Category: News

Sri Lanka aims to conclude its debt restructuring process by year-end, with expectations for a prompt exit from the default rating category soon after, Central Bank Governor Nandalal Weerasinghe told Economynext in an interview in Washington, D.C. this week.

“To complete the process, certain procedures must be followed, including documentation, due diligence, and related formalities,” Weerasinghe said.

“It will take 2-3 weeks to complete the debt exchange and get the investor participation. That will take some time. The idea is to complete before end-December,” Weerasinghe said.

Backed by the International Monetary Fund (IMF) and international advisors, Sri Lanka has secured a debt restructuring agreement with its official creditors and reached an in-principle deal with the private creditors.

The arrangement with the bondholders includes macro-linked bonds tied to the island nation’s economic growth trajectory.

Sri Lanka is also expected to finalise a debt deal with China Development Bank and pursue debt treatment deals with other remaining official and private creditors, holding less than a billion dollars worth of debt by the end of 2023.

Governor Weerasinghe also expressed confidence that Sri Lanka’s default rating would see an upgrade shortly after the debt restructuring process is finalised.

“We met with all the ratings agencies here in Washington. They obviously mentioned that they will follow the normal procedure. Once we start repaying our obligations, we will come out of the selective default or the restrictive default category,” he said.

“Then we’ll be starting with normal CCC or depending on the outlook we will get a better rating. The immediate action would be to remove Sri Lanka from the default category.”

DELAY IN IMF REVIEW

Weerasinghe noted that completion of the third review of the IMF loan deal will be delayed, as a staff-level agreement in this regard will be entered in by late November or early December.

The third review of Sri Lanka’s $3 billion, 48-month Extended Fund Facility (EFF) was initially scheduled for completion in December.

However, the October presidential election and the delay in submitting next year’s budget to Parliament have postponed the timeline.

“The government has expressed their willingness to complete the third review and go ahead with the debt restructuring. The president made this statement. So on that basis, an IMF team came to Sri Lanka and then we continued the discussions here (Washington),” Governor Weerasinghe said.

“This is a review mission. We are here trying to negotiate and complete the review as soon as possible. Obviously, there will be a delay because there is no parliament.”

“The third review should have been completed by end-December. That was the original timeline. But there were prior actions like submitting the budget to the Parliament for next year.”

“What we are trying to do is to at least to reach a staff level agreement with the fund to complete the third review. Once we have discussions here, there will be elections. Soon after that a new Cabinet will be appointed and a parliament established. Then the mission will be there to complete and announce the staff level agreement.”

Sri Lanka is scheduled to hold polls to elect new members to the Parliament on November 14.

While a staff-level agreement could be finalised by early December, the IMF Executive Board approval is likely to be delayed as Sri Lanka must first complete the prior action of presenting next year’s budget to Parliament.

“Going to the board will be delayed because for the compilation of the third review we have some prior actions such as submitting a budget to the parliament for the next year. That will happen during the first three months of the year. Then there will be a vote on account,” Weerasinghe said.

“Because of this, there will be a delay in the completion of the third review. Soon after the new government establishes a cabinet and a proper government, that’s their invitation to start the staff-level agreement.”

Out of the $3 billion IMF facility, Sri Lanka has up to now received approximately US$ 1 billion in three tranches.

Postal voting for Sri Lanka’s 2024 General Election is set to commence today, providing an early voting option for Government employees, armed forces, and police personnel.

The Election Commission of Sri Lanka (ECSL) has announced a detailed plan to ensure a smooth and secure postal voting phase, establishing polling stations in strategic locations across the country, including all police stations, District Secretariats, and Election Commission offices.

The ECSL has scheduled 1 November and 4 November as designated postal voting days specifically for members of the armed forces and Government institutions, offering flexibility for those in critical service roles.

Additionally, a second voting date, 4 November, has been set for those unable to cast their ballots today. For those who miss the designated dates, arrangements have been made to allow them to vote at the District Secretariat associated with their workplace.

In a bid to maintain transparency and uphold electoral integrity, People’s Action for Free and Fair Elections (PAFFREL) Executive Director Rohana Hettiarachchi confirmed that nearly 1,000 PAFFREL officials will be stationed nationwide to monitor the postal voting process.

The Election Commission (EC) stated that they are ready to hold the Provincial Council (PC) Elections once the relevant legal issues are resolved.

Speaking at a recent political rally, President Anura Kumara Dissanayake said that the Government had planned to hold the PC Elections next year (2025).

Commenting on the matter to The Daily Morning, EC Chairperson R.M.A.L. Rathnayake said that the EC would hold the said elections as soon as the related legal issues are addressed. “To hold the PC Elections, either delimitation should be carried out, or an amendment should be brought to the relevant legislation to hold it under the previous proportional system. When it is done, we will hold the elections.”

