JVP calls on govt. to reveal reason behind postponing LG polls

Claiming that procrastination of local government election was an anti-democratic move, the Janatha Vimukthi Peramuna (JVP) today called on the government to reveal the reason behind postponing the Local Government election.

JVP General Secretary Tilvin Silva told a news conference that the subject minister had been empowered by the Local Government Act to postpone the local government election by an year based on a reasonable reason.

He said the government has failed to come out with any reason for the postponement of the LG polls.

“The term of the Local Government Bodies has been extended from March 19, 2022 to March 19, 2023. The government has not cited any reason for putting off elections for all the LG Bodies. We challenge the government to reveal the reason for postponing the LG polls,” he said.

He said they see no reason other than the government’s fear to go before the people and added that the decision was taken not because of the Covid pandemic.

“The country is fully opened now. All the schools are open now. All the state employees have been called for duties. The government cannot cite covid pandemic as a reason when the country returned to normalcy,” he said.

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Rajapaksa popularity facing a drop but I believe it is temporary: Namal

– The debt issue and the Forex issue have always been present
– Rajapaksas have always been farmer-friendly, and the dynasty is based on farming
– There should be fresh faces in politics and administration
– The existing tax system should be digitized and present practices need to change

Minister of Sports and Youth Affairs Namal Rajapaksa has said Sri Lanka would ease all crises this year and come out of the woods as the Government hoped to revive the tourism sector and attract further investments. He said that President Gotabaya Rajapaksa’s decision to ban chemical fertilizer was strong but it was not implemented thoroughly by the State Minister and officials in charge. Further, the Minister admitted that the Rajapaksa popularity had declined with the existing crises but said this was only temporary.

Excerpts:

Q The time this interview is being conducted is crucial. Because outside, the country is literally on fire with a soaring cost of living, the economic crisis, people finding it difficult to carry on with their daily lives, the popularity of the Government has drastically reduced. So what is in store for 2022? Are we going to burn further or is the government taking measures to mitigate the issues?

It is a very challenging time, especially with the COVID19 pandemic. The challenge is not only for Sri Lanka but it is a global crisis. In our lifetime, even for our parents and elders and even the entire administrative system, this is the first time we all are going through a global crisis of this nature. Probably this is the worst devastation we have seen after the World Wars. The way we now face and approach things are different from how we faced it earlier.

If you see the 1983 riots, the 2004 Tsunami, the war against LTTE, and the Easter Sunday attacks, all those were domestic crises. But this is the first time all countries are trying to come out of this pandemic. At that time when we went through the domestic crises, we had our friends, our foreign partners, different organizations, who all came forward to help us. But this is the first time, all countries are facing a health, social and economic crisis altogether.

The cost of living is rising globally and there is a food crisis globally as well. We are also facing this. We believe now we need to strengthen our local industries and our domestic economy and of course, we need the foreign currency now coming in urgently.
For that we need the exports going out, cut down imports as much as we can and welcome as many tourists as possible. Our tourism sector has done well these past few months. If we look at today, we have about 30,000 tourists in the country, while I am giving you this interview.

We are also getting in remittances from our migrant workers. Of course, there have been pay cuts globally and cut down of jobs as well, even in Sri Lanka we have seen this. But for this, we have to encourage our private sector. I will tell you, that Sri Lanka is one of the very few countries in the world, where our private sector did not go for job cuts.
This may have happened in the SMEs but if you look at the mass scale factories such as the apparel and manufacturing sector, they did not go for job cuts as other countries did. Rich countries could not do this. They cut down the staff. So we have to respect our private sector.

But at the same time, we saw a huge loss of income for our daily workers and the SME sector also struggled a lot.
So, that is where the government had to step in and hand out Rs.5000 to each family. So, considering all this we will see a revival this year for sure.

Q But is the COVID-19 entirely to blame for all the mess, as I can bluntly put it, that Sri Lanka is in right now?

Well, if you look at the debt issue and the Forex issue, it is not something that happened two months or two years ago. It had been already there.

