China may disagree with Western creditors on Sri Lanka’s debt restructuring

China, Colombo’s largest bilateral lender, may disagree with Western creditors on Sri Lanka’s debt restructuring.

A senior International Monetary Fund (IMF) official said that Sri Lanka’s ongoing economic crisis would deepen if China disagrees on debt restructuring, reported Sunday Islands Online.

“If one creditor or creditors are not willing to provide these assurances, that would indeed deepen the crisis here in Sri Lanka and would undermine the repayment capacity,” Peter Breuer, senior IMF mission chief told reporters in Colombo when asked what if China does not agree on a debt restructuring plan.

He said that China would not go along with Western creditors on debt restructuring on an equal footing.

“So a deepening crisis means that essentially the resources available to service the debt would become less,” said Breuer at the media briefing after concluding a nine-day visit to finalize the staff-level agreement and a loan package for Sri Lanka’s reforms.

All Sri Lankan creditors including China have to agree to restructure their existing loans to the island nation before the IMF starts disbursing a 2.9 billion US dollar loan on which preliminary agreement was announced on Thursday.

“So it is actually in the interest of all creditors to collaborate together and with Sri Lanka so that Sri Lanka can emerge from this crisis as quickly as possible and regain its repayment capacity and service this new debt that will come out of these debt negotiations,” added Breuer.

Notably, China has so far not agreed to debt restructuring which could include haircuts or reductions in interest rates. Instead, China has expressed its willingness to refinance Sri Lanka to repay its past loans without any changes, said Lankan officials, reported Sunday Islands Online.

Earlier, China had dodged the request for debt relief and said that the ball is in Sri Lanka’s court. A spokesman for the Chinese embassy said that the ball is in Sri Lanka’s court, not China’s, reported Sri Lankan publication Daily Mirror.

“We sent proposals to the Finance Ministry. But, there was no response from them. Also, Sri Lanka insisted that it should complete the agreement with the International Monetary Fund (IMF) first. The ball is in Sri Lanka’s court,” the spokesman said.

The spokesman told Daily Mirror China communicated to the Sri Lankan Finance Ministry three months ago about its readiness to discuss how to address the debt issue with the Chinese banks.
He said China encouraged its banks to discuss it. The Chinese position was also communicated during the telephone conversation between Chinese Premier Li Keqiang and then Sri Lankan Prime Minister Mahinda Rajapaksa.

Sri Lanka has already hired financial and legal advisory firms Lazard and Clifford Chance LLP to support its debt restructuring as the country is on the brink of bankruptcy. Lazard has been the legal adviser in Zambia’s debt restructuring where creditors included China, reported Sunday Islands Online.

The Paris Club of Western nations has a well-defined unified process for dealing with defaulted nations, which is familiar to the IMF.

“Sri Lanka is in a special situation that much of its official debt is outside of Paris Club creditors,” Breuer said.

“It is important to move expeditiously. We want to avoid the crisis from becoming worse,” he added.

Source:(ANI)

SLFP split after constitution change

Following the Sri Lanka Freedom Party (SLFP) Constitution being amended to empower its Chairman to remove party officers from their respective positions at their discretion, amidst opposition from several senior SLFP members including Ministers Nimal Siripala de Silva and Mahinda Amaraweera, divisions have arisen within the SLFP, The Morning learnt.

Last week, several amendments were implemented to the Constitution of the SLFP, including a clause empowering the party’s chairman to remove any officer or member at their discretion. Despite the opposition of several members of the SLFP’s parliamentary group such as de Silva, Amaraweera, and MP Chamara Sampath Dassanayake, the amendments were passed in the party’s Central Committee and its All-Ceylon Committee.

Speaking to The Morning, sources within the SLFP said that following the constitutional amendment, there has been a division into two groups in the party. According to sources, SLFP Chairman, former President, and incumbent MP Maithripala Sirisena, SLFP General Secretary and MP Dayasiri Jayasekara, and SLFP Senior Vice President Rohana Luxman Piyadasa are in one group, while the other includes de Silva, Amaraweera, Dassanayake, and some other MPs.