Emphasising that it is important to establish a strong political mechanism which includes the Presidency, the Cabinet of Ministers, the Parliament, PCs and Local Government Bodies to revive the collapsed country, President Dissanayake said that the Government would facilitate the PC Elections, which were last held in 2014.

The PCs are the devolved governing bodies of the nine provinces. In accordance with the Constitution, they have legislative power over a variety of matters including agriculture, education, health, housing, Local Government, planning, public transport and social services.

The Constitution also gives them powers over the Police and lands, but successive central governments have refused to devolve these powers to the provinces. Although there should be public representatives for the better functioning of PCs, the PC Elections to elect public representatives have been postponed for a long time due to a legal issue which arose as a result of a legal amendment that the United National Front Government from 2015 to 2020 attempted to bring in.

Cabinet Spokesperson Minister Vijitha Herath has dismissed social media posts suggesting that fresh loans were obtained and money was printed.

He clarified that there has been no new borrowing from any country or institution. The Central Bank’s standard procedure is to issue new securities when existing ones reach maturity, which is what occurred this time as well.

Minister Herath emphasized that no new loans have been secured, nor has any money been printed.

He explained that the President, who also serves as the Finance Minister, must sign every currency note if money is being printed. To date, no currency note bearing the signature of President Anura Kumara Dissanayake has been issued. He challenged anyone to present such a note if it exists, reiterating that no such currency note has been issued.

Minister Herath dismissed the fake news claiming that a billion rupees was printed as completely false, reaffirming that no fresh notes were printed and no new loans were obtained.

The Election Commission said that it has submitted a comprehensive report to the Attorney General’s Department regarding the activities conducted so far in relation to the general election.

This submission is in response to a fundamental rights petition filed in the Supreme Court concerning the election date.

The Attorney General’s Department had requested observation reports from the Election Commission regarding the election date.

The department stated that it would present its findings to the Supreme Court on the 4th of next month, based on these observation reports.

A fundamental rights petition was filed in the Supreme Court on the 21st of last month, seeking a ruling that the decision to hold the parliamentary election on November 14th is unconstitutional.

The petition was filed by H.M. Priyantha Herath, a civil society activist and convener of the “Api Sri Lanka National Organization.”

The petition claims that the announcement of the nomination period and the election date violates the provisions of the Election Act.

According to the petition, the nomination period was set from October 4th to October 11th, as per Section 10 of the Parliamentary Elections Act.

It added that the Act stipulates that the election date must be set within a period not less than five weeks and not more than seven weeks from the end of the nomination period.

It noted that therefore, the five-week period from the end of the nomination period on October 11th concludes on November 15th, while the seven-week period concludes on November 29th.

The petitioner argues that the correct timeframe for holding the election, according to the Election Act, is between November 15th and November 29th.

The petitioner further asserts that the gazette notification issued by the President announcing the election date is entirely contrary to the law and constitutes a breach of the rule of law.

The incumbent National People’s Power administration stated that it would retain the Prevention of Terrorism (Temporary Provisions) Act as amended (PTA), as the issue, according to them, lies not in its existence but its misuse – the latter scenario where the onus is on political vengeance as opposed to reliable intelligence, The Daily Morning learnt.

Several parties including both local and international organisations have been urging the Sri Lankan authorities to repeal the PTA, which is usually referred to as a piece of ‘draconian legislation’.

In response to The Daily Morning’s inquiry about the Government’s stance on the PTA, the Presidential Secretariat Director (Legal), attorney J.M. Wijebandara said that the issue was not about the PTA’s existence, but rather its misuse to detain civil activists, journalists, and others. “The issue was about the misuse of the PTA against civil activists and journalists, which we will not allow. It will only be applied based on credible intelligence information, and it will not be used for political revenge. When the Act is not misused, no issues will arise.”

He also said that there are several other pieces of legislation which are in the statute books, but are not implemented as per policy decisions made over time. “The law of our country includes the death penalty, but, as a policy, Presidents, who are the ones authorised to enforce it, refrain from enforcing it. Similarly, Presidential pardons are allowed in our law, but they are not granted to individuals convicted of serious crimes. The PTA is also one such legislation. It being there is not the issue.”

However, former President Maithripala Sirisena sought to implement capital punishment despite the moratorium on the same while the Presidential pardon has been afforded to those convicted of premeditated murder with the pardon afforded to the Royal Park incident murder convict being one such egregious example (again by Sirisena).

The PTA, introduced in 1979 as a temporary measure, became permanent in 1982. The law has disproportionately affected minorities, allowing prolonged detention without charge and often violating international due process standards. Despite Government assurances to reform the PTA, meaningful changes have not been implemented, rights groups allege. The concerned parties have claimed that the amendments gazetted in January, 2021, failed to address key flaws, and that the Act continues to enable arbitrary arrests, unfair trials, and runs the risk of torture due to the admissibility of confessions granted to the Police, the latter which is contrary to the procedure which is normally followed per the Evidence Ordinance.