Q That means, are you saying it was there even during the Yahapalanaya regime?

What I mean is, it was there ever since independence. Different Governments borrowed for different reasons. If you look at President Chandrika’s regime, we borrowed money to buy wheat and rice. Then during President Mahinda Rajapaksa’s time, we borrowed money to build ports, highways, for development.
Then during President Sirisena’s time, we borrowed money to pay the loans. Because of the Central Bank bond issue. The trust broke and the inflation also jumped by a couple of points because of the Bond Scam.
Back then eventually the cost of living started going up. Unemployment rose. So under different Governments, different leaders took decisions, which was best for the country. Now, President Gotabaya Rajapaksa, in all good faith, he cut down on chemical fertilizer.

Q Has this not been one of President Rajapaksa’s weakest decisions? The masses are against this as Sri Lanka was just coming out of continuous lockdowns from the pandemic, and suddenly the President imposes this rule which affects the entire population. Even foreign companies dealing with this issue were of the view that such a decision could not be implemented overnight. So, don’t you see that as a bad decision?

Well, it depends on who you have been speaking to. It is true that there is a process to shift to chemical fertilizer and it should have been structured for 10 years but as we know, from the President’s point of view, he appointed a State Minister for the subject and he waited for one-and-a-half years. The Subject Minister and the officials did not work on this and finally, the President had to make a tough decision. Leaders have to do this for the betterment of their nation.

Q But wasn’t the timing of such a decision, weak?

The leader of a country has a right to make his decisions for the betterment of his people and he did not make this decision overnight. He had informed all officials, as soon as he took office, to get ready for this and these officials did not get ready for this, to be honest. Even today if you ask these officials what is the composition of organic fertilizer they will not know.
My personal belief is this would have been done within 10 years, as some countries have done it successfully. But at the end of the day, as a President, Gotabaya Rajapaksa took this decision. But now as a responsible Government, we have taken one step back and have allowed the private sector to import chemical fertilizer.

Q Is this not a sign that Gotabaya Rajapaksa failed?

Not at all, because leaders should not be worried to take a step back because their people want them to. After all, he is elected by the people.

Q So you are admitting that the people did not want the chemical fertilizer ban?

Well, people want the easy way out. When you do not know how to make organic fertilizer and when the officials are not bothered to tell you how to make it or how to use it and if there is no supply, then people want to go back to what they are used to. This is the normal thing that happens in any country. But you need to realize only a responsible leader and Government, after making a decision and if the public does not want it immediately, will take one step backwards. Leadership is that. Nobody can challenge him for the decision he took as he made the right choice for his people.

Q In 2019, President Gotabaya Rajapaksa won in a landslide victory. And in 2020, Prime Minister Mahinda Rajapaksa and even yourself smashed records by polling in with the highest votes ever in your electorates. You publicized the Rajapaksa name quite a bit. But today in 2022, do you think this very name has declined your popularity due to the crises we are now in due to family politics?

You see, the popularity of any politician will never be at a peak right throughout. The popularity of leaders always fluctuates. People’s needs change drastically. So politicians also need to keep interacting with their voters and see how they can keep updating their policies to meet the people’s demands and what is right for the people. The Rajapaksas have always been a farmer-friendly, rural-based family. Our dynasty is based on farming. So, when we take a drastic decision all of a sudden based on switching from chemical fertilizer to non-chemical fertilizer, then yes, the popularity gets affected. I won’t disagree with you on that.

Q I am not referring to the fertilizer issue, alone Minister. I am talking about the other issues in this country today like the dollar shortage, economic crisis, the soaring cost of living. The common man blames the Government for these failures.

