Sri Lanka Announces Defaulting On All Its External Debt

Sri Lanka defaulted on its $51 billion foreign debt Tuesday as the island nation grapples with its worst economic crisis in memory and widespread protests demanding the government’s resignation.
Acute food and fuel shortages, alongside long daily electricity blackouts, have brought widespread suffering to the country’s 22 million people in the most painful downturn since independence in 1948.

Public anger has flared in recent weeks with crowds attempting to storm the homes of government leaders and security forces dispersing protesters with tear gas and rubber bullets.

Sri Lanka’s finance ministry said the country was defaulting on all external obligations, including loans from foreign governments, ahead of an International Monetary Fund bailout.

“The government is taking the emergency measure only as a last resort in order to prevent further deterioration of the republic’s financial position,” a statement from the ministry said.

Creditors were free to capitalise any interest payments due to them or opt for payback in Sri Lankan rupees, the ministry added.

Sri Lanka’s snowballing economic crisis began with an inability to import essential goods, after the coronavirus pandemic torpedoed vital revenue from tourism and remittances.

The government imposed a wide import ban to conserve its foreign currency reserves and use them to service the debts it has now defaulted on.

Economists say the crisis has been made worse by government mismanagement, years of accumulated borrowing and ill-advised tax cuts.

Public frustration with the government is widespread, with long queues around the island nation forming each day to buy scarce supplies of petrol, gas and kerosene for cooking stoves.

Thousands of people were camped outside President Gotabaya Rajapaksa’s seafront office in the capital Colombo in the fourth straight day of protests calling for him to step down.

Rating downgrade

International rating agencies also downgraded Sri Lanka last year, effectively blocking the country from accessing foreign capital markets to raise new loans and meet demand for food and fuel.

Sri Lanka had sought debt relief from India and China, but both countries instead offered more credit lines to buy commodities from them.

Official figures show that China and Japan, two key bilateral sovereign creditors, hold about 10 percent each of Sri Lanka’s foreign debt while India’s share is under five percent.

Just under half of Sri Lanka’s debt is market borrowings through international sovereign bonds and other similar instruments.

Estimates showed Sri Lanka needed $7 billion to service its debt load this year, against just $1.9 billion in reserves at the end of March.

Sri Lanka suspends normal debt servicing of all affected debts for an interim period

Sri Lanka has decided to suspend normal debt servicing of all affected debts for an interim period.

The Ministry of Finance said the suspension is pending an orderly and consensual restructuring of those obligations.

The Ministry further said the orderly and consensual restructuring will take place in a manner consistent with an economic adjustment program supported by the International Monetary Fund (IMF).

The policy of the Government in this regard applies to amounts of affected debts outstanding on 12th April 2022.

However, new credit facilities after that date are not subject to this policy and shall be serviced normally, the Ministry added.

The Finance Ministry’s interim policy regarding the servicing of Sri Lanka’s external public debt is as follows: https://www.treasury.gov.lk/api/file/54a19fda-b219-4dd4-91a7-b3e74b9cd683

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Sri Lanka’s economic crisis may lead to more deaths than Covid-19, warn doctors

Sri Lanka’s worst economic crisis could lead to far more deaths than the Covid-19 pandemic, doctors warned on Sunday as they are nearly out of life-saving medicines. The island nation is struggling with power blackouts and severe shortages of food, fuel and pharmaceuticals.

The Sri Lanka Medical Association (SLMA) said all hospitals in the country no longer had access to imported medical tools and vital drugs, according to news agency AFP.

Several facilities have already suspended routine surgeries since last month because they were dangerously low on anaesthetics, but the SLMA said that even emergency procedures may not be possible very soon.

“We are made to make very difficult choices. We have to decide who gets treatment and who will not,” AFP quoted the group as saying after it released a letter the group had sent President Gotabaya Rajapaksa days earlier to warn him of the situation.

“If supplies are not restored within days, the casualties will be far worse than from the pandemic,” it said.
Mounting public anger over the crisis has seen large protests calling for Rajapaksa’s resignation. Thousands of people braved heavy rains to keep up a demonstration outside the leader’s seafront office in the capital Colombo for a second day.

Rajapaksa, meanwhile, has invited the 11-party coalition allies comprising 42 independent MPs for a discussion on the country’s worst economic crisis, according to a media report.

During the meeting, which was scheduled to take place on Sunday evening, the MPs would also request the president to remove his elder brother, Prime Minister Mahinda Rajapaksa, and appoint a new cabinet to address the unprecedented crisis faced by the island nation.

Last week the entire Sri Lankan cabinet resigned apart from Mahinda at a time when the country was facing its worst economic crisis since gaining independence from the UK in 1948.

