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CBSL Chief: Economy could be stabilised in year or so if …
By Hiran H. Senewiratne
The prevailing Balance of Payments (BoP) crisis could lead to a major social crisis as the available foreign reserves were only sufficient for a few weeks’ imports, Governor of the Central Bank Dr. Nandalal Weerasinghe warned on Monday.
“The economy can be stabilised in the next 12 month if the IMF negotiations and debt restructuring are finalised within the next seven to eight months. Until then we have to support the poor people,” Dr. Weerasinghe said, addressing a seminar on the “State of the Economy and Talks with the IMF”. It was organised by the Press Club, together with the Press Institute, at Colombo Hilton.
The CB Governor said the current BoP crisis would worsen and, therefore the economic pain could only be minimised if essential policies and measures were implemented in an expeditious manner. But “IMF technical level virtual meetings are likely to conclude this week, and thereafter further discussion will take place to finalise everything,” Dr. Weerasinghe said.
Dr. Weerasinghe suggested that the monetary and fiscal authorities tighten the monetary policy by higher margins and fiscal policy by restoring tax rates to pre-2020 levels.
The Governor said, “We have three categories of creditors namely International Sovereign Bonds, which raise short term funds from global markets, which account for 35 percent of the government debt, while other two creditors are Paris Club and non-Paris Club (India and China).
Dr. Weerasinghe said that the country’s debt needed to be brought to a sustainable level. “For that purpose a debt sustainability analysis needs to be drafted with a fiscal policy for the IMF bailout”, he said.
Speaking about the country’s worsening economic fundamentals, Dr. Weerasinghe said: “The nation is currently experiencing a historically low economic growth and falling trend of per capita GDP since 2017 with rising levels of poverty. It is also running the highest fiscal deficits since 1988 with the lowest ever government revenue as a percent of GDP.
“Amid those developments Sri Lanka’ poverty level will increase, unemployment level soar and local industries will have to shut down due to restriction of importation of raw material. Therefore, we have to seek humanitarian assistance from the World Bank, Asian Development Bank and other bilateral and multilateral agencies”, the Governor said.
“We are seeking short-term bridging facilities from official creditors until an agreement is reached with creditors on restructuring,” he said.
In his presentation, Dr. Weerasinghe analysed the links between banking and the currency crises. He pointed out that the problems in the banking sector typically precede a currency crisis with the currency crisis deepening the banking crisis, thus activating a vicious spiral.
Sri Lanka also had the highest-ever government debt which was unsustainable at the moment. Debt dynamics might be worsening in the next few years unless the debt was restructured, he said.
Sri Lanka also recorded the highest rate of inflation in 12 years which was increasing sharply and was experiencing the highest-ever levels of money printing by the CBSL, he added
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Level III landslide early warnings issued to the Districts of Kandy, Kegalle, Kurunegala and Matale extended
The landslide early warning center of the National Building Research Organisation [NBRO] has extended the Level III RED landslide early warnings issued to the Districts of Kandy, Kegalle, Kurunegala and Matale until 1600hrs on 11th December 2025.
Accordingly,
The LEVEL III RED landslide warnings issued to the the Divisional Secretaries Divisions and surrounding areas of Kundasale, Pasbage Korale, Medadumbara, Ganga Ihala Korale, Hatharaliyadda, Pathadumbara, Doluwa, Panvila, Gangawata Korale, Ududumbara, Akurana, Yatinuwara, Harispattuwa, Deltota, Thumpane, Poojapitiya, Udapalatha, Udunuwara, Minipe and Pathahewaheta in the Kandy district, Aranayaka, Yatiyanthota, Rambukkana, Bulathkohupitiya and Mawanella in the Kegalle district, Mallawapitiya, Mawathagama and Rideegama in the Kurunegala district, and Rattota, Laggala Pallegama, Ukuwela, Matale, Wilgamuwa, Pallepola, Naula, Yatawatta and Ambanganga Korale in the Matale district have been extended.
LEVEL II AMBER landslide early warnings have been issued to the Divisional Secretaries Divisions and surrounding areas of Uva Paranagama, Hali_Ela, Meegahakivula, Badulla, Kandeketiya, Bandarawela, Soranathota, Ella, Haputhale, Lunugala, Welimada, Haldummulla and Passara in the Badulla district, Warakapola, Galigamuwa, Kegalle, Dehiowita, Ruwanwella and Deraniyagala in the Kegalle district, Polgahawela and Alawwa in the Kurunegala district, Kothmale East, Walapane, Thalawakele, Nuwara Eliya, Kothmale West, Nildandahinna, Mathurata, Ambagamuwa Korale, Hanguranketha and Norwood in the Nuwara Eliya district. and Kolonna, Godakawela and Kahawaththa in the Ratnapura district.
LEVEL I YELLOW landslide early warnings have been issued to the Divisional Secretaries Divisions and surrounding areas of Divulapitiya, Attanagalla and Mirigama in the Gampaha district, Narammala in the Kurunegala district, and Kiriella, Eheliyagoda, Balangoda, Kaltota, Openayake, Nivithigala, Imbulpe, Ayagama, Kuruwita, Kalawana, Elapatha, Pelmadulla and Ratnapura in the Ratnapura district.
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“We cannot allow flooding to become a part of the daily lives of the people in the Colombo District” – PM
Prime Minister Dr. Harini Amarasuriya stated that unauthorized constructions within the Colombo District, nor any form of residential developments that endanger the public carried out under the guise of development agenda will not be allowed.
The Prime Minister made these remarks while addressing the media at the conclusion of the Colombo District Disaster Management Committee meeting held on Tuesday [December 09] at the Colombo District Secretariat.
Addressing further, the Prime Minister stated:
“The Colombo District has become vulnerable to this extent due to the constructions carried out without any proper planning or understanding of regulations, along with personal and politically motivated decisions that have placed both the district and its people at risk.
Compared to the districts that suffered severe loss of life and property due to the recent cyclone, the damage to the Colombo District has been relatively lower. However, special intervention is being carried out together with the relevant institutions to manage the potential future flood risks in the district.
This matter was also given special attention during today’s District Disaster Management Committee meeting. We cannot allow the flooding to become a regular part of the lives of the people in Colombo. All relevant institutions will come together to put forward a common plan for flood control in the district.”
The Prime Minister further stated that discussions are already underway to provide sustainable solutions for the people living in high-risk areas within the Colombo District.
The discussion was attended by the Deputy Minister of Urban Development Eranga Gunasekara, Deputy Minister of Mass Media Kaushalya Ariyaratne, and Colombo District Members of Parliament Aruna Panagoda and Chandana Suriyarachchi.
[Prime Minister’s Media Division]
The handover of 35 tonnes of Russian Humanitarian Aid to Sri Lanka, recently affected by the cyclone «Ditwah», took place at Katunayake today (10th December)
The shipment was welcomed at the Katunayake airport by Ambassador of Russia Levan Dzhagaryan, Minister of Ports and Civil Aviation Anura Karunathilaka and Deputy Minister of Defence, Major General Aruna Jayasekara (Retd).
Ambassador Levan Dzhagaryan: said “This delivery is a reflection of long-term friendly relations between Russia and Sri Lanka and reaffirms Moscow’s commitment to support countries in a difficult humanitarian situation.”
The supplies brought by the EMERCOM (Russian Ministry of Emergency Situations) aircraft comprised a movable 60 kW electric power station, Pumping equipment for water drainage, Summer tents (10-person capacity) and Food supplies (sugar, vegetable oil, rice)
The total cargo weight is 35 metric tonnes. The aid will be distributed among the most affected regions.
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