Category: News

Cabinet Spokesman Minister Bandula Gunawardena says he is hopeful that a large number of projects that are suspended at present will resume in September.

Speaking during the weekly Cabinet media briefing at the Department of Government Information this morning, Minister Gunawardena said all foreign funding was suspended after Sri Lanka declared bankruptcy last year.

He said that resulted in the suspension of projects in various sectors.

The Minister noted that with the implementation of the programme initiated by the President and the government, the economy is gradually stabilizing.

He said discussions with the International Monetary Board were also successful which resulted in the government securing a USD 2.9 billion deal, despite skepticism from the opposition.

Minister Bandula Gunawardena said the government has unveiled the domestic debt optimization plan and is in the process of discussing the comprehensive debt restructuring programme with local and international partners.

He said they are hopeful that an agreement can be reached on the debt restructuring programme by September which will take Sri Lanka out of bankruptcy and open doors for massive eternal funding.

He said once external funding starts flowing in addition to budgetary support from multilateral organizations, the suspended projects can resume.

The Colombo High Court today granted bail to stand-up comedian Nathasha Edirisooriya.

However, the Colombo Fort Magistrate’s Court had earlier today ordered that she be remanded further until 12 July.

Edirisooriya was arrested in May for allegedly making comments disrespectful to Buddhism.

The Criminal Investigations Department (CID) had received a complaint against Nathasha Edirisooriya, accusing her of insulting Buddhism, and Christianity during a stand-up comedy show.

The owner of the YouTube channel SL VLOG, Bruno Divakara, was also arrested and remanded in May for publishing and promoting a video by Nathasha Edirisooriya.

Police Spokesman Nihal Thalduwa said that Bruno Divakara was arrested for aiding and abetting an illegal act committed by Edirisooriya.

Divakara was however granted bail last month.

Sri Lanka’s cabinet of ministers approved a proposal to commence a diplomatic dialogue with Japan on a light rail transit (LRT) project that Colombo had unilaterally and controversially cancelled in 2020.

A statement from the Government information Department on Wednesday June 05 said the cabinet had greenlit a proposal made by President Ranil Wickremesinghe to prepare an “appropriate time frame for entering into the agreement applicable activating the discussions with the Japanese diplomatic mission in Colombo once again”.

Sri Lanka’s auditor general said in late June that the government has agreed to pay about 3.4 million US dollars (about billion rupees) to a consultancy led by Japanese firms after the project’s cancellation.

Former President Gotabaya Rajapaksa suddenly cancelled the project which was to be financed through a low-interest loan from the Japan International Co-operation Agency (JAICA), damaging relations between the two countries.

Then Secretary to the President P B Jayasundara said in an official communication that the project is “very costly and not the appropriate cost effective transport solution for the urban Colombo transportation infrastructure.”

“A suitable transport solution could be worked out in consultation with the Ministry of Urban Development and Housing and the Department of National Planning of the Ministry of Finance,” Jayasundara wrote, adding that the president had also ordered the immediate closure of the project office.

Rajapaksa’s successor Wickremesinghe has been keen to repair the damaged relations.

This is, in fact, the second time this year that the cabinet has approved a proposal by President Wickremesinghe to discuss resuming the project.

During an official visit to Tokyo in late May, Wickremesinghe extended an apology for the cancellation of the LRT project and discussed legislation to make sure that large-scale bilateral projects cannot be cancelled without mutual agreement.

He also called for bilateral collaboration highlighting emerging opportunities in Sri Lanka that Japanese businesses could leverage as the island nation restores stability.

Ex-president Rajapaksa’s surprise decision in 2020 along with another 500-million US dollar tripartite deal to develop the Colombo Port’s Eastern Container Terminal (ETC) together with India proved controversial. Relations soured between Sri Lanka and Japan as a result. The east Asian nation has long been considered a friend of Sri Lanka with mutually beneficial diplomatic ties going back decades.

Since his appointment as prime minister in the wake of widespread protests in Sri Lanka after its currency crashed in early 2022, Wickremesinghe has shown renewed interest in repairing ties between the two countries.

Blaming poor foreign policy on the country’s international “marginalisation”, Prime Minister Wickremesinghe in June 2022 said: “Japan is our long time friend; a nation that has helped our country greatly. But they are now unhappy with us due to the unfortunate events of the past.”

A court order has been issued for the commencement of excavations on July 06 at a site believed to be a mass grave in Mullaitivu.

Magistrate T. Saravanaraja visited the location at Kokkutuduvai on June 30 and recorded having observed skeletal remains.

A court order has also gone to the JMO, forensics experts and bomb disposal units to be present at the commencement of the excavations.

Water supply workers stumbled upon the site while digging the earth to lay pipelines.

That happened less than a week after the ITJP, JDS, CHRD and FoD released a report of recommendations in Colombo on June 22 seeking a resumption of excavations at mass grave sites.

The Development Control Regulations (DCR), which will regulate all construction activities within the area of authority of Colombo Port City, was published in the extraordinary gazette No 2334/47 on June 02nd, 2023.

This updated version represents an enhanced version of the initial publication in April 2022.

As a result, the Colombo Port City Economic Commission is now open to receiving development proposals for evaluation and the issuance of Planning Clearance, Development Permits, and Certificates of Conformity, aligned with the approved Master Plan – Spanning a buildable area of 6.3 million square meters, that will offer a world-class environment for various amenities, including a Marina Facility, Luxury Villas, Apartments an Integrated Resort, Convention Centre, International School and University, a Hospital and a Financial Centre etc. These said and all developments of Colombo Port City will be subjected to the regulation of the newly published DCR 2023.