During the meeting, the MPs will also hand out a list of proposals to President Rajapaksa to bail out Sri Lanka from the current economic and political crisis, the Colombo Page news portal reported.

Every minute you protest; we lose dollars-MR (Full statement)

Prime Minister Mahinda Rajapaksa says every minute protests are staged in the country; Sri Lanka loses the opportunity to obtain dollars.

In his address to the nation the Premier said it is the responsibility of all individuals, prior to enforcing development, to uplift the country from its present state.

The Prime Minister said the country at this point of time needs the people’s patience.

Premier Rajapaksa said his family and himself have heard many insults in the recent past, adding they can bear all such insults.

However, the Premier called for security forces and Police not to be harmed, who are engaged in their duties and reminded the public to be grateful as they are able to freely walk about due to a country being secure by the forces.

Prime Minister Mahinda Rajapaksa added despite the present crisis in the country political parties representing Parliament failed to come together to seek solutions.

The Premier claimed party politics must be set aside and steps must be taken to prioritise the strengthening of the economy. Therefore, the Prime Minister said the government will provide solutions.

Premier Rajapaksa added the government constructed roads not for people to stand in queues and constructed ports not for fuel shipments to be held at ports without being able to make dollar payments.

The Premier claimed when many individuals succumbed to COVID-19 world over, Sri Lanka constructed facilities to house patients and provided all necessary medication as well.

The Prime Minister said many measures were taken to safeguard the people.

Full statement:

Special statement by the Prime Minister regarding the current situation.

Friends and citizens of Sri Lanka,

I speak to you at a crucial time as we grapple with many challenges that have overcome our people. These challenges are not new to me having overseen the journey our nation has undertaken in my fifty plus years of politics.

Friends, I am sure by now that you are very aware of the deep economic crisis that has befallen our county following the battle we fought, to keep our citizens safe from the Coronavirus pandemic. Although we ensured the safety of the lives of the people from the pandemic, we were unable to avoid falling into this economic abyss.

Needless to say, with the closure of our international borders and the travel ban within the country, foreign exchange inflows were halted and subsequently, foreign resolves dried up as they were used up for sustenance.

You know the situation has become serious when tankers providing fuel have arrived at the port, but we are unble to clear it for want of foreign exchange.

My mind goes back to when I addressed you following the 2010 presidential election after the culmination of the war.

I promised you a future free of power cuts.

Power plants were built for this purpose in an effort to ensure the fulfilment of those promises. However, because the previous government stalled the development of these projects, we were not been able to fulfil those expectations and upkeep those assurances. That is the truth.

I understand the fatigue of the people who have been queuing for days in the fuel queues and empathise with the pain of our citizens queuing up for gas. I feel that pain.

We intimately understand the suffering of the people in the face of the skyrocketing price of goods. Friends, although we have extended an invitation to all parties to come forward in unity to address the current situation, they have not stepped forward. This is not a time to prioritise party affiliations over the resurrection of the country’s economy. With this call being unanswered, we as the party commanding a majority have taken up this responsibility. We will overcome these challenges.

30 years of a terrorist threat and the fear of death that existed among the people of this comfy was eradicate; not to further endanger the people and to relegate them to a fate of hardship and pain. We built highways, modern roads and infrastructure – not so that you can stand in queues on those roads.

We built ports, not to suffocate supply chains and halt tankers carrying fuel because win unable to pay for it.

When thousands died in neighbouring countries due to the coronavirus, treatment centres equipped with facilities were mobilised. Indigenous medicines such as koththamalli were dispensed, medicines were given and the whole county was largely vaccinated

All this was done, not so that our people would be victimised by tear gas and bullets. Historically, we have spared no sacrifice to protect our people from every challenge. As in times past, we will make every effort to overcome this crisis.

Friends, this government restricted taking loans from international stakeholders and prioritised working with and empowering our people to make Sri Lanka a debt free country.

This government has always strived to protect the independence of the country even from international influences under trying circumstances, to the point that at times, we withdrew opportunities to bring in large scale investments to Sri Lanka when public opinion dictated so.

Friends, our responsibility is to uphold the sovereignty of the people. We will never take decisions that will undermine democracy, the country’s governance structure or its supremacy. We work with that purpose in mind. In politics we are accustomed to letting go.

Friends, the chant ‘No 225 in Parliament’ today echoes through the streets. That immediately translates to a rejection of this democratic system. While it may sound goo, I urge you to understand its danger from a historical perspective.

We have witnessed the tragedy of the bombing of Parliament and attempts to destroy it. The blood of our youth flowed along the streets as those parties rejected democracy. Thousands of young people were burned alive in tires as that movement took wind. So much so that 1988/1989 proved to be the darkest age in our history as this rebellion claimed over 60,000 young lives.