There again you know that when we took over we faced a global pandemic. No politician or political family rode high on popularity for periods of 10, 12 years continuously. The Rajapaksa popularity is facing a popularity drop but I believe this is temporary. There will always be people who are satisfied and those who are not satisfied. But at the end of the day, we need to make the best decisions for the people. Dynastic politics does not exist anymore. It is modern politics. But at the same time, you need to do what is the right thing. When former President Mahinda Rajapaksa decided to end the war, especially after the assassination attempt on former Army Commander Sarath Fonseka, we stood by that decision. We went through a very hard time, there was even a time we had to borrow money. But today we are reaping the benefits of ending the bloodshed. So politicians should not worry about their popularity. But they have to worry about how they will deliver to the people.

Q Minister do you believe in nepotism? You come from a family where the President, Prime Minister, Ministers are all Rajapaksas? Are you planning to take over next?

Well, the people will decide who their leader should be. Not me or not anyone else. And Premadasa himself is coming from a political family. His father was the leader of the country and was also at one time responsible for the youth uprising in the south. We have Dissanayakas as well in Parliament. Then in the last Cabinet, we had a husband and wife. The unfortunate thing here is that the Rajapaksas are always highlighted.

Q Why do you think they are highlighted?

Because we are always with the people.

Q Is it not because of the controversies you’ll have created?

See, when you are with the people, you are a threat naturally. So you are always part of a political conspiracy. If you are hidden, if you are not seen, then no one will bother about you. We still have families in politics. This system not only exists here, but it is also everywhere, whether it be the UK, US or even countries in the region. When some organization, company or party comes up for working for the people, you obviously become part of a conspiracy.

Q You are young. Wouldn’t you want to see fresh faces in our political arena? We are seeing the same old faces.

Definitely, I want to see fresh faces but not only in politics. We need this even in the administration. Unfortunately, we talk only about politicians. We never talk of the administrators. This is where this country has gone wrong for so many years as the easy target is a politician. But why aren’t we talking about the administration that actually runs the country?
If you see all our manifestos have been very similar ever since Independence. Different Governments, different leaders have had their priorities. President Mahinda Rajapaksa had his priority to end the war and secondly, it was infrastructure development. Then, President Gotabaya Rajapaksa has his priorities that are digitalization and a green economy. President Maithripala Sirisena’s priority was good governance. So all leaders come with their priorities. And it is the government service that needs to take it forward. We have a vibrant Government Service but we now need the next generation coming in and who can deliver the policies put forward.

Q Minister, let us focus on your subject of digitalization. You are talking of digitalization when Sri Lanka is lacking its basics. Even something as basic as PayPal is lacking in the market. Why don’t you address all this first?

Paypal is a private company so I don’t think any Government can dictate to them where they should enter. But this is the system change I am talking about. Unless you change the system, where people can get things done on their own, by using technology, I don’t think this country can move forward.

Q You are now in the Government. You can change this system.

We are changing it now and don’t forget to change this system we need to change certain laws that have been existing for 40 to 50 years. We need to change certain habits and practices that have been there. For example, for a teacher to get a transfer, he or she presently has to go meet a union leader or he/she has to find out where there is a vacancy and take that and go meet the Provincial Secretary and then decide if a transfer is possible. Why can’t there be a system online to see where the vacancy exists? Even when you take a doctor, why can’t there be an online system to show which areas need more medical assistance.

And even for those who want to start their own companies, presently they need to collect about 10 letters to start their business. But of course, now the company registration process has been digitalized and it is doing very well. But to even enrol your child to school, how many documents are required?

These documents were required 20, 30 years ago. And as a practice, you keep on asking for the same document. To even get a Police Report about yourself you need to be in a queue for at least 30 minutes. To even pay a tax you need to be in the queue. Nowhere in the world, this is seen. The Government should welcome you with a garland in fact when you arrive to pay your tax money. So these are the practices we need to change. But we are committed and we have already begun to make the changes.

For example, the birth, death and even the marriage certificate can now be taken online. We will also introduce spot fining soon where people don’t need to go back to the place they were fined to pay. This does not require technology worth billions of dollars. It is already there in your smartphones. All you need is a simple QR system. Good governance comes with transparency.

Q Will this reduce the red tape?

