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CB Governor says he preferred to avoid domestic debt restructuring

Published

3 years ago

2023/07/8

Thilina Walpola

CBSL Governor Dr. Nandalal Weerasinghe flanked by senior officials

By Rathindra Kuruwita

Ghas said that it was still his position that it is better if Sri Lanka could avoid restructuring its domestic debt.Dr. Weerasinghe, addressing the media, at the Central Bank on Thursday, said that the CBSL position was that because of high inflation, the country’s domestic debt had undergone restructuring in a way.

“At that time, we felt that there was no need to restructure domestic debt because that had already happened as a result of inflation. I still say it is better if we can avoid restructuring our domestic debt because it is already restructured.” He said that position had been changed due to the ongoing negotiation process,” he said.

Once the President of Sri Lanka reached a staff-level agreement with the IMF, the country was committed to sovereign debt sustainability. The country has agreed to certain debt targets for the next 10 years.

“When we ask our external creditors to make a significant contribution and take a cut, the external creditors want some more contributions from domestic lenders. This is a process of negotiations. There are two choices: you can hold on to a position and get nothing done, or compromise and get things done. We compromised while protecting the interests of the Central Bank,” he said.

Market interest rates have already declined in response to measures already taken to ease monetary conditions, Dr. Weerasinghe said.The interest rates on Treasury bonds issued by Sri Lanka were high in the past few years, but the rates have been coming down. The rates were high because of the uncertainty in the country.

“Last week, the interest rates of Treasury bonds touched the policy rates, just below 14 percent. As we have always said, the uncertain premium would collapse if there was stability and clarity about domestic debt restructuring,” he said.

When questioned by a journalist why the CBSL had sold Treasury bills on Thursday (06) worth over 130 billion rupees well above the policy rate, the Governor said that it had been a weekly bond auction to meet government expenditure requirements.

“We can’t decide on government cash flow operations and delay cash flows, anticipating policies to take effect. This amounts to market manipulation. If the government wants, it can ask us not to raise funds right now. Can the government wait, expecting interest rates to go down?” he said.

Dr. Weerasinghe said that in the future, the interest rate structure would return to normal with benchmark rates moving closer to policy rates.

“We hope that the rates will normalise so the economy will benefit. We will not hesitate to take on more administrative tasks to make sure this happens,” he said.

The Governor said that financial institutions had brought down interest rates on credit cards by 2 percent.

“We want to see rates for lending, especially for Small and Medium enterprises, lower faster,” he said.

The Governor said that with the drop in interest rates of Treasury bills, EPF would have to look at alternative investments. The EPF was able to make significant investments because there was a lot of demand for funds from the government, he said.

“Going forward, medium and long term investments strategies have to change for such funds,” he said.

The Governor also dismissed allegations that the EPF would lose 12 trillion rupees by 2038 as the government had decided, in the domestic debt restructuring proposals, only to pay an interest rate of nine percent instead of the average market rate for Treasury bills, which is 13.5 percent.

“Those assessments misrepresent the facts, figures, and reality. The argument is that the average interest payment for Treasury bills is 13.5 percent. I don’t know how that number even came up. However, EPF’s average yield on their medium and long-term fund is 11.5 percent. That’s why EPF paid nine percent interest to its beneficiaries,” he said.

Those who claim the EPF will lose 12 trillion rupees by 2038 assume that 13.5 percent interest can be made from investing Treasury bonds until then, he said.

“The inflation must be around 15–18 percent until 2038 to ensure a 13.5 percent interest rate for Treasury bonds. So, obviously, these are manipulated numbers. The assumption is that our debt will not be sustainable,” Dr. Weerasinghe said.

The Governor said that the Central Bank was responsible for the stability of the financial system, the Central Bank balance sheet, and being the custodian of the EPF.Dr. Weerasinghe said that the markets and international rating agencies had responded positively to domestic debt restructuring.

“We have finalised domestic debt restructuring, and this is important when it comes to dealing with foreign creditors. We are also having discussions with them. The discussions with the Paris Club are on. We have shared data analysis and proposals. We are making progress on the bilateral discussions with non-Paris Club countries like China. Discussions with Chinese banks are ongoing. When it comes to ISB holders, we had several rounds of discussions. Our advisor, Lazard, is conducting discussions with them. We hope that this process will make progress. We would like to expedite the process and reach agreements with both bilateral and ISB creditors before the first IMF review. This is our first objective,” he said.

The IMF, ADB and World Bank have approved another 900 million dollars in the near future, he said.

The Governor added that imports had stabilised at around 1.4 billion dollars a month. Exports stand at around 1 billion dollars. There is a gap of about 400 million dollars between the two.

