration.

However, the letter addressed to PM Modi and submitted to High Commissioner Gopal Baglay on Tuesday, also highlights what some in the Tamil polity deem limits of the 13th Amendment that established a provincial council system, envisaging devolution of powers to the provinces. The Amendment was “introduced into a Unitary Constitution making the exercise one of decentralisation instead of devolution,” the letter noted. “It is against this background that every effort made thereafter moved in the direction of surpassing the 13th Amendment towards a federal structure,” it said.

President Gotabaya Rajapaksa, in a policy statement in the first session of Parliament this year on Tuesday, referred to the experts’ committee appointed by him to draft a new constitution. “I hope to submit the recommendations of this Committee to the Cabinet and the Parliament for broad discussion,” he said, making no reference to the Tamil political leadership’s continuing calls for a political solution in the new Constitution.

On the other hand, he appeared to equate ethnic reconciliation to development. “We regard government’s prime responsibility towards reconciliation as providing such facilities to these [war-affected] people without discrimination,” he said, urging parliamentarians representing the people of the north and east to “set aside various political ideologies, at least temporarily”, and support the government’s efforts to “improve the living conditions of the people in your areas”.

President Rajapaksa is yet to hold talks with the Tamil leadership or elected MPs since his election to office in November 2019. In June 2021, a meeting between the President and a TNA delegation was scheduled. However, Mr. Rajapaksa’s office cancelled the meeting and said a new date would be announced.

The Rajapaksas to blame for Sri Lanka’s disastrous 2021

President Gotabaya Rajapaksa’s 2019 election manifesto promised ‘Vistas of Prosperity and Splendour’. Professionals for a Better Future (Viyathmaga) were to implement his programs, which would achieve successive years of economic fortune. But Rajapaksa will instead be remembered for presiding over Sri Lanka’s worst-ever year post-independence.

2021 was a year that millions will associate with lengthy queues to purchase sugar, milk powder, kerosene and cooking gas. This is because prices skyrocketed to hitherto unseen levels, thanks mainly to a severely indebted island lacking dollars to pay for essential imports. The year ended with around 1500 shipping containers comprising essential items stuck at port because the government had not released dollars to pay for them.

Inflation in December was 12.1 per cent, having risen from 9.9 per cent in November, with food prices having more than doubled in the past year. The government exacerbated inflation by printing money willy-nilly — as much as Rs 69,100 crore (US$3.4 billion) in 2021. With the focus on the dollar crisis, inflation, and food queues, what is not sufficiently covered concerns those going hungry.

The regime was also linked to various scams that worsened conditions. One such scam centred on the propane and butane ratio in cooking gas cylinders, which caused numerous household explosions and killed and injured individuals. Another centred on contaminated fertiliser from China, which the government was forced to return yet pay US$6.7 million for, apparently due to corrupt procurement. In a country now infamous for impunity, no one was held responsible for corruption or incompetence.

Sri Lanka’s foreign currency inflow has long depended on remittances, tourism and specific exports like garments and tea. The COVID-19 pandemic, which has now killed over 15,000 people, was bound to trouble these sectors. While the government oversaw a relatively successful vaccination program, unsustainable debts plus arrogant and fatuous decision making landed the country where it is.

The nearly three decades-long civil war contributed to these debts, but so did ‘blingfrastructure’ projects former president Mahinda Rajapaksa and his Chinese partners initiated. Consequently, Sri Lanka must cough up around US$7 billion in 2022 to various creditors to service its debts, which between now and 2026 will amount to around US$26 billion. The possibility that Sri Lanka may, for the very first time, default on its obligations is the reason Fitch Ratings downgraded it in December. The move raised predictable government hackles, but it reflects the balance of payments crisis facing the island. While COVID-19 exacerbated the balance of payments crisis, debt financing was a pre-COVID-19 predicament.

President Gotabaya Rajapaksa’s decision in April to ban chemical fertiliser was related to this dilemma. Doing so would eliminate US$400 million per year of government fertiliser subsidies. Vistas of Prosperity and Splendor promised an organic agricultural sector within ten years, but this hastily imposed policy negatively impacted farmers. They have since protested unceasingly against the government, joining teachers and others who are also demanding higher wages given the runaway cost of living. It now seems the rice shortage caused by the addle-brained decision to abruptly ban chemical fertiliser, weedicides, and herbicides will likely cost the government US$450 million in rice imports over the next few months.