The sources further stated that due to the alleged disobedience of several senior politicians representing the SLFP, the Sirisena-led group is engaged in an effort to remove them from the positions they hold in the party, and to appoint people friendly to them to those positions. Apart from that, the sources also stated that another senior official of the party is attempting to become the SLFP Chairman, thereby paving the way to fulfil his future political dreams.

Meanwhile, an official of the SLFP, when contacted by The Morning, said that de Silva and Amaraweera, who accepted ministerial positions in the current Government despite the SLFP’s decision to the contrary, have been removed from all the positions they held in the party. Noting that the process of revoking their party membership is currently underway, he said that strict measures will be taken against anyone who acts against the party’s decisions in the future.

The SLFP is among the prominent political parties in Sri Lanka and was founded by slain Prime Minister S.W.R.D Bandaranaike in 1951. Since then, it was one of the two largest political parties in the country until the Sri Lanka Podujana Peramuna (SLPP) was formed in 2018. The SLFP first came to power in 1956, and since then has been the predominant party in Government on a number of occasions. Both in the Presidential Election in 2019 and the General Election in 2020, the SLFP supported the SLPP and the MPs representing the SLFP recently left the SLPP governing alliance by becoming “Independent” Opposition MPs in Parliament.

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Only bunch of mad-hatters in SLFP now: CBK

Claiming that the Sri Lanka Freedom Party (SLFP) sans any policy now, Former President Chandrika Bandaranaike Kumaratunga said there are only a bunch of mad hatters in the party now.

She told reporters in Colombo that the SLFP was the most Democratic Party in Sri Lanka after the Independence and that its party democracy has been destroyed.

“There is no SLFP today. There are no policies or people in the party. Only the name-board is there,” he said.

She said what matters for her is not the party but the policies and the people of the party and therefore she would continue to work for the people and the policies of the party.

New political alliance formed by independent groups

A new political alliance was formed today by some independent groups in Parliament, which includes MPs Wimal Weerawansa, Udaya Gammanpila, Vasudeva Nanayakkara and Tissa Vitharana.

The ‘Supreme Lanka Coalition’ was launched at the National Youth Council premises in Maharagama today.

Former Minister Weerawansa will act as the Chairman of the new alliance and Dr. G. Weerasinghe the Secretary.

Others in the alliance include the Venerable Athuraliye Rathana Thero, MP Gevindu Kumaratunga, Jayantha Samaraweera, Mohamed Muzammil and Weerasumana Weerasinghe.

The new alliance is to contest future elections.

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Namal notes strong bond between TMVP and MR

The former Minister tweeted saying that he attended the convention of the party in Batticaloa today.

“Since it’s inception as a political party the TMVP has maintained a strong alliance with all HE @PresRajapaksa led govts. It was an honor to attend the convention of the party earlier in #Batticaloa today on the invitation of Hon. Sivanesathurai Santhirakanthan,” Namal Rajapaksa tweeted.

The TMVP consists of some members who were earlier part of the LTTE.

The TMVP was accused in the past of being involved in human rights abuses.

A former spokesman of the TMVP had also alleged that there were links between the TMVP and the Easter Sunday attacks.

The TMVP has, however, denied the allegations.

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IMF boss Georgieva comments on Sri Lanka deal

Managing Director of the International Monetary Fund, Kristalina Georgieva has commented on the Funds program with Sri Lanka.

“Very pleased that IMF staff and Sri Lankan government officials have reached a staff-level agreement to support the country’s economic policies with a 48-month Extended Fund Facility of about US$2.9 billion,” she said in a twitter.com message.

“This is an important step forward for Sri Lanka,”

Sri Lanka faces regular currency crises due to operating an intermediate monetary regime (soft-peg) and their frequency has increased in recent year amid more aggressive open market operations to target an output gap.

