Category: News

Sri Lanka’s High Commissioner to India Milinda Moragoda met with the Minister of Finance and Corporate Affairs of India Smt. Nirmala Sitharaman in New Delhi on Tuesday (21).

This was the latest of a series of meetings High Commissioner Moragoda has had with Minister Sitharaman since November 2021 on Indian economic cooperation and assistance to Sri Lanka in the context of the present economic crisis.

At the outset, High Commissioner Moragoda thanked Minister Sitharaman for the leadership that the government of India took towards the realization of the International Monetary Fund’s Extended Fund Facility (EFF) Arrangement for Sri Lanka.

He particularly thanked Minister Sitharaman for her personal involvement in taking up Sri Lanka’s case with bilateral development partners as well as multilateral financial agencies including the IMF in this context.

Minister Sitharaman and High Commissioner Moragoda also discussed the way forward in bilateral economic cooperation.

The ways and means to attract Indian investments to Sri Lanka, enhance bilateral trade particularly through Indian Rupee trade expansion and increasing the inflow of Indian tourists to Sri Lanka were explored and discussed.

The Minister and the High Commissioner agreed that these measures could form part of Sri Lanka’s economic recovery.

High Commissioner Moragoda also presented Minister Sitharaman with a copy of the publication “Geoffrey Bawa; Drawing from the Archives”, which contains the drawings of Sri Lanka’s iconic architect the late Geoffrey Bawa.

The publication was presented to her as a memento to mark the opening of the two month- long exhibition “Geoffrey Bawa: It Is Essential To Be There” which was inaugurated by the External Affairs Minister of India Dr. S. Jaishankar on 17th March 2023 at the National Gallery of Modern Art in New Delhi.

Sri Lanka’s leading leftist party the Janatha Vimukthi Peramuna (JVP) has rubbished a crucial deal with the International Monetary Fund (IMF), with the party’s general secretary Tilvin Silva claiming that the lender is only interested in bailing out corrupt governments.

Speaking at an event, Silva said that Sri Lanka’s freshly approved 2.9 billion US dollar extended fund facility (EFF) from the IMF will be an addition to the island nation’s existing debt burden.

He also insinuated that government ministers, who he claimed have been starved of an opportunity to make money on the side as a result of Sri Lanka’s worst currency crisis in decades, have been given a new lease of life following the IMF loan.

“Ministers of the government have been languishing for a year with nothing to snack on. Nothing could be stolen in a while because avenues for making money had been blocked in recent times,” said Silva.

“They were waiting for a chance,” he said.

“Once this loan is used to start projects, it will be like distributing bread in Somalia. It will be stolen instantly,” the JVP general secretary claimed. “Somaaliyawata paang demma wage” is an offensive phrase in Sinhala that calls back to Somalia’s malnutrition woes.

The IMF programme, Sri Lanka’s 17th to date, will just not work, said Silva.

“No country in the world has made it after going with the IMF. It’s not going to work. The IMF does not exist for the people but to save thieving governments,” he added.

The IMF said Monday evening that it has approved a 48 month program for Sri Lanka worth 3 billion US dollars (2.286 billion special drawing rights) or 395 percent of the Indian Ocean island’s quota.

Following the announcement, President Ranil Wickremesinghe said the government will lift ongoing import restrictions in stages starting with essential goods.

In approving the loan, the IMF has acknowledged Sri Lanka’s capacity to restructure its outstanding debt, said Wickremesinghe.

“Sri Lanka will no longer be considered a bankrupt country. So normal dealings can commence,” he said.

Sri Lanka’s currency collapsed from 200 to 360 to the US dollar, as the central bank printed unprecedented volumes of money to target what was claimed to be a ‘persistent output gap’, crippling Treasuries auctions and botched an attempted float with a surrender rule.

“The economy is facing significant challenges stemming from pre-existing vulnerabilities and policy missteps in the lead up to the crisis, further aggravated by a series of external shocks,” an IMF statement said.

“The EFF-supported program aims to restore Sri Lanka’s macroeconomic stability and debt sustainability, mitigate the economic impact on the poor and vulnerable, safeguard financial sector stability, and strengthen governance and growth potential.”

The JVP is a formerly Marxist-Leninist party that led two unsuccessful insurrections in the early 1970s and late 1980s, both of which were brutally suppressed by the government in power at the time.

The party has since embraced mainstream democratic politics and still leans far left, though it has repeatedly backed or called for populist policies that are not strictly in line with its ideology.

National People’s Power (NPP), a centre-left alliance led by the JVP and is currently represented in parliament by its leader Anura Kumara Dissanayake and two other MPs, have opposed IMF-backed progressive taxation.

Significant human rights abuses were recorded in Sri Lanka in 2022, the US State Department said in its annual Country Reports on Human Rights Practices released by US Secretary of State Antony J. Blinken.

The 2022  Country Reports on Human Rights Practices noted there were reports that members of the security forces, primarily police, committed numerous abuses.

From March through July the country experienced civil unrest driven by an economic crisis including power cuts, soaring food prices, and a fuel shortage. Demonstrations called for the resignation of then President Gotabaya Rajapaksa and other Rajapaksa family members from government leadership, as well as for political and economic reforms.