This will drastically reduce the red tape and make people’s lives easier. And in fact, we are even doing a study on which documents we can make online. For example, Police Reports can presently be taken only from Police Headquarters. We want to change this and make this available to all police stations. Then Grama Niladhari Certificates will also be changed to an online system. So there are many more plans underway like this to make people’s lives easier.

Q How soon will all this be implemented?

We are looking at completing all this, this year. We are closely working with the Local Council Ministry as well. We are also looking at digitalizing the entire court system, the education system, the university system.
The E-Gramasevaka will also help a lot in the rural areas. And we are looking at going paperless at least within the coming five years.

Q Minister my final question. You are presently dubbed as the ‘Minister of Everything’. Have you not taken too much onto your plate?

Well, the answer is digitalization. Because most of my time goes for youth and sports. But this year I will invest more time in digitalization. And the Monitoring Ministry is not a namesake Ministry. It is about getting things done and working in line with the other Ministries which I am doing. For that, I am using digital platforms. So, whatever I can put in place, I am doing.

Four key foreign representatives to visit Sri Lanka this month

Four key foreign representatives are to visit Sri Lanka this month, the Foreign Ministry said.

The Foreign Minister of Hungary Péter Szijjártó, the Foreign Minister of Turkey Mevlut Cavusoglu, the Minister of State at the UK Foreign, Commonwealth and Development Office (FCDO) Lord (Tariq) Ahmad and the Speaker of the National Assembly of Korea, Park Byeong-seug are scheduled to arrive in Sri Lanka this month.

The Foreign Minister of Hungary, Péter Szijjártó is expected in Sri Lanka tomorrow (12th January) while Lord (Tariq) Ahmad is scheduled to arrive in Sri Lanka on 18th January.

The Speaker of the National Assembly of Korea, Park Byeong-seug, is expected to arrive in Sri Lanka on 19th January.

The Sri Lanka Foreign Ministry said that the Foreign Minister of Turkey, Mevlut Cavusoglu, is expected to arrive in Sri Lanka at the end of the month.

Chinese State Councillor and Foreign Minister Wang Yi had just concluded a visit to Sri Lanka.

Foreign Minister, Professor G.L. Peiris said that the visits showed that Sri Lanka continues to maintain strong bilateral relations with the international community.

People’s Bank removed from China Embassy blacklist

Sri Lanka’s People’s Bank has been removed from the blacklist of the Economic and Commercial Office of the Chinese Embassy in Sri Lanka, it was confirmed on Tuesday.

On the 9th of January 2022; The People’s Bank of Sri Lanka has informed the Chinese Embassy in Sri Lanka of its request to be taken off the blacklist by the Embassy’s Economic and Commercial Office over the Chinese Fertilizer shipment that was rejected by Sri Lanka, after pathogens were detected in samples twice.

This is after People’s Bank honoured the Letter of Credit obligation of USD 6.9 Mn to China’s Qingdao Seawin Biotech Group.

The People’s Bank of Sri Lanka announced that a sum of USD 6.9 Million was paid to Qingdao Seawin Biotech Group Co., Ltd, on Friday as per the Letter of Credit opened for the purchase of organic fertilizer.

This announcement came days after the Colombo Commercial High Court dissolved an order preventing the payment to a Chinese company for imported fertilizer.

The order was dissolved on the basis that the Chinese company and the Sri Lankan Government had reached a settlement on the issue.

The People’s Bank of Sri Lanka was then blacklisted by the Economic and Commercial Office of the Chinese Embassy in Sri Lanka for failing to make the payment according to the Letter of Credit and the contracts between the two parties.

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Formation of common political platform underway

*Talks have been ongoing for some months and some members and parties have already expressed keenness

* It is yet to be decided who will head this platform as a common candidate

The opposition steered by the Samagi Jana Balawegaya (SJB) is presently in talks with several political parties including those in the government to form a common political platform this year to contest the future polls, the Daily Mirror learns.