In December 2019 by policymakers also cut taxes to target a ‘persistent output gap’ followed by even more aggressive liquidity injections leading to steady loss of reserves and default by April 2022.

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Paris Club ready to start debt relief for Sri Lanka

The Paris Club said on Friday it is ready to start the debt relief process for Sri Lanka, the President’s Media Division (PMD) says.

It reiterated its willingness to coordinate with non-Paris Club official bilateral creditors to provide the necessary financing assurances in a timely manner, the PMD said citing a statement from the Paris Club.

The Paris Club statement said, “Paris Club members welcome the Staff-Level Agreement (SLA) concluded between Sri Lankan Authorities and IMF staff for a 48-month arrangement under the Extended-Fund Facility (EFF). This agreement represents an important step to restore macroeconomic stability and public debt sustainability.”

Noting the IMF’s assessment for the need for a debt treatment in the context of the IMF program, the Paris club said it is ready to start the debt treatment process and reiterated its willingness to coordinate with non-Paris Club official bilateral creditors to provide the necessary financing assurances in a timely manner and ensure fair burden sharing, as already proposed to the largest other official bilateral creditors.

The statement also assured that, “The Paris Club remains at the disposal of the Sri Lankan authorities and non-Paris Club official bilateral creditors to further discuss the next steps of the debt treatment process.

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Follow IMF conditions or risk credibility again: Ali Sabry

Improving transparency, Sri Lanka’s human rights track record, and securing an International Monetary Fund (IMF) agreement are focus areas for the Government to improve Sri Lanka’s international recognition, says Foreign Affairs Minister Ali Sabry, PC.

According to Sabry, who will be leaving for the UN Human Rights Council (UNHRC) sessions in Geneva next week with Justice Minister Dr. Wijeyadasa Rajapakshe, Sri Lanka has made progress on addressing concerns related to the much-criticised 1978 Prevention of Terrorism Act (PTA), with draft legislation almost ready to be put to the Cabinet of Ministers. He blamed the political instability in Sri Lanka over the past six months for the slow progress in addressing issues related to missing persons and reparations.

Minister Sabry further noted that the Government was not aware of a new resolution on Sri Lanka to be moved at the upcoming UNHRC sessions in Geneva, but said a new resolution may be introduced if the current one was not rolled forward.

In an interview with The Sunday Morning, the Foreign Minister also highlighted the need to review Sri Lanka’s foreign policy and ensure the national diplomatic apparatus is staffed by trained and competent persons as the nation moves towards a recovery phase.

Following are excerpts of the interview:

Sri Lanka is trying to rebuild its credibility in the international arena. What are the key areas the Government is working on to improve Sri Lanka’s international recognition?

Firstly, we need to engage with the international community positively and work to win their confidence in order to quickly reach an IMF agreement. We have already reached the first step of a Staff-Level Agreement (SLA). That is important, because it is central to everything else that we need to gain. It is needed before we move to restore the confidence of others or encourage investors to rethink about Sri Lanka.

Secondly, we also need to improve the transparency of Sri Lanka’s workings. Thirdly, there is the matter of improving the human rights record.

The Geneva human rights sessions are around the corner; has there been tangible progress since last year? On counter terrorism laws, the Government recently spoke about a National Security Act (NSA) – is this a new process?

There is; we told them that we will continue to engage with them. Some important achievements are that we have appointed a committee to look into the cases of people who have been held for a long time under the PTA. The PTA has been amended since then [last sessions] and bail provisions have been granted, so the number of cases and individuals held in custody has come down.

Secondly, we are in the process of establishing the Counter Terrorism Act (CTA) or similar legislation, in line with international best practices. I don’t know what he [spokesman] was talking about. However, what we are looking at is replacing the PTA with an Act that will have a better balance between national security and human rights. It is difficult to give a timeline about the process, but we are in the process of presenting the draft legislation to the Cabinet.

There are reports of moves for a fresh resolution on Sri Lanka at the Geneva sessions; do you have any information on such moves?