Rajapaksa’s authoritarian reputation and Sinhalese Buddhist credentials made Tamils and Muslims fear for their future. The continued militarisation of the predominantly Tamil northeast and the ban against burials for those who died from COVID-19 — a policy that especially traumatised Muslims — confirmed their fears. Rajapaksa’s unwillingness to fully investigate the 2019 Easter Sunday Islamist bombings that killed around 270 people, allegedly because forces close to him helped orchestrate the event to promote his election prospects, has also estranged the Christians who voted for him in large numbers.

This and his attentiveness to Buddhist interests aside, the country has thus far not experienced anti-minority violence. Indeed, the difficulties stemming from COVID-19 may have tamed the regime’s rabid majoritarianism. But this was not enough for Sri Lanka to be invited to US President Joe Biden’s Summit for Democracy. Some think cosying up to China, especially under presidents Mahinda and Gotabaya Rajapaksa, was the reason why. In any case, the pro-China tilt took place amid rampant corruption, increased authoritarianism and an unwillingness to account for human rights violations — major themes undergirding the democracy summit.

The Rajapaksa government is slated to announce a new constitution, which will further strengthen the island’s Sinhalese Buddhist character and presidential powers. The government and its allies command a two-thirds parliamentary majority, but today even cabinet ministers excoriate the regime while allies threaten to desert it. At the same time, Rajapaksa effigies are hit during protests and family members are booed in public.

Even government officials now warn of impending food shortages. Overall, the country’s multiple crises cannot be addressed unless the economy is restructured and embraces a more pluralist climate. Those with vested interests, including the Rajapaksa family, find this threatening. Hopelessness is why some ask the military to take over.

Sri Lanka’s military enjoys status and resources, with many retired and serving officers currently benefitting from sinecures. It is unlikely these individuals want to undermine their positions by taking on a debilitated state. They are more likely to further militarisation under Rajapaksa rule, which does not bode well for democracy.

The Rajapaksa family wants to stay in power and build a political dynasty. Their corrupt governance is a major reason for the island’s recent democratic backsliding. On the other hand, various anti-government protests highlight the island’s democratic resilience. This simultaneous fortitude and retreat notwithstanding, the year ahead may see Sri Lanka mired in violence and militarised autocracy. If so, it will be another year of disasters.

Sri Lanka plunges into a massive power crisis

Sri Lanka’s Ceylon Electricity Board (CEB) had been plunged into a deep crisis as the Ceylon Petroleum Corporation (CPC) has been unable to supply the required stock of fuel to the Kelanitissa Power Plant which has already shut down from last night due to the lack of diesel stocks resulting in possible one and a half-hour power cuts from today.

The Daily Mirror learns that the Kelanitissa Power plant generates 300 megawatts of electricity on a daily basis but due to the lack of diesel stocks, the power plant has shut down from late last night.

Highly placed sources said that till late last night, the CPC had not indicated any possible date as to when they can supply the diesel stocks to the plant due to the lack of fuel created by the forex crisis, and this may result in one-hour power cuts during the day and 30-minute power cuts in the night daily from today.

Further, from yesterday afternoon, half of the Sapugaskanda Power Plant was also forced to shut down due to the lack of supply of heavy furnace oil but due to the CPC supplying 900 metric tonnes of furnace oil urgently yesterday, half of the plant could continue to function.

However, the plant needs 600 metric tonnes of furnace oil to function daily and if the CPC fails to supply the required stock today, the Sapugaskanda Plant will also temporarily come to a complete halt.

Sources said that the CPC however has assured that they will continue to supply the stocks of heavy furnace oil to the plant till January 22. Further, the Barge Power Plant and the Uthuru Janani Power Plant which also runs on heavy fuel will receive stocks till January 22 to continue their electricity generation.

“So after January 22, if we do not get the required fuel supply to these plants and if we do not get the diesel stocks for Kelanitissa Power plant urgently today, we will be plunged into a crisis and the whole country will have to face daily power cuts,” officials said.

Officials further said that due to the lack of continuous fuel, the CEB has been forced to use water for hydropower plants, which are usually stored for the dry months of March and April.

Officials warned that if these water stocks are used up, then by March and April, Sri Lanka will have no choice but to declare an electricity supply schedule daily where limited electricity supply will be provided per day.and if water is used up from the main reservoirs for electricity generation, then this will severely hamper irrigation, resulting in a food crisis by April due to the lack of water.

Till yesterday the CPC was in severe crisis attempting to supply the required stocks to prevent an island-wide power outage, but officials now question if the country can function with an uninterrupted power supply from today.

India’s “helping hand” to forex and energy-starved Sri Lanka

India on Tuesday extended a US$ 500 million credit to Sri Lanka for emergency purchase of petroleum products. In a tweet, the Indian High Commission in Sri Lanka tweeted to say that “a friend holds out a helping hand again.”