Your elders will remember the massive effort we put in to saving those young lives then. I want to remind the youth of the North as well as the South about it.

Your parents will attest to the bloody past that shrouded our history.

A movement was birthed in the North of our country during the 1970s and 1980s by the youth who killed elected people’s representatives on the streets as they protested governance, by declaring their refusal for elections and a parliament. The ensuing distress affected not only those in the North but also those in the South of Sri Lanka for over 30 years due to that political movement. Tens of thousands paid with their lives as landmines and bullets claimed Sri Lanka’s children.

People lost their homes and gradually, school children began to take to the streets in protest. The next inevitable step was to forcibly conscript school children into this evil war.

I urge our sons and daughters this evening to consider this carefully and protect or nation from once again slipping into a time as dark as that in our history, through these actions.

Friends, we are embarking on an enormous program to overcome the crisis we face today. Every second spent by the President and this government is used up exhausting avenues to rebuild our country.

This government has historically imbued our farmers with the highest relief packages to aid their industry. However, today the farmers stand against us.

No matter how honourable the notion of organic fertiliser is, it is not the time for it to be implemented. As such, we will be reinstating the fertiliser subsidy to once again equip our farmers to optimise their craft.

The country needs to urgently recover from this debilitating crisis which includes the unbearable cost of living and the requisite shortages.

Even if it is not possible within the next two or three days, we have initiated action to address these crises with the highest urgency.

Friends, every second you protest on the streets, our country loses opportunities to receive potential dollars. The reform that is being sought is currently secondary to the collective responsibility and the urgency that is required to stave off this crisis.

To facilitate this, we have extended an open invitation to all those who have the courage to join us in saving our great nation. Remember that the country right now needs the patience of all of us to endure this hardship a little while currently.

Dear Daughter, Dear Son, we know that you all love your homeland passionately. I undertook many miles of protest walks in the past for the sake of the youth who were being oppressed from the violence that was prevalent. However, the infinite grains of sand that I trampled do not begin to compare with the humiliation and insults that my family and I have been levelled with. We can bear it. We can face it.

My one humble plea is that you do not harass or insult those who serve in the police of the tri forces who have dutifully served our country.

Remember that today you walk the streets without fear of oppression protesting, because those war heroes sacrificed their lives to save this country for you.

Keep in mind that these very same war heroes came back to battle for you during the recent pandemic. My Sons and Daughters, I see how proudly you wave our national flag during your protests, and it fills my heart with joy. However, do not forget those who laid the foundation for that flag to be freely hoisted anywhere in our homeland.

Today, despite the many challenges, there is one thing that is not lacking,- our courage, and determination to once again fight this crisis together. We will fight and we will overcome, as we have in times past.

May the blessings of the noble Triple Gem be with you.

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SJB begins collecting signatures to impeach Prez

Samagi Jana Balawegaya (SJB) today said its MPs had already begun placing signatures for an impeachment motion against President Gotabaya Rajapaksa while the placing of signatures for the no confidence motion against the government is also continuing.

SJB MP Rajitha Senaratne told a press conference that the impeachment motion against the President is underway while the placing of signatures for the no faith motion is also continuing. “These are components of a programme which the party has devised to take the nation out of the present political crisis,” Dr. Senaratne said.

“SJB does not aim to remove the incumbent President alone but has prepared a plan which goes beyond an impeachment motion. We plan to go for constitutional reforms under which Executive Powers will be shared by a new President and the legislature. We also propose the repealing of the 20th Amendment and to rectify the shortcomings of the 19th Amendment as a short-term measure,” he said.

“SJB will only work towards forming a multiparty interim government only if the other parties representing the House agree with our proposals,” he added.

Meanwhile a group of MPs who gave official statements to journalists before the press conference including Dr. Kavinda Jayawardana said SJB MPs have begun placing their signatures to both the no faith motion and the impeachment motion.

“The course of action which we have proposed is a way forward for the legislature to resolve the present political crisis and we hope that all MPs will support us. We also don’t want to support those who want President Gotabaya Rajapaksa but enjoy a good rapport with Prime Minister Rajapaksa and those who are against former Minister Basil Rajapaksa but good with other Rajapaksas,” MP Nalin Bandara Jayamaha told journalists.

Asked whether there are any divisions within the SJB, MP Mujibur Rahman denied these reports. “We are all working together,” he said.

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SLFP MP Shantha Bandara sworn in as State Minister

Sri Lanka Freedom Party Kurunegala District MP Shantha Bandara has been appointed as the State Minister of Promoting the Production & Regulating the Supply of Organic Fertiliser, and Paddy and Grains, Organic Foods, Vegetables, Fruits, Chilies, Onion and Potato Cultivation Promoting, Seed Production and Advanced Technology Agriculture.

