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Crisis cannot be tackled by fuel price increases alone: SJB prescribes IMF
By Shamindra Ferdinando
Samagi Jana Balavegaya (SJB) spokesperson Dr. Harsha de Silva, MP, yesterday (21) called for immediate remedial measures in the wake of Energy Minister Udaya Gammanpila’s shocking admission that the national economy was in such a bad shape it found it difficult to pay for oil imports.
Former UNP non-Cabinet minister de Silva said that there had not been a previous instance of a minister expressing fears of collapse of the banking system under their watch unless corrective measures were taken. The Colombo District MP recommended the government to seriously consider seeking IMF’s assistance before the situation further deteriorated .
Noting that both the Energy Minister and the Presidential Secretariat declared that state banks could be overwhelmed by staggering Rs 737 bn loans owed by the Ceylon Petroleum Corporation (CPC) and Ceylon Electricity Board (CEB), MP de Silva emphasised that the monetary crisis could not be addressed by increasing fuel prices alone.
COPE member MP de Silva appreciated Attorney-at-law Gammanpila for being frank in his assessment. The SJB MP explained ways and means of addressing the issues at hand when The Island asked whether the Parliament as an institution should adopt a common stand on national economy and take tangible remedial measures?
The Island also sought the MP’s suggestions on stabilising the economy.
Economist de Silva said that Minister Gammanpila is on record as having said that the Central Bank in a letter dated May 31, 2021 warned the Finance Ministry of dire consequences unless remedial measures were taken.
MP de Silva said that State Minister of Finance, Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal in a recent interview with Irida Lankadeepa confirmed Minister Gammanpila’s statement. However, it would be a grave mistake on the part of the government to believe such an extremely serious situation could be tackled by increasing fuel prices.
The former Policy Planning Deputy Minister said the issue at hand is so serious, it could not be fixed by just increasing fuel prices. “A macro prudential analysis must be undertaken by the Central Bank without further delay. The systemic risks must be identified and assessed. The vulnerability of the banking system must be immediately addressed beyond the mere inability of the CPC to make good on their payments,” MP de Silva said.
MP de Silva underscored the desperate situation the state banks were experiencing. The MP said that state banks were entering into dollar swaps at massive discounts. For instance, buying dollars today at Rs 199.99 with settlement in a year at Rs 181.99. “Consider the risk these state banks are running. Can they get dollars at Rs 181.99 in a year’s time or will the dollar cost Rs 210 or even higher? Whose money is at risk? Another glaring example is the plan to borrow USD 1 billion from ‘unsolicited’ bidders. This is unbelievable. Are we going to integrate our banking system with money laundering operators to allow them to clean black money? What will happen to our credibility in the longer run? These are all serious matters that need immediate attention.”
Responding to another query, MP de Silva asserted that the best option available to the SLPP government was to restructure the country’s debt. “If we, do it now, we should be able to come out of the crisis with only a re-profiling exercise, meaning a delay in our payments to the bond holders instead of asking them to take a haircut, meaning to agree to a reduction in principle,” he said.
The SJB heavyweight asked would working with the IMF acceptable than seeking deals with those hoping to clean their dirty money. The current crisis should be tackled by working with the IMF whatever the political agenda the SLPP hoped to pursue, the government had no option but to seek IMF assistance or face a catastrophe. MP de Silva said that he suggested six months ago that Sri Lanka had no option but to undertake a restructuring process with the IMF. Although the government had ignored warnings and declared it would never go to the IMF, the crisis triggered by the fuel price hike exposed the government. “Unfortunately for the people of Sri Lanka the more these people continue this delay in restructuring the greater the pain will be when it finally is thrust upon us. We need a soft landing. Not a hard landing,” Dr. de Silva said.
The former minister said that this would be raised in parliament. Referring to a media briefing called by Minister Gammanpila early this month whereas announced plans for a new oil refinery at Sapugaskanda, MP de Silva said that the PHU leader said that cash-strapped debt-ridden government lacked the wherewithal to make an investment therefore needed external financing amounting to USD 3 bn. The former Minister said that Minister Bandula Gunawardena and State Minister Dr. Nalaka Godahewa, too, acknowledged the severe financial difficulties with the latter explaining how the raging Covid-19 pandemic worsened the situation.
News
Navy seizes an Indian fishing boat poaching in northern waters
During an operation conducted in the dark hours of 27 Dec 25, the Sri Lanka Navy seized an Indian fishing boat and apprehended 03 Indian fishermen while they were poaching in Sri Lankan waters, south of the Delft Island in Jaffna.
