Category: Breaking News

Sri Lanka is discussing with the World Bank and Asian Development Bank (ADB) to get loans of 1.9 billion US dollars after a reform program with International Monetary Fund is approved, former Central Bank Governor Indrajit Coomaraswamy said.

The IMF program would give 2.9 billion US dollars in tranches to the central bank after debt sustainability has been achieved. Multilateral lenders would then be able to resume lending to the government.

A policy loan now being discussed with the World Bank may bring around 700 million US dollars, Coomaraswamy told a business forum organized by CT CLSA Securities, a Colombo-based brokerage.

The Asian Development Bank may also give around 1.2 billion US dollars most of which will be budget support, he said.

Japan has also promised funding, he said.

Multilateral lenders and Japan will usually give loans for projects which will boost economic activities.

If budget support loans are given a reform program they require reform to unlock economic activities which will bring growth and future taxes to unlock growth.

With the IMF program in place, banks would also find it easier to resume or extend their credit lines, he said.

Sri Lanka owed Chinese lenders USD 7.4 billion – nearly a fifth of its public external debt – by the end of last year, calculations by the China Africa Research Initiative (CARI) published on Wednesday showed, an estimate higher than many others.

The figure was above the “often-quoted 10 to 15 percent figures,” the study said, adding a “significant portion” of the country’s debt to China had been recorded under lending to state-owned enterprises rather than central government.

Crisis-hit Sri Lanka is in the midst of a debt restructuring after years of economic mismanagement combined with the COVID-19 pandemic saw the country plunge into the worst economic crisis since independence from Britain in 1948 and tip into default.

Export-Import Bank of China (EximBank) and China Development Bank are the two largest Chinese lenders, accounting for $4.3 billion and $3 billion respectively, according to the data collected by CARI at the Johns Hopkins University School of Advanced International Studies.

China is Sri Lanka’s largest bilateral creditor and, with India and Japan, part of official creditor talks to restructure the country’s debt.

“China will have to play a major role in Sri Lanka’s debt restructuring process,” CARI researchers Umesh Moramudali and Thilina Panduwawala wrote in the report.

The island nation kicked off talks with bilateral creditors in September after securing a staff level agreement of $2.9 billion with the International Monetary Fund. But financing will not flow until the fund’s board approves the deal, a step that requires financial assurances from bilateral lenders.

The latest talks initially expected earlier this month were postponed, casting doubt over how fast the debt rework can progress.

The island nation’s total external debt is $37.6 billion, according to the report. Adding central bank foreign currency debt, including a $1.6 billion currency swap with China, public external debt rises to $40.6 billion, of which 22% is from Chinese creditors.

CARI’s total debt numbers differ from the $46.6 billion tally published by the government in September as it excludes local hard-currency debt and loans to some state-owned enterprises.

The CARI study also identified six different loans to the deep water port in Hambantota from EximBank between 2007 and 2013 for around $1.3 billion. The loan agreements have clauses that “submit the loans to Chinese governing law and arbitration before the China International Economic and Trade Arbitration Commission”.

Reuters

The ruling Sri Lanka Podujana Peramuna (SLPP) noted that it, as a party, is pro-devolution, but that power should be devolved to the people for the economic development of their locales, and not for the purpose of, nor based on, their ethnicity or religion.

Speaking to The Morning, SLPP General Secretary MP Sagara Kariyawasam emphasised yesterday (29) that his party has always been pro-devolution, but that the said devolution should be provided for development, and not for ethnicity or religion-based purposes.

“We have always been a party that is pro-devolution. What we say is that devolution should be given to the people for their development. The units have to be identified not based on their ethnicity or their religion, but based on the economic development of their areas,” he added.

When queried by The Morning as to whether his party would support 13-plus (a reference to going beyond the 13th Amendment to the Constitution in terms of the devolution of power) as agreed to by MP Mahinda Rajapaksa in Parliament last week, Kariyawasam noted: “If President Ranil Wickremesinghe invites us, we will certainly be participating. Former President Rajapaksa is the party leader. He will not say anything against the party’s stance.

“The party has still not met on this. We have to meet on this and have a discussion once we receive an invitation from the President. As a party, our stance has been even when we were in the Sri Lanka Freedom Party, to support devolution. We are the party that has always said that devolution should carry forward until the lowest unit. Devolution should be there and it should go to the grassroots level, not to a particular ethnic or religious group. We have been very clear about that right from the beginning.”

Kariyawasam also said that each Local Authority consists of small electoral units and that power should be given even to such units.

“If somebody is trying to devolve power based on the language that they speak or the religion that they practice, that is something that has never been done anywhere in the world. Such may lead to economic or social development, but will alos create more problems,” he added.

When queried regarding the SLPP’s stance on the Police and land powers being devolved under the already existing 13th Amendment to the Constitution, he added: “That has to be discussed very deeply. The situation varies. Earlier, we were a country where a separatist group waged war against the Government to divide the country. In such a situation, it cannot be condoned. But currently, we have to assess and analyse the present situation in order to make a decision.”

Meanwhile, the Tamil National Alliance and certain other Tamil political parties aligned with similar political ideas had taken up the stance that a federalism-based solution to the national ethnic issue would be suitable through a new Constitution.

Accordingly, President Wickremesinghe last week invited all political parties in the Parliament for discussions to solve the ethnic issue following the Budget.

Meera Srinivasan in Sri Lanka and Kanishkaa Balachandran in Bengaluru have put together a video report for The Hindu on the plight of the Malayaha Tamils or Hill Country Tamils who work on the tea plantations of Central Sri Lanka.

As the poorest community in Sri Lanka, these workers of Indian origin have had to put up with harsh deprivations during the COVID-19 pandemic and the economic crisis that followed.

The President’s Media Division (PMD) today rejected the media reports claiming the President is planning to establish District Development Committees instead of Provincial Councils.

Recent media reports attributing a quote to the President stating that the Provincial Councils will be replaced with the District Development Committees is incorrect, the PMD said.

Issuing a statement, the PMD said President Ranil Wickremesinghe’s response in Parliament yesterday (29) has been reported by several media in such a way that the meaning is distorted.

During the ongoing Parliamentary budget debate responding to a statement by MP Maithripala Sirisena the President stated that the District Development Committees (DDCs) will be established within the Provincial Councils. The DDCs will provide a platform for coordination between the Government, the Provincial Councils and the Local Governments for all executive decisions. This will ensure the process is not duplicated and will reduce financial wastage.

Apart from that, the President has not made any statement about the dissolution of provincial councils, the PMD stressed.

The suspect linked to the Easter Sunday attacks, who was out on bail, was murdered in Colombo, in broad daylight, today.

The 38-year-old man was stabbed by unknown individuals in Mattakkuliya this morning.

According to the Police, the assailants had arrived in a car and carried out the crime.

The victim was rushed to the Colombo National Hospital but was pronounced dead in hospital.

Source: Colombo Gazette