The primary objective of 2023 for Colombo Port City is to benefit developers, residents, investors, and all stakeholders, including the surrounding community. These regulations establish guidelines for development intensity, building height, and overall construction framework across all plots within Colombo Port City. They serve as a vital planning tool, ensuring logical and orderly development. By providing landowners and developers with a clear understanding of the permissible development on each of the 74 plots, the DCR 2023 fosters transparency and efficient decision-making. Furthermore, it encompasses a comprehensive framework covering building masses, land uses, solid void ratios, green and public spaces, local characteristics, utility networks and usage, sustainability measures, and more.

The published DCR 2023 marks another key goal post, for the Colombo Port City Economic Commission for the Investors to commence their journey, in the realization of Colombo Port City’s immense potential for economic growth and innovation through iconic Architecture which brings world-class buildings to this City. The Commission is committed to fostering a successful ecosystem that attracts global investment and drives sustainable development in Sri Lanka.

Development Control Regulations published by the Gazette Democratic Socialist Republic of Sri Lanka, Extraordinary No 2334/47, 2023.06.02.

Fitch Ratings has warned of risks in Sri Lanka’s domestic debt restructuring plan but noted that it resolves uncertainties around its impact on the local banking sector.

The Sri Lankan Government’s proposal for treatment of domestic debt marks a significant step towards resolving uncertainties around the impact of the sovereign’s debt restructuring on the local banking sector, but complications may arise from a number of factors, Fitch Ratings said.

The proposal excludes banks’ holdings of Sri Lankan rupee-denominated treasury securities, which will alleviate some of the pressure on their already stressed capital positions from weakening loan quality and the rupee’s depreciation.

Fitch’s base case did not expect treasury bills held by banks to be subject to restructuring, but assumed banks’ treasury-bond holdings would be.

Bank holdings of Sri Lanka Development Bonds (SLDBs), which are foreign-currency denominated but governed by local law, will be affected, as anticipated, and an impact on international sovereign bonds (ISBs) as well is still expected.

However, these together account for only about 5.5% of banks’ combined assets, a much smaller share than treasury securities (26.4% for Fitch-rated domestic banks). The proposal also includes a restructuring of foreign-currency bank loans to the government (less than 1% of combined assets for Fitch-rated banks), though without detailed plans.

“The Government has outlined three treatment options for SLDBs. We expect banks will generally opt for the choice involving conversion of such debt into local currency-denominated instruments; banks have so far opted to convert maturing SLDBs to rupee-denominated treasury bonds since the announcement of suspension of foreign debt servicing in April 2022,” Fitch Ratings said.

Fitch said that provisioning should help to moderate the hit to bank capital from the debt treatment. Fitch-rated Sri Lankan banks have already made provisions of 35% or higher for ISBs, with SLDBs being subject to lower provisioning due to the possibility of obtaining rupee-denominated treasuries.

Nonetheless, worsening impaired loans (end-May 2023: 13.3% of system loans, from 1Q22: 8.4%) in line with the economic stress associated with the sovereign default and the unwinding of forbearance provided during the Covid-19 pandemic are already exerting pressure on banks’ thin capital buffers.

“We do not believe a restructuring of the sovereign’s local-currency obligations is likely to trigger a loss of depositor confidence in the banking system, based on the proposed plans. However, funding stress remains a negative sensitivity for bank ratings. Fitch-rated Sri Lankan banks’ national ratings remain on Rating Watch Negative (RWN) to reflect the potential for the banks’ creditworthiness relative to other entities on the Sri Lankan national ratings scale to deteriorate. This reflects heightened near-term downside risks to credit profiles from capital and funding stress,” Fitch Ratings said.

Fitch Ratings said that a downgrade of the sovereign’s ‘CC’ Long-Term Local-Currency Issuer Default Rating would not automatically drive a downgrade in Sri Lankan bank ratings.

“To resolve the RWN on these ratings, we will need to assess the impact to the banks’ capital once debt treatment terms are finalised, including the effects of any present value reductions from an exchange of bonds and those of any regulatory or accounting forbearance. We may resolve and affirm the banks’ ratings if we think risks from funding and capital stresses have abated, at both the individual bank and the sector level, to the extent that we believe the banks’ ability to service obligations in local and foreign currency is not hindered and/or banks are able to continue as a going concern and avoid failure,” Fitch Ratings said.

Fitch Ratings said that although the government’s domestic debt treatment announcements go some way towards resolving uncertainties over Sri Lankan bank ratings, many risks remain.

Fitch said that it is still unclear, for example, whether the Government’s proposals have received support from the sovereign’s key external creditors. If not, the risk of further domestic debt restructuring could linger, resulting in further instability for the banking sector.

Archbishop of Colombo Malcolm Cardinal Ranjith accuses the rulers of ruining the country and its economy to a state of beggary.

Their aim is to sell the entire coastline of Pamunugama to other countries by claiming an expansion of the Colombo Port to Dickowita and live a happy-go-lucky life.

Once they die, people will be left with discards only, he said at a religious activity at Pamunugama yesterday (02).

At this rate, the country would be destroyed by 2048, he said, and told the president not to give dreams to the people of what would happen in 25 years time.