Category: News

A couple of millennia ago, most villages were economically self-sufficient. They produced everything that the residents needed. But modern nation-states are seldom self-sufficient though the globe itself is now a village. They export their surplus. They earn and save foreign reserves. And, they import to cover their deficiencies. Sri Lanka’s current problem is it does not have enough money to buy what it needs from outside world.

RIGHT NOW
Sri Lanka has sought a $1 billion credit line from India to cover the import of essentials, news agency Reuters has reported as the island nation battles through its worst economic crisis in decades.

This is in addition to $1 billion India has already pledged to bail out Sri Lanka, which is struggling to pay for the essential imports including food and fuel.

HOW BAD IS IT?
Its foreign exchange reserve has dipped 70 per cent since January 2020. Sri Lanka’s foreign currency reserves fell to $2.31 billion in February a fall by $779 million from December 2021 through January 2022.

This stalled its imports leading to acute shortage of several essential items. Its currency has undergone substantial devaluation. Its efforts to find generous global lenders have not been very successful.

LANKAN DEBT
Sri Lanka’s debt burden has become unmanageable for the country if a proper bailout package is not given to the country from an international financial agency or group.

Sri Lanka is obligated to repay debt of about $7 billion in 2022. One of the debts is of $1 billion in the form of international sovereign bond that matures in July.

Sri Lanka’s public debt has risen (in projection) from 94 per cent of its gross domestic product (GDP) in 2019 to 119 per cent of the GDP in 2021, the International Monetary Fund (IMF) said in early March.

International ratings agencies have downgraded Sri Lanka’s credit ratings. Market observers fear that Sri Lanka may not be able to service its $51 billion sovereign debt this year.

INDIAN AID
India has reportedly assured Sri Lanka that it would extend the credit line to meet the imports of essential items such as rice, wheat, wheat flour, pulses, sugar and medicines.

Besides the two $1 billion credit lines, India earlier this year extended a $400 million currency swap, and another $500 million credit line for buying fuels.

This is in addition to the Chinese currency swap facility amounting to $1.5 billion in 2021.

LIFE IN LANKA
Lankans are having real tough time. Its banks are unable to secure dollars to finance imports of any kind including food, fuel and medicines. The Covid-19 pandemic only aggravated its economic woes since January 2020, after which the spread of coronavirus shell-shocked the world into separate cocoons.

Prices have sky-rocketed. Each of the past five months has recorded a new high of inflation rate. In February, inflation rate was pegged at 17.5 per cent. Food prices rose by 25 per cent. This increase in prices happened on January’s inflation rate of over 14 per cent.

Stalled imports of the essentials forced the government to resort to stricter rationing. For example, against one kg of milk a day, a Sri Lankan can now buy only 400 grams of milk a day.

Sri Lankan cities are facing daily power cuts of over five hours. Reports say people are forced to stand in kilometer-long queues to get cooking gas cylinders and petrol-diesel.

NOT TODAY’S PROBLEM
If Rome was not built in a day, a crisis does not arrive in a blink. Sri Lanka’s economy has had structural problems for several years. The successive government took short-cuts to address the issues.

For example, every government in the past 15 years issued sovereign bonds without provisioning for repayment. Its foreign exchange reserve increased but not through export of goods and services but from borrowing foreign currencies. This left its forex reserve vulnerable to market shocks.

In 2019, the Sri Lankan government announced substantial tax cuts which ended up lowering its revenue. Its loan arrangements with China too contributed to this crisis. Most of Chinese loan of over $5 billion in the past decade went to low-return projects such as construction of ports, airport and coal power plants.

During the Covid-19 pandemic, its foreign remittances nosedived, and foreign exchange booster tourism sector practically crumbled. Tourism sector is among the top earners for Sri Lanka. But the sector took a hit after Easter bombing in 2017. Before it could recover, the Covid-19 pandemic hit the world hard.

When Covid-related curbs started lifting, tourist inflow was heavy from Russia and Ukraine, amounting to about 25 per cent up to mid-February. The Russia-Ukraine war and consequent sanctions on banking in Russia had a ripple effect on Sri Lanka. Its traditional tourist sources India, China, the UK and Germany have not recovered to pre-Covid levels.

The Covid-19 pandemic exposed the vulnerabilities and put Sri Lanka in a situation where it appears clueless about how to exit from this financial mess.

The Peradeniya Teaching Hospital has resumed surgeries after the Medical Supplies Division assured that the required medicines will be delivered.

Indian External Affairs Minister Dr. S. Jaishankar expressed his concern over the Peradeniya Teaching Hospital running short of medicines for surgeries.

“Disturbed to see this news. I am asking High Commissioner Baglay to contact and discuss how India can help,” he tweeted after a News 1st SMS alert was shared on Twitter by a social media user.

All scheduled surgeries at the Peradeniya Teaching Hospital were suspended with effect from Tuesday (29) due to the shortage of medicine.

Sources said that ONLY emergency surgeries will be carried out at the hospital.

Dr. R.M. Saman Kusumsiri Rathnayake, Secretary State Ministry of Production, Supply and Regulation of Pharmaceuticals told News 1st that a delay from the supplier attributed to this situation, adding that one medicine required for surgeries is currently unavailable.

He said that the necessary measures were taken to procure the said medicine.

However, he said that the Peradeniya Teaching Hospital and several other hospitals are in possession of the medication, yet, the dosage is very low.

Following the Indian External Affairs Minister expressing concern, the Indian High Commissioner had spoken to the University of Peradeniya and inquired into the requirement of medicines to continue regular and scheduled surgeries.