According to political sources, talks have been ongoing for some months and some members and parties who are part of the government have already expressed keenness in joining this platform to break away from the Rajapaksa regime. The government, it is learnt, is already split into groups, with some remaining in positions but working against government policies.

In recent months, this split has been evident with the critical remarks issued by some government members voicing their opposition to ruling decisions and policies in the media. Already the Yugadanavi Power Deal which received cabinet nod is now before court after a case was filed by three cabinet ministers. The Daily Mirror learns that a campaign is also underway within the government to discredit the leaders in order to lose the popularity which they came in with, in the 2019 and 2020 presidential and general elections.

President Gotabaya Rajapaksa in a recent cabinet meeting has already questioned his cabinet if it is ethical of ministers, deputy ministers and officials to speak publicly against the government while being part of it. In recent days President Rajapaksa has already sacked one of his state ministers for his critical remarks against the government policies. The Daily Mirror learns that the formation of the common platform is being formulated by the SJB and they have already held successful talks with several parties. However, who will head this platform as a common candidate is yet to be decided and revealed.

Political sources said that this common political platform will be finalised this year so it can be ready to contest future polls. In the meantime, the President and Prime Minister have already announced that this year several new investments and FDIs will enter Sri Lanka, thereby easing the economic crises and which will put Sri Lanka back on track. It is learnt that all ministries and departments have been told to bring in results this year in order to fully implement the government policies which were stalled by the COVID-19 pandemic and bring in tangible results to ease the burden off the public.

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Relief package supports SL economic recovery but compounds govt’s fiscal challenge: Moody’s

The fiscal relief package recently introduced in Sri Lanka reduces the scope for fiscal and debt consolidation at a time when fiscal flexibility is already severely limited by the large share of interest payments in government revenue, Moody’s said in a recent analysis.

According to Moody’s, this funding package with reallocations from the budget in part reflects the limited fiscal space, which constrains the government’s ability to use fiscal policy to mitigate the impact of economic shocks.

Full Statement

On 3 January, Sri Lanka’s (Caa2 stable) government announced a fiscal relief package worth LKR229 billion ($1 billion, 1.6% of our 2022 GDP forecast) to support the economy and alleviate the impact of higher consumer prices on low-income households. While the size of the package is moderate and will be fully funded via reallocations from the budget (6% of budget expenditure in 2022), it reduces the scope for fiscal and debt consolidation at a time when fiscal flexibility is already severely limited by the large share of interest payments in government revenue (60-70%).

Funding the package with reallocations from the budget in part reflects this limited fiscal space, which constrains the government’s ability to use fiscal policy to mitigate the impact of economic shocks. Furthermore, the risk of fiscal slippage has increased with the emergence of the omicron variant of the coronavirus. Some countries have tightened activity and travel restrictions, and any reintroduction of measures domestically or a delay in the recovery of Sri Lanka’s tourism sector would intensify fiscal and external pressures.

Key features of the relief package include cash handouts of LKR1,000 to citizens receiving income support, agricultural subsidies, the removal of certain taxes on food and medicine and an increase in public-sector salaries (LKR5,000 a month from January). Such measures would support domestic demand and the economic recovery as surging prices – particularly for food – stemming from global supply chain-related disruptions and some import restrictions over 2020-21 reduce the purchasing power of households. Consumer price inflation rose to 8.3% year-over-year in October 2021 and accelerated to more than 11% in November, with food prices surging
by 17%.

We expect inflation-adjusted real GDP growth to pick up to around 5% in 2022 from around 4-5% in 2021, in part because of a lower base and because domestic economic activity has largely normalised, with international borders open to vaccinated tourists since October 2021. However, risks remain as the new omicron variant of the coronavirus could delay such a recovery, and several countries have reversed their easing of travel restrictions. Should such risks materialise, the recovery in government revenue would likely be delayed beyond our assumptions, with fiscal and debt metrics remaining very weak for longer.