The seized boat and Indian fishermen (03) were brought to the Kreinagar Jetty and were handed over to the Fisheries Inspector of Jaffna for onward legal proceedings.
News
Delay in govt. response to UK sanctions on ex-military chiefs, and others causes concern
Admiral of the Fleet Wasantha Karannagoda said that he is still waiting for the government’s response to the UK sanctions imposed on three ex-military officers, including him, and a former member of the LTTE.
The former Navy Chief said so in response to The Island query whether he was aware of the position taken by a three-member ministerial committee, consisting of Foreign Minister Vijitha Herath, Justice and National Integration Minister Harshana Nanayakkara and Deputy Defence Minister Maj. Gen (retd) Aruna Jayasekera.
The government named the committee in the wake of the UK declaration of travel bans and asset freezes in respect of Karannagoda, General Shavendra Silva, General Jagath Jayasuriya and Vinayagamoorthy Muralitharan, also known as Karuna. Maj. Gen. Jayasekera said that they inquired into the issue at hand.
Karannnagoda said that he would like to know the government’s recommendations if the ministerial committee briefed the Cabinet as per a decision taken by the Cabinet of Ministers. Karannagoda said that the issue should have been taken at the highest level as various interested parties continue to humiliate the war-winning military by targeting selected individuals.
Other sources, familiar with the issues at hand, told The Island that the government was yet to announce its stand.
Sources pointed out that the Opposition has been silent on what they called a matter of utmost national importance.
Cabinet spokesman Dr. Nalinda Jayathissa is on record as having described the UK move as a unilateral move and that committee was formed to examine the developments and recommend appropriate measures to the Cabinet.
Foreign Minister Herath told The Island the government was not successful in getting the British to withdraw sanctions. Describing the UK decision as unilateral, the Miniser said that the government conveyed its concerns but the UK didn’t change its stand.
The Island raised the issue with Minister Herath and Admiral Karannagoda in the wake of British MP of Sri Lankan origin, Uma Kumaran requesting the UK Foreign Secretary Yvette Cooper to expand on the government’s sanctions imposed on the four above-mentioned persons.
During a Foreign Affairs Committee meeting on 16 December, the MP for Stratford and Bow highlighted the lack of accountability and political will from the current Sri Lankan government to address war crimes and mass atrocities committed in Sri Lanka.
Sources said that David Lammy, who served as Secretary of State for Foreign, Commonwealth and Development Affairs at the time of the declaration of sanctions, had no qualms in declaring that the action taken against four Sri Lankans was in line with a commitment he made during the election campaign to ensure those responsible wouldn’t be allowed impunity. The UK government statement quoted Lammy as having said that this decision ensured that those responsible for past human rights violations and abuses were held accountable.
By Shamindra Ferdinando
News
Sri Lanka outlines seven key vectors of international cooperation at Moscow forum
Sri Lankan Ambassador to the Russian Federation, Shobini Gunasekera recently presented a conceptual framework of seven key vectors that defined contemporary international relations and facilitated dialogue among States. She made the presentation at XI Moscow International Financial and Economic Forum held under the theme “Building Bridges: Partnership without Borders”.
In her address, the Ambassador emphasised that these vectors represent the channels through which ideas circulate, trade expands, and peace is strengthened, serving as guiding principles for cooperation amid global uncertainties. The seven key vectors highlighted were economic ties as a foundation for long-term stability; political choice and diplomacy through dialogue and multilateral engagement; security cooperation to address cross-border threats; cultural linkages through education, tourism, and professional exchanges; technological advancement, particularly in digital systems and artificial intelligence; environmental stewardship through collective action on renewable energy and climate change; and humanitarian obligations, including disaster relief and development cooperation.
Drawing on Sri Lanka’s experience, the Ambassador illustrated the practical application of these principles by highlighting the country’s strategic location in the Indian Ocean, its role as a trade and logistics hub, and its active engagement in regional groupings such as BIMSTEC and the Indian Ocean Rim Association, where the Russian Federation serves as a Dialogue Partner.
The potential for enhanced Sri Lanka–Russia bilateral cooperation was underscored, particularly through complementarities between Russia’s technological and energy expertise and Sri Lanka’s logistical capabilities and maritime infrastructure. She noted that such synergies could support joint initiatives in trade, innovation, tourism, and logistics, while cultural and scientific exchanges would further strengthen mutual understanding between the two countries.
Concluding her remarks, the Ambassador stated that sustained progress requires dialogue, mutual respect, and forward-looking partnerships capable of shaping a shared and stable future.
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