Significant human rights issues included credible reports of: unlawful and arbitrary killings, including extrajudicial killings; torture and cruel, inhuman, or degrading treatment or punishment by the government; harsh and life-threatening prison conditions; arbitrary arrest and detention; transnational repression against individuals in other countries; serious problems with the independence of the judiciary; arbitrary and unlawful interference with privacy; restrictions on freedom of expression and media, including violence and threats of violence against journalists, unjustified arrests of journalists, and censorship; serious restrictions on internet freedom; substantial interference with the freedom of peaceful assembly and freedom of association, including overly restrictive laws on the organization, funding, or operation of nongovernmental organizations and civil society organizations; restrictions on freedom of movement; serious government corruption; serious government restrictions on or harassment of domestic and international human rights organizations; lack of investigation and accountability for gender-based violence, including but not limited to domestic and intimate partner violence and sexual violence; crimes involving violence targeting members of national, racial, and ethnic minority groups; crimes involving violence or threats of violence targeting lesbian, gay, bisexual, transgender, queer, and intersex persons; laws criminalizing consensual same-sex sexual conduct between adults, even if the laws were not enforced; and restrictions on workers’ freedom of association.

The report noted that the Government took minimal steps to identify, investigate, prosecute, and punish officials who committed human rights abuses or engaged in corruption, and there was impunity for both.

The report also recalled that on May 9, supporters of then Prime Minister Mahinda Rajapaksa attacked a peaceful protest camp in Colombo.

In the evening after the attack, violent demonstrators attacked Government supporters across the country, killing eight individuals, including a member of parliament, and setting fire to or otherwise severely damaging more than 80 houses of members.

The Government reported as of September it arrested more than 3,300 persons in relation to the May 9 violence and that more than 2,000 had been released on bail.

According to the report, civil society groups reported that the majority of those arrested were peaceful protesters, while those who attacked the protest camp were not arrested.

President Ranil Wickremesinghe tabled the IMF staff level agreement on the Extended Fund Facility (EFF) arrangement for Sri Lanka in Parliament, a short while ago.

President Wickremesinghe is currently in Parliament attending today’s parliamentary proceedings and is delivering a special statement on the IMF Extended Fund Facility.

He said that at a time when the country was in chaos in July last year, no one was willing to accept responsibility and that he was requested to take over.

“I had no power in Parliament, and no MPs from my Party to call my own.” However, the President said his strength was his conviction that he was capable of rebuilding the country.

He said that the IMF credit facility amounts to USD 3 billion over a period of 4 years, with the first tranche of USD 333 million already being received.

Additionally, the country is expecting about USD 7 billion dollars more in rapid credit support from other parties, he said.

He said the IMF facility is a step towards building a better future for the youth and uplifting the country.

The President said the IMF Extended Fund Facility will restore Sri Lanka’s international recognition, ensure the country is not bankrupt and help banks regain international recognition.

This will create opportunities for low interest credit, restore foreign investors’ confidence and lay the foundation for a strong new economy, he emphasized.

The President says that the government plans to reduce existing tax exemptions on Value Added Tax (VAT) by 2024, remove the simplified VAT system, and expedite its reimbursement.

He added that Estate Duty will be introduced as a property tax by 2025.

He also said that the government aims to reduce the primary deficit to 2.3% of the GDP by 2025 and to increase revenue to 14% of GDP by 2026.

He said the standard corporate income tax rate has been raised to 30%, and that sectoral tax holidays have been eliminated.

The PAYE tax rate has been raised from 12% to 15%, while the tax exemption limit has been reduced from Rs. 300 million to Rs. 80 million.

President Wickremeisnghe stated that fuel prices will be decided only by the 2018 Fuel Price Formula and that the electricity tariff will be adjusted every 06 months.

He urged the Members of the Parliament to approve the agreement reached with the IMF. “Only then can I start the second round of discussions,” he said, addressing the House.

“This is not the end of the journey. This is the beginning of a longer journey.”

The President said that amidst numerous hardships, bearing all kinds of pressure and undergoing suffering with equanimity, the people of this country remained calm and patient.

He said their commitment was a great strength in achieving the IMF Facility and therefore, he extended his gratitude to the people of the country.

The Executive Board of the IMF approved the Extended Fund Facility (EFF) to Sri Lanka at its board meeting held on Monday (20 March).

The program will allow Sri Lanka to access financing of up to US$ 7 billion from the IMF, International Financial Institutions (IFIs) and multilateral organizations.

Meanwhile, 48-month extended arrangement with an amount of SDR 2.286 billion (395 percent of quota or about USD 3 billion) was also approved under the EFF, with the aim of restoring Sri Lanka’s macroeconomic stability and debt sustainability, mitigating the economic impact on the poor and vulnerable, safeguarding financial sector stability, and strengthening governance and growth potential, the IMF said.

The Supreme Court today announced that the travel ban imposed on former Prime Minister Mahinda Rajapaksa and former Finance Minister Basil Rajapaksa would not be effective any further in connection with the Fundamental Rights petitions filed over financial irregularities and mismanagement of the Sri Lanka economy.

The United States has called on Sri Lanka to conclude debt restructuring agreements to ensure the IMF program and the economy stay on track.

The US Ambassador to Sri Lanka Julie Chung welcomed the approval of Sri Lanka’s IMF package saying it was great news and an important step on the road towards economic recovery.

“The govt of SL will need to continue reforms and conclude debt restructuring agreements to ensure the program – and the economy – stay on track. Structural & lasting reforms that address good governance & transparency are critical to ensure all citizens of SL can prosper,” the Ambassador said in a tweet.

The Executive Board of the International Monetary Fund (IMF) yesterday (Monday) approved a bailout package for Sri Lanka.

The Executive Board of the IMF approved a 48 month extended arrangement under the Extended Fund Facility (EFF) with an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion).

The EFF-supported program aims to restore Sri Lanka’s macroeconomic stability and debt sustainability, mitigate the economic impact on the poor and vulnerable, safeguard financial sector stability, and strengthen governance and growth potential.