No, we are not aware of such a move, practically, because resolution 46/1 is coming up for review. So, unless we agree on that, or there is a roll-over of 46/1, there cannot be a new resolution.

Recently, local law enforcement agencies used the PTA to detain several protesters; isn’t this a misuse of the legislation?

We are open to the opinions and suggestions of people. However, the investigators are of the opinion that there are matters that need to be looked into and allegations that need to be dealt under the PTA and fall within its preview. So I think they have already gone before the courts on the charges and the courts will decide if these cases, these allegations of terrorism, are plausible or not. That is part of the legal process.

Has Sri Lanka made any progress in the other human rights-related areas, such as the Office on Missing Persons (OMP), reparations, and war crime allegations, since the last sessions in Geneva?

I think we have made some progress on the issue of missing persons over the last year but unfortunately, nothing happened over the last six to seven months, since March, due to the situation in the country. We couldn’t show much progress, but we should still work towards that.

The IMF has clearly signalled that Sri Lanka needs to engage China on debt restructuring. A recent report in the press quotes Chinese diplomatic sources stating that ‘the ball is in Sri Lanka’s court’. Has Sri Lanka begun a discussion on debt restructuring with China and how is it progressing?

On the matter of debt restructuring, I think we were concentrating on reaching an SLA with the IMF. Now that we have gained a certain amount of certainty (following the SLA with the IMF), we will begin engaging with all bilateral creditors, particularly China, India, and Japan.

Sri Lanka has sought assistance from Japan to coordinate with its creditors, including China, on debt restructuring. How and when will this process take place? Who will be involved from Sri Lanka?

I think that is a question the Finance Minister and the Finance Ministry are better placed to answer.

A team from the IMF was in Sri Lanka last week to hold staff-level talks with the Central Bank of Sri Lanka (CBSL) and other Government officials, reaching a four-year $ 2.9 billion SLA. How confident are you that Sri Lanka will meet the structural reforms agreed on and address corruption vulnerabilities?

Yes, I think we need to do those. We have no choice; we need to follow up on those conditions. Otherwise, I don’t think we will get those facilities [conditional $ 2.9 billion]. If we don’t do it, we risk losing credibility again.

The recent visit of the Chinese Yuan Wang 5 vessel caused much controversy in the country and in the international sphere. Do you think the incident was properly managed by Sri Lanka and has the controversy strained Indo-Lanka or Sino-Lanka relations?

It was a very difficult situation for us. This difficult issue came at a crucial juncture; Sri Lanka was undergoing tremendous turmoil. When some concerns were raised, we looked into it and consulted all parties. Having consulted all the parties, we tried to manage it as much as possible.

Naturally, there will be some concerns from all sides in matters such as these. However I think, given the complexity and the risks that it entailed, we did manage it well. That’s what I feel.

In a recent interview with the Economist, President Ranil Wickremesinghe stated that ‘we see India as the net security provider in the area and then all other countries can also be present as long as it doesn’t lead to rising tensions or increase the rivalry between states’. Does this indicate a change in Sri Lankan foreign policy, a sign of a closer orbit on security matters with India?

Regional security is paramount for Sri Lanka as an island nation. To ensure regional security, there should be consultation and coordination with the biggest player in the region. It is in that context that the President would have said so. Our aim is to have peace in the region.

The entire Indian Ocean should be a region of peace and Sri Lanka should ensure a good economic climate for trade and safety of maritime routes of communication. Adversity or enmity with anyone should not be promoted in the Indian Ocean.

As the Minister of Foreign Affairs, given Sri Lanka’s vulnerability due to the economic crisis and the dynamic nature of geopolitics, do you think a review of Sri Lanka’s foreign policy is due?

Yes, I think so. Even otherwise, I think we need to review the foreign policy after discussing the pros and cons of such changes, and proceed with changes that benefit Sri Lanka’s national interest. The Ministry is planning to review the foreign policy as soon as possible.