External Affairs Minister (EAM) S Jaishankar and Sri Lankan Prime Minister Mahinda Rajapaksa on Monday virtually inaugurated the Jaffna Cultural Centre constructed by Indian grant.
In Colombo, both ministers witnessed the signing of an agreement on supporting Buddhist culture and heritage. They also virtually toured an ongoing camp in Jaffna on fitting ‘Jaipur Foot’.
“Thank Prime Minister @PresRajapaksa for his gracious welcome. Our discussions were followed by some notable events: Witnessed the signing of an agreement on supporting Buddhist culture and heritage. Virtually toured an ongoing camp in Jaffna on fitting ‘Jaipur Foot’. Virtually inaugurated the Jaffna Cultural Centre constructed by India,” Jaishankar tweeted.

The purpose of the Jaffna Cultural Centre is to provide suitable social infrastructure for the people of the Northern Province, especially for the people of Jaffna, to help them to reconnect with their cultural roots as well as to the rest of the country and to rejuvenate and nurture the ancient cultural heritage of Jaffna.

The Centre will enable the people of Jaffna to enjoy various local and international cultural products. It would also serve as a delivery centre for training, instruction and education in a variety of cultural disciplines. The Centre is developed as an iconic building that will emerge as a cultural forum that embodies coexistence and cooperation amongst the various communities on the island.

Jaishankar arrived in Colombo on Sunday. He called on Sri Lankan President Gotabaya Rajapaksa as part of his three-day visit.

He reviewed various dimensions of India-Sri Lanka’s close neighbourly relationship and assured Gotabaya of India’s continued cooperation and understanding.

“Pleased to call on President @GotabayaR of Sri Lanka. Reviewed various dimensions of our close neighbourly relationship. Assured him of India’s continued cooperation and understanding,” Jaishankar tweeted.

During the meeting, Sri Lankan President thanked Jaishankar for assistance in form of a USD 1 billion credit line.

“Met with Indian Foreign Minister @DrSJaishankar today, and I expressed my gratitude to the Government of #India for the invaluable assistance provided recently via the line of credit, on behalf of the people of #lka,” wrote the official Twitter account of The President of Sri Lanka.
During his bilateral visit, Jaishankar will also attend the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) meeting.

(ANI)

Sri Lanka Podujana Peramuna (SLPP), while challenging the recently ousted MPs Wimal Weerawansa and Udaya Gammanpila to make the Government lose its majority in Parliament, as they claimed they would, also squash speculation that UNP Leader, Ranil Wickremesinghe would soon be appointed as Prime Minister of a soon-to-be-formed National Government.

SLPP MP and Minister Rohitha Abeygunawardena addressing a media briefing yesterday (28) when Gammanpila and Weerawansa have time and again said the Government will lose its majority in Parliament but has not done anything to that effect.

Abeygunawardena said, certain people have issues with the Minister of Finance Basil Rajapaksa and are trying to slander him, noting that Rajapaksa was the one who formed the SLPP and has worked relentlessly to make it victorious.

He rejected claims that UNP MP Wickremesinghe would be appointed Prime Minister. Meanwhile, General Secretary of the SLPP Sagara Kariywasam added the most suitable person to be Prime Minister is currently in office and there is no need to make any change.

Kariyawasam said the Government is strong and will overcome the economic crisis and will secure a huge win in the next election.

Weerawansa on 23 March, stressed that they will ensure the Government would lose its majority in Parliament, while visiting Malwathu and Asgiri Maha Nayaka Theras in Kandy to present proposals of 11 constituent parties of the Government.

Minister of Foreign Affairs Prof. G.L. Peiris discussed the reconciliation efforts underway in Sri Lanka with Ambassador of South Africa Sandile Edwin Schalk, at the Ministry of Foreign Affairs last Friday (25), as per a Foreign Ministry media release.

The ministry stated that the main focus of the discussion was the experience of the Truth and Reconciliation Commission of South Africa. The Foreign Minister explained to the Ambassador that it was the intention of the Government of Sri Lanka to closely study the positive experiences of other countries, while taking care to ensure that these experiences were creatively adopted to suit the circumstances of Sri Lanka.

Ambassador Schalk comprehensively briefed Prof. Peiris on all aspects of the process in South Africa, and on various initiatives by former South African President Nelson Mandela upon his election as President.

Prof. Peiris had said last week, at a media briefing held jointly with US State Department Undersecretary for Political Affairs Victoria Nuland, following the fourth Sri Lanka-US Partnership Dialogue in Colombo, that the Government hopes to develop a truth-seeking mechanism, similar to the one used in South Africa, as part of Sri Lanka’s reconciliation process.

“The Nawaz Commission of Inquiry (CoI) report is very informative. One of its recommendations that we want to develop is the truth-seeking mechanism. Here, we do not wish to reinvent the wheel. There is no purpose in going back. No two situations are exactly alike, when we look at the experiences of other countries such as South Africa in particular. But we are always taking care to adopt the successful experiences of other countries to suit the circumstances in our country,” Prof. Peiris had said.

He added that the assistance of the US is “most welcome” in this endeavour of a truth-seeking mechanism.

Nuland had said that the notion of setting up a truth-seeking mechanism is a “very good step” and that the US looks forward to supporting Sri Lanka in that process.

“Setting up a truth-seeking mechanism, as other countries with difficult histories have done, particularly taking advantage of the South African experience, is a very good step,” she noted.