We forecast that the fiscal deficit will narrow only slightly to around 9-10% of GDP in 2022 from around 11% in 2021, mainly reflecting our expectation for lower revenue growth than the budget envisages. Wide deficits will keep the government’s debt burden at higher levels for some time; we estimate that the debt burden will rise to around 108% of GDP by the end of 2022 from around 101% at the end of 2020 and 87% at the end of 2019, before stabilising at the elevated 2022 level thereafter, mainly reflecting the recovery in nominal GDP growth. Such levels are significantly above the Caa median and much higher than the government’s medium-term target
of around 75% in 2025.

In addition, a delay in the recovery of tourism receipts would weigh on Sri Lanka’s precarious external liquidity position. As of November 2021, the country had $1 billion in foreign-exchange reserves (which in our definition excludes gold and Special Drawing Rights), covering less than one month of imports. While the central bank indicated that reserves had risen as of the end of December with the disbursement of a $1.5 billion swap agreement with the People’s Bank of China, reserves adequacy remains very weak, with reserves at around $2-3 billion compared with $5-6 billion of foreign-currency obligations due annually through at least 2025.

Gazette issued extending terms of Local Government Institutions

A Gazette notification has been issued extending the tenures of Municipal Councils, Urban Councils and Pradeshiya Sabhas until March 19, 2023.

The Gazette has been issued today (10) by the Minister of Public Services, Provincial Councils & Local Government Janaka Bandara Thennakoon exercising the powers vested in him by the Municipal Council Ordinance, Urban Council Ordinance and Pradeshiya Sabha Act.

Accordingly, the term of each member of all 24 Municipal Councils, 41 Urban Council and 275 Pradeshiya Sabhas have been extended until March 19, 2023.

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Chinese envoy wants defence cooperation with Sri Lanka to keep region stable, prosperous

Both Sri Lanka and China should do more in defence cooperation that would serve the stability and prosperity of the Indian Ocean region, Chinese Ambassador to Sri Lanka Qi Zhenhong said on Sunday (09) following an official visit by China’s foreign minister.

Zhenhong’s statement came soon after Chinese State Councilor and Foreign Minister Wang Yi left the island nation after a two-day visit that saw the signing of four memoranda of understanding between the two countries, excluding any defence pact.

“Defence progression and exchanges is a very important part in bilateral relations,” Zhenhong told a group of journalists late on Sunday.

“I think we (China and Sri Lanka) should and could do more in this field.”

“I believe cooperation in this field, we not only serve the common interests of China and Sri Lanka on sovereignty, security, and stability, but also you will have this region to keep stability and prosperity (sp).”

The statement is likely to make the regional power India nervous along with the United States which has been monitoring China’s activities in the Indian Ocean under Beijing’s One Belt One Road initiative, defence analysts say.

Already India has raised concerns over China’s increasing presence in its backyard of Sri Lanka.

Sri Lanka has already handed over the 1.4 billion US dollar Chinese funded and built Hambantota port in the deep south of the island as a part of a debt-to-equity deal in 2018. China is eying a 15,000-acre investment zone around the port.

China has also reclaimed a 269-acre land next to Sri Lanka’s main Colombo port where a state-owned Chinese firm is building the Port City. It has already invested 1.5 billion US dollars in the project.

India accounts for over 70 percent of the transhipment at the Colombo port where China also has a terminal on a 25-year lease basis. To counterbalance Chinese presence, President Gotabaya Rajapaksa’s administration has given a majority stake at the West Container Terminal (WCT) to India’s Adani group, a privately owned firm, for a 850 million dollar investment.

Sri Lanka is in the process of canceling power system installation projects in three islands off Sri Lanka’s northern city of Jaffna within 50 km from South Indian coast, which prompted China to say the move was due to “security concern of a third party”.

Defence analysts say Beijing’s activities in the South China Sea have been cited by countries that are raising concerns over increasing Chinese presence in Sri Lanka.