Managing international relations during a crisis requires competent and capable professionals in charge of our diplomatic missions overseas. What action, if any, will you take to depoliticise the Foreign Ministry and the Foreign Service and allow career diplomats to return to the helm of diplomatic relations?

Yes, in terms of numbers, we need to review the deployment of our best personnel. We need to look at that carefully. The backbone of the Foreign Ministry and diplomacy should be the Foreign Service. The Foreign Service has been recruited and trained for that task. Wherever possible, we will try to give Foreign Service officers the maximum priority and make use of them.

We have not recruited to the Foreign Service for the past five years. We need to move quickly to get the next team coming in, otherwise we may have problems filling the ranks of first, second, and third secretaries and senior diplomats at our missions. We are working towards that. Hopefully, it will be done soon; it needs to be done in consultation with the President’s Office. We are making every effort to do it soon.

Back in Lanka, Gotabaya struggles to get support -The Newindian express

After seven weeks, former Sri Lankan President Gotabaya Rajapaksa finally returned to Colombo on September 2. He fled on July 13 after the nation witnessed huge protests over country’s worst economic crisis.He will be living in a state bungalow close to Wijerama Mawatha in Colombo while a large security contingency will be appointed to maintain security in the area.

“Former Presidents are accorded security and there are some other entitlements which will be extended to Gotabaya. Nearly all members of SLPP (Sri Lanka Podujana Peramuna) went to the airport to receive him when he returned from Bangkok on a Singapore Airlines flight. His wife, Ioma, too returned with him. He looked visibly happy and relieved,’’ say sources.

The New Indian Express was the first to report on August 22 that Gotabaya would return to Colombo in the first week of September. Meanwhile, the support that Gotabaya received on his arrival at Bandaranaike International Airport indicates that his supporters from SLPP will try and garner support for him. Some sources suggest he might return to politics sometime.

Gotabaya is said to be waiting to get his US Green Card as both his wife and son are US citizens and Gotabaya had to surrender his citizenship when he became President. When he was trying to flee Colombo in July, he was desperate to go to the US but couldn’t as he could not manage a short-term visa.“His stay in Bangkok left him feeling very uneasy as he was confined to stay in the hotel due to security reasons. He was looking forward to returning to Colombo,’’ said sources.

Gotabaya is likely to lie low for some time, before he makes any statement or suggests which way he will head towards. However, his return triggered calls for his arrest. Leaders of the protest campaign that toppled his government said Rajapaksa should now be brought to justice.

Tamil activists and politicians call for Sri Lanka to be referred to ICC ahead of UNHRC session

Tamil civil society organisations, activists and politicians have repeated their calls for Sri Lanka to be referred to the International Criminal Court (ICC) in a joint letter to the Core Group on Sri Lanka.

In their letter, they expressed their “concerns of continued failure for accountability for war crimes, crimes against humanity and genocide committed against the Tamil people.”

The letter calls on the Core Group, comprised of Canada, Germany, Malawi, Montenegro, North Macedonia, the UK and the United States, to “clearly urge UN Security Council to refer Sri Lanka to the ICC.”

“We as representatives of Tamil people strongly believe that anything short of calling for the referral to ICC will permanently eliminate any chance of getting justice for the mass atrocities we faced,” the letter added.

The signatories highlighted that successive Sri Lankan government have stalled accountability and “have adopted different tactics to drag the accountability process to hoodwink UNHRC.”

The letter also noted that aside from the lack of progress made by Sri Lanka in achieving justice and accountability, the state has continued it’s oppression of the Tamil nation by continuing to heavily deploy it’s forces in the region. Moreover, the state has continued to take away Tamil lands in an attempt to alter the demographic of those areas.

In last year’s report, outgoing High Commissioner Michelle Bachelet encouraged member states to take steps to refer Sri Lanka to the ICC as well as using their own courts to investigate and prosecute war criminals under universal jurisdiction.

Next month, Sri Lanka will be on the agenda of the 51st session of the UNHRC in Geneva.

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