“Energizing bilateral economic partnership, India offers a credit line of USD 500 million to Sri Lanka for the purchase of petroleum products. Critical support by India follows a discussion between External Affairs Minister Dr.S.Jaishankar and (Lankan) Finance Minister Basil Rajapaksa,” the tweet added.

This followed an assurance made by Jaishankar to his Lankan counterpart, G.L. Peiris on January 15.

After an on-line meeting with Basil Rajapaksa on January 15, Jaishankar had tweeted to say that they had “positively noted the extension of the USD 400 million swap facility and the deferred ACU (Asian Currency Union) settlement of USD 515.2 million. They discussed the early realization of USD 1 billion term loan facility for essential commodities and of USD 500 million Line of Credit for fuel purchase.”

Jaishankar assured that India will take up with other international partners, initiatives to support Sri Lanka at this important juncture. He welcomed the progress on the Trincomalee Tank Farm which will contribute to Sri Lanka’s energy security.

The Indian External Affairs Minister also said that he and Basil Rajapaksa had considered projects and investment plans by India that would strengthen Sri Lankan economy. He “reaffirmed that India will be a steadfast and reliable partner of Sri Lanka.”

Adding to this, the Indian High Commission in Sri Lanka said that India would seek an “early operationalization of the Line of Credit” as it will “help realize one of the four pillars of economic cooperation identified during the visit of Hon’ble Minister of Finance, Mr. Basil Rajapaksa to India in December 2021.”

Power Cuts

According to the website ECONOMYNEXT, the Ceylon Electricity Board (CEB) is in talks with the Finance Ministry, the Central Bank and the Ceylon Petroleum Corporation to get fuel and foreign exchange. Power Minister Gamini Lokuge said this amid looming prospects of 2.5 hour power cuts on January 19.

The CEB is expected to run out of diesel for a combined cycle plant and several reciprocal engines and gas turbine with a total capacity of around 280 MW by January 19, unless fresh deliveries are made, according to officials at the utility. CEB Spokesperson, Andrew Navamani, said Ceylon Petroleum Corporation (CPC) has promised to give 900 metric tons of Furnace oil, which they hope to use on Wednesday to avoid power cuts.

Rolling 1.5 hour power cuts are likely to start in the daytime from 11.00 am and run until 17.00 hours in four slots if deliveries are not made. One hour power cuts are likely to start at 1730 hours and run till 2130 hours.

The CEB is facing higher demand for diesel than earlier planned because a 300MW coal plant is down. Meanwhile, the local media reported that the Lanka Indian Oil Corporation had told the authorities that it could not supply diesel to meet the emergency need because its stocks were inadequate.

President Highlights Forex Problem

“The most serious challenge we face today in economic management is the foreign exchange problem,” President Gotabaya Rajapaksa said delivering a policy speech to a new session of parliament on Tuesday.

Sri Lanka’s currency crises in the past have come from outright deficit finance, re-finance of rural credit, output gap targeting. But with commercial debt with large bullet repayments coming up for maturity which cannot be rolled over, Sri Lanka is facing a debt problem.

“When I took over the country in 2019, the country’s foreign exchange reserves were only US $ 7.2 billion. Part of it was short-term loans We had realized that under these circumstances if we fail to control our spending, there will be a foreign exchange problem in the near future. That is why we had to take unpopular decisions such as suspending the import of vehicles and restricting the import of various non-essential imported goods. In this manner, we have been able to control the total import expenditure for the last two years,” the President said.

Sri Lanka’s imports are estimated to have soared to 21.5 billion US dollars in 2021, a three year high as money flowed into areas other than vehicles and controlled items.

President Gotabaya said he expected tourism revenues to grow, and effort will also be made to boost information technology exports.

He said renewable power is being promoted and electric vehicles will be encouraged instead of fuel driven ones.

Meanwhile, Sri Lanka has paid off a 500 million US dollar sovereign bond that fell due on January 2021, according to the Central Bank Governor Nivard Cabaal.

Sri Lanka’s credit had been downgraded to ‘CCC’ and ‘CC’ by Standard and Poor’s and Fitch over risks of default.

China steps in, grants 1 million metric tons of rice to SL

The Government of China has granted 1 million metric tons of rice as a donation to Sri Lanka, says Co-Cabinet Spokesperson, Minister Ramesh Pathirana.

The consignment is expected to arrive into Sri Lanka in March.

China is making the donation to mark the 70th anniversary of the Rubber-Rice Pact signed between the two countries in 1952.