“We can fill the gap with our worker remittances and tourism. There can be a balance. Even if imports go up to 1.6 or 1.7 billion dollars, we have a buffer,” he said.

Sri Lanka has already met the reserve levels agreed with the IMF. This will give investors more confidence and strengthen their ability to intervene in the market.

“All targets, except revenue targets, have been met. That’s because import tax collection was low due to lower imports. This is why we have recommended that the government relax import restrictions so that they can collect revenue. Value Added Tax and Income Tax are in line with expectations,” he said.

What import restrictions were relaxed and when that would be done would be decided by the Ministry of Finance, Dr. Weerasinghe said. The Central Bank had recommended relaxing restrictions on about 900 items, he added.

“Restrictions on about 300 items, including motor vehicles, remained,” he said.Sri Lankan economy would grow by the end of 2023, the Governor added. The economy contracted in the first two quarters of 2023.

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ITS Giuseppe Garibaldi’ departs Colombo

Published

7 hours ago

2026/09/12

Priyan

The Italian Naval Vessel ‘ITS Giuseppe Garibaldi’ departed the Port of Colombo today, 12 September 2026, after completing a replenishment stop for logistics and services.

During the ship’s stay, the Commanding Officer of ITS Giuseppe Garibaldi, Captain Marco GUERRIERO, called on the Commander Western Naval Area, Rear Admiral Harsha De Silva, at the Western Naval Command Headquarters.

Members of the visiting crew also toured several tourist attractions across the Colombo area during their port call.

News

Green Climate Fund (GCF) Regional Dialogue for East and South Asia will be held from 14 to 17 September 2026 at Cinnamon Life at City of Dreams Hotel, Colombo

Published

11 hours ago

2026/09/12

Priyan

The Green Climate Fund (GCF) Regional Dialogue for Eastern and Southern Asia is scheduled to be held from September 14 to 17, 2026, at Cinnamon Life at City of Dreams, Colombo.

The Dialogue is hosted by the Government of Sri Lanka. The Green Climate Fund is the world’s largest dedicated climate fund established under the United Nations Framework Convention on Climate Change to assist developing countries in responding to the challenges of climate change.

The Green Climate Fund aims to promote a paradigm shift towards low-emission and climate-resilient development
pathways by supporting developing countries in reducing their greenhouse gas emissions and adapting to the impacts of climate change.

The Ministry of Environment of Sri Lanka serves as the country’s National Designated Authority for the Green Climate Fund, playing a critical role in coordinating access to climate finance, nominating institutions for accreditation to the Green Climate Fund and approving funding proposals, and ensuring that activities supported by the Green Climate Fund are aligned with national development objectives.

More than 120 delegates from 10 countries are expected to participate. The participating countries are Bangladesh, Bhutan, China, India, the Maldives, Mongolia, Nepal, Pakistan, the Republic of Korea, and Sri Lanka.

Participants will include representatives of National Designated Authorities of the above countries, Direct Access Entities, Accredited Entities, civil society organizations, the private sector, development partners, and technical institutions across the region.

Sri Lanka’s delegation comprises Dr. Dammika Patabendi, Minister of Environment, Anton Jayakody, Deputy Minister of Environment, K.R. Uduwawala, Secretary, Ministry of Environment, and high-level government officials.

The Dialogue will provide a platform to:

Share challenges, experiences, and lessons learned from the implementation of climate change projects and programmes.

Strengthen regional cooperation and partnerships on climate finance.

Discuss the Green Climate Fund’s evolving strategies, policies, and approaches.

Identify opportunities to accelerate climate investments across East and South Asia.

Hosting the Regional Dialogue in Colombo will provide Sri Lanka with an important opportunity to engage with senior government officials, private-sector representatives, development partners, technical experts, and international climate finance institutions.

The event is expected to support Sri Lanka’s efforts to improve access to climate finance and international grants, showcase national climate action initiatives and achievements, and strengthen the country’s engagement with the global climate community.

The Dialogue will also offer a strategic platform for Sri Lankan institutions that have applied for direct accreditation to present their project concepts and engage directly with representatives of the Green Climate Fund. These engagements are expected to support the accreditation process and contribute to the expansion of Sri Lanka’s network of Direct Access Entities through stronger regional partnerships and increased cooperation on climate finance, the Regional Dialogue will
contribute to positioning Sri Lanka as a credible and reliable partner for climate investment.

Projects that Sri Lanka has received funding from this fund are:
• The main projects that Sri Lanka has received support from the Green Climate Fund at present include the Wevu Gam Pubuduwa Project (52.1 USD Million) and the GCF Knuckles Project (49 USD Million).

7.5 USD Million has been allocated from GCF for 5 National Designated Authority Readiness Projects (NDA Readiness Projects) and for the National Adaptation Plan Readiness Project (NAP Readiness Project).