The President’s Media Division said Shantha Bandara took oath before President Gotabaya Rajapaksa last evening.

The PMD said President Rajapaksa also refused to accept the resignation letter of State Minister of Foreign Employment Promotion and Market Diversification Piyankara Jayaratne.

Accordingly, Piyankara Jayaratne will continue to work within the capacity of State Minister.

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Political stalemate continues SLFP losing faith in President?

The meeting between President Gotabaya Rajapaksa and the parliamentary group of Sri Lanka Freedom Party (SLFP) ended without any conclusion on the formation of an interim government to quell present political unrest in the country and find solutions to the economic woes.

The Sri Lanka Freedom Party claims that no progress was made pertaining to resolving critical issues faced by the country, during discussions between the President and 41 independent MPs yesterday.

Speaking to NewsRadio, Senior Vice President of the SLFP Rohana Luxman Piyadasa said the SLFP sought a meeting with the President in a bid to resolve the current crisis in the country.

He said the SLFP Parliamentary Group and several members of the Central Committee met with the President yesterday.

Rohana Luxman Piyadasa said there is a huge public uprising at present with citizens demanding an end to corruption.

He said people are opposing nepotism while demanding for the establishment of good governance in the country.

The Senior Vice President of the SLFP said however no favourable solutions have been given to rectify the shortcomings of the present administration.

He said therefore the party will have to rethink its strategy going forward.

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Rupee sinks further as dollar hit an all-time high

The Sri Lankan rupee hit an all-time low today against the US dollar.

Following the move to float the rupee by the Central Bank recently, the US dollar has been appreciating against the rupee continuously during the past few days.

According to the latest foreign currency exchange rates issued by the Central Bank of Sri Lanka, the US dollar was buying at Rs.316.79 while the selling rate was Rs.327.49.

Meanwhile, the Sterling Pound was buying at Rs.413.03 while the selling rate was Rs.427.91.

The euro buying rate has meanwhile increased to Rs.347.85 while the selling rate was jumped to Rs.359.55.

Protesters give new name to Galle Face Occupying area ’Gota Go Gama’

The ‘occupying area’ at the Galle Face Green in Colombo has been renamed as ‘Gota Go Gama’ by protesters.

The public protest against the President and his Government over the failed economy of Sri Lanka is continuing for the third consecutive day today.

The protest is being held at the Galle Face Green, opposite the Presidential secretariat.

Protesters have set up temporary tents and marquees, providing food, medicines, among other necessities, while public toilets have also been set up for the convenience of the protesting public.

The protesters have placed a placard made out of cardboard renaming the ‘occupying area’ at the Galle Face Green as ‘Gota Go Gama’.

The new name ‘Gota Go Gama’ originally in Sinhala translates to ‘Gota Go Village’ in English.

Tourists cancel holiday plans to Sri Lanka

Sri Lanka is facing its worst crisis and just when the tourism industry was trying to raise its head tourists are calling to cancel their holiday plans on the back of harsh travel advisories. The industry is wandering in the dark with no one to turn to as the Minister has resigned.

Transporting tourists has become an issue, as was the case this week with one such driver who had headed to Ella with a group of tourists and had run out of diesel. To continue on their tour to Tissamaharama he had called Colombo for help to try and get some diesel from a bowser that was arriving at Bandarawela. As a result, tourists were compelled to stay back for one more day in Ella before proceeding.

Convener of One Industry, One Voice and Immediate Past President of Sri Lanka Association of Inbound Tour Operators (SLAITO) Mahen Kariyawasam told the Business Times that the industry is currently facing about 30-40 per cent cancellations.

In fact in the wake of the strong Indian media coverage of the economic crisis and political instability in Sri Lanka even the Travel Agents Association of India (TAAI) that was scheduled to arrive this week has rescheduled their plans for July, he said. About 500 participants were scheduled to take part in this event.

Another cancellation has been the three flights per week charter operation from Kazakhstan due to the current crisis in Sri Lanka. Mr. Kariyawasam pointed out that while tourists visiting through a tour operator were looked after well, others arriving on their own were finding it difficult since trains got cancelled and even moving around has become a problem for them.

Moreover, with no gas and electricity the smaller hotels are facing a crisis situation as tourists have to enjoy their holiday in the dark.

Inspite of the emergencies that the country is facing in light of the current fuel and electricity crisis, the industry is trying to work things out on their own as the Sri Lanka Tourism Development Authority (SLTDA) Chairperson Kimarli Fernando is said to be still focused on bringing about a change in the Tourism Act.

Mr. Kariyawasam noted that the Chairperson has not held any discussions with them on the current crisis and how to resolve it or issued any statement that will allay the fears of tourists and inform their respective governments against issuing adverse travel advisories.

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