Officials from the current ruling Sri Lanka Podujana Peremuna (SLPP) have told the EconomyNext in the past that indirect backing of India and the United States helped oust the previous government of then President Mahinda Rajapaksa in 2015 after Sri Lanka gave permission to Chinese nuclear submarines to enter Colombo port premises in October 2014.

Officially both India and the US have denied their involvement in toppling Rajapaksa’s previous government.

China has said all its projects in Sri Lanka are commercial in nature and has denied any military involvement.

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FNO calls for full and thorough probe into Trinco Oil Tank Farm deal with India

The Federation of National Organisations has asked President Gotabaya Rajapaksa to put an immediate halt to the ongoing process of entering into an agreement with India, purportedly to develop the Trincomalee Oil Tank Farm. It has called for a thorough investigation into the questionable deal.

A letter signed by FNO Convener Dr. Gunadasa Amarasekera addressed to the President says the then government of Ceylon took possession of 99 tanks at the farm paying Sterling Pounds 250,000 to the British Navy in 1964. That government did so, taking the national interests into serious consideration. The so-called agreement process contained serious technical flaws. Agreements made without following due process are null and void before the law. Therefore, the President should immediately stop this process and make a full revision of it. Any decision taken otherwise owing to the pressures of public protests or court decisions will pave the way for serious repercussions which would be detrimental to the image and sustenance of the government and Indo-Sri Lanka relations.

The FNO says that the government instead should pay attention to make a policy decision to ensure energy security of the country by retaining its hold on bunkering.

Informed public opinion in this country today is that the process of handing over 99 tanks to the LIOC is questionable. People do not trust this agreement and there will be public protests, the letter has said.

Crisis-hit Sri Lanka asks China to restructure its debt

The president of crisis-hit Sri Lanka has asked China to restructure its debt repayments as part of efforts to help the South Asian country navigate its worsening financial situation.

Gotabaya Rajapaksa made the request during a meeting with Chinese foreign minister Wang Yi on Sunday.

In the last decade China has lent Sri Lanka over $5bn (£3.7bn) for projects including roads, an airport and ports.

But critics say the money was used for unnecessary schemes with low returns.

“The president pointed out that it would be a great relief to the country if attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the Covid-19 pandemic,” Mr Rajapaksa’s office said.

The statement also said China was asked to provide “concessional” terms for its exports to Sri Lanka, which amounted to around $3.5bn last year, without providing further details.

Mr Rajapaksa also offered to allow Chinese tourists to return to Sri Lanka provided they adhere to strict coronavirus regulations.

Before the pandemic, China was one of Sri Lanka’s main sources of tourists. And it imports more goods from China than from any other country.

In recent months, Sri Lanka has been experiencing a severe debt and foreign exchange crisis, which has been made worse by the loss of tourist income during the pandemic.

China is Sri Lanka’s fourth biggest lender, behind international financial markets, the Asian Development Bank and Japan.

The country has received billions of dollars of soft loans from China but the island nation has been engulfed in a foreign exchange crisis which some analysts have said has pushed it to the verge of default.

Sri Lanka has to repay about $4.5bn in debt this year starting with a $500m international sovereign bond, which matures on 18 January.

The country’s central bank has repeatedly assured investors that all of its debt repayments will be met and said funds for this month’s bond repayment has already been allocated.

Sri Lanka is a key part of China’s Belt and Road Initiative, a long-term plan to fund and build infrastructure linking China to the rest of the world.

However, some countries, including the US, have labelled the project a “debt trap” for smaller and poorer nations.

Beijing has always rejected those accusations, and in response has accused some in the West of promoting this narrative to tarnish its image.

Is China luring poorer countries into debt?

Last month a Sri Lankan government minister said the country planned to settle a debt for past oil imports from Iran by paying it off in tea.

It plans to send $5m worth of tea to Iran each month to clear a $251m debt.

In September, Sri Lanka declared an economic emergency, after a steep fall in the value of its currency, the rupee, caused a spike in food prices.

Authorities said they would take control of the supply of basic food items, including rice and sugar, and set prices in an attempt to control rising inflation.