Approval has also been obtained for 3 regional projects. (Cooling Facility Programme, Global Fund for Coral Reef Investment Window, PEEB COOL Programme)

Sri Lanka has also identified 5 project concepts as priority projects for the Green Climate Fund period 2024-2027 and has taken steps to submit those project concepts (Concept Notes) for
approval by the Green Climate Fund.

The “Climate-resilient Fisheries in Sri Lanka” project concept (USD 107.5 million) submitted by DFCC Bank has already received approval.

News

Prof. Pieris says Buddha Dhamma recognised as source of law under Constitution

Published

13 hours ago

2026/09/12

Thilina Walpola

G.L. Peiris

Former Minister and People’s Joint Opposition Convener Prof. G.L. Peiris has challenged the assertion that the Supreme Court’s determination on the 22nd Amendment to the Constitution would be based solely on law and not Buddhist teachings, arguing that such a position is inconsistent with Article 9 of the Constitution and established judicial precedent.

In a special statement, titled “Buddhist Doctrine as a Source of Law in Sri Lanka”, Prof. Peiris has said the issue had arisen during the 22nd Amendment determination proceedings when Ven. Balangoda Kassapa referred to the Buddha Dhamma in his submissions.

According to Prof. Peiris, the Chief Justice responded that the determination would be made on the basis of the law and not Buddhist teachings.

Describing this as a “cavalier dismissal” of the Buddha Dhamma. Prof. Peiris has said it is contrary to Article 9, which gives Buddhism the foremost place and requires the State to protect and foster the Buddha Sasana.

Full text of the statement: In the 22nd Amendment determination proceedings, Venerable Balangoda Kassapa, in his submissions, made reference to the Buddha Dhamma. His Lordship the Chief Justice, in reply, made the strong assertion that the determination would be made on the basis of the law and not Buddhist teachings. This cavalier dismissal of the Buddha Dhamma is totally inconsistent with Article 9 of the Constitution and its authoritative interpretation in judicial decisions.

I. Authoritative Sri Lankan Judicial Authority A few examples may be cited.

In the Antiquities Amendment Bill, the Supreme Court, in its determination, observed: “The expression Buddha Sasana is wider than Buddhism and includes the entire establishment, together with objects and places of religious practices and worship of Buddhists”.

In Re the Thirteenth Amendment to the Constitution and the Provincial Councils Bill, 1987 2 Sri Lanka LR 312, Wanasundera J, referring to the term Buddha Sasana, said that it was “a compendious term encompassing all ancient, historic and sacred objects and places which have from ancient times been associated with the religious practices and worship of Sinhala Buddhists”.

It is clear that the Buddha Sasana is not confined to matters of ritual or practice, but includes the substance of Buddhist teachings. This is borne out clearly in other judgments of the Supreme Court.

An explicit example is the determination of the Supreme Court in the Ayurveda Amendment Bill, SCSD, numbers 22-35/2023, where the Court declared: “We hold that Buddha Sasana in Article 9 of the Constitution includes the dhamma, principles and teachings of Buddhism, including in particular recognized and undisputed codifications of the teachings of Lord Buddha”.

There are several other passages in the judgment which offer strong authority on the point.

The Court declared: “We determine that the word Buddha Sasana in Article 9 is a compendious term and includes the entire establishment of Buddhism as defined above. We conclude that the Tripitaka, consisting of the Vinaya Pitaka, the Sutta Pitaka and the Abhidhamma Pitaka, falls within the word Buddha Sasana. Hence the State has a duty inter alia to protect and foster the Tripitaka”.

The Court was uncompromising in its declaration that “While retaining the word Buddhism to denote the religion to which foremost place has been accorded in the Republic, the word Buddha Sasana was used to impose a duty on the State to protect and foster the entire establishment of Buddhism”.

The Court’s approach is very clear from the following passage: “We must proceed to interpret Article 9 of the Constitution on the basis that this change was intentional on the part of the legislature. It was meant to cover an area wider than Buddhism”.

II. International Judicial Authority

There is valuable material in the jurisprudence of the International Court of Justice at The Hague.

Judge C. G. Weeramantry, in his dissenting opinion in the ICJ’s 1996 advisory opinion on the legality of the threat or use of nuclear weapons, said that Buddhism could provide an important humanitarian perspective when considering the legality of nuclear weapons. The judge cited as his source the work by Walpola Rahula, entitled What the Buddha Taught, 1959.

Similarly, Judge Weeramantry, in his separate opinion in the maritime delimitation in the area between Greenland and Jan Mayen case, 1993, commented on the international legal concept of equity. In this connection, he referred to “the elaborately researched concept of fairness and justice in Buddhism”.