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Change catastrophic strategies or face consequences -CB warns Parliament

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MP Kiriella poses a question to Dr. Nandalal Weerasinghe (pic courtesy Parliament)

By Shamindra Ferdinando

Central Bank Governor Dr. Nandalal Weerasinghe has warned political parties represented in Parliament that unless they abandon their ill-conceived strategies, Sri Lanka would have to seek IMF interventions 16 times in the next 20 years.

Dr. Weerasinghe issued the warning at a meeting organised on the intervention of Speaker Mahinda Yapa Abeywardena at the Parliament, on 31 August. This was ahead of the successful conclusion of the Staff-Level talks with the International Monetary Fund (IMF)for a four-year USD 2.9 bn loan facility.

Dr. Weerasinghe said that over the years Sri Lanka had sought IMF’s intervention on 16 occasions and this was the 17th time.

Pointing out that measures that had been taken by the yahapalana government (2016-2019). following agreement with the IMF, was disregarded by those who regained power in 2019/2020, Dr. Weerasinghe said if the government/Opposition reneged on the undertakings, the country would face a similar crisis, in three years.

Dr. Weerasinghe chided political parties for seeking political gains at the expense of the national economy. The government and the Opposition and vice versa repeatedly, made election promises that undermined the national economy, Dr. Weerasinghe said. Those who voted for them ultimately paid a very heavy price, Dr. Weerasinghe added.

Top Central Banker Dr. Weerasinghe, who retired in January 2021, was requested by former President Gotabaya Rajapaksa to succeed Ajith Nivard Cabraal as its Governor in April this year.

Dr. Weerasinghe said that those who obtained IMF assistance promising to rectify their wrongdoings, but continued to do the same.

At the onset of his one-hour long speech, Dr. Weerasinghe, having declared that the situation was so bad the current crisis could be compared with that of Zimbabwe and Lebanon. The CBSL Chief stressed that the per capita income in USD terms had dropped from USD 4,000 to 3,200. Unless tangible measures were taken, the economy could collapse, Dr. Weerasinghe warned, while advising lawmakers how hyperinflation could cause the government to lose control.

Dr. Weerasinghe alleged reckless and irresponsible spending by successive governments against the backdrop of year on year widening budget deficit led to the current crisis. The governments deprived the private sector of the much required funding for investment purposes etc., by utilizing such funds, he said.

The CBSL Chief showed how Parliament repeatedly raised the ceiling on borrowings to facilitate the agendas of the ruling party whoever was at the helm at that time.

Commenting on rapid deterioration of the economy, Dr. Weerasinghe pointed out large scale commercial borrowings that began in 2005 as against concessionary loans secured earlier undermined the very basis of the economy. Imprudent investments of such commercial loans contributed to the current catastrophe, Dr. Weerasinghe said, asserting that commercial borrowings had reached a critical level.

Declaring that he wasn’t making a political statement, Dr. Weerasinghe explained how the Mahaweli project contributed to Sri Lanka’s development, especially saved valuable foreign exchange by enhancing hydro-power generation capacity. Otherwise, Sri Lanka would have been in deeper trouble, Dr. Weerasinghe said, finding fault with successive governments for procuring loans at higher interest rates to further expand the public sector, pay salaries and pensions and other non- productive measures.

Dr. Weerasinghe said that those who had been in power simply secured loans from those ready to give. The reckless project continued as long as Sri Lanka had access to financial markets, Dr. Weerasinghe said, adding that this was interrupted in 2020/2021 when the country lost access to such markets. Dr. Weerasinghe declared that the moment creditors stopped giving us more loans we were bankrupt.

Referring to recurring losses suffered by state enterprises, Dr. Weerasinghe disclosed State Corporation sustained losses amounting to Rs 1 trillion. Addressing Power and Energy Minister Kanchana Wijesekera who was among those present on the occasion, Dr. Weerasinghe said that the lawmaker knew the extreme difficulties in managing the crisis.

Dr. Weerasinghe slammed the previous government for abolishing a range of taxes in the absence of a public campaign. That triggered the unprecedented crisis, Dr. Weerasinghe said, acknowledging Central Banks world over printed money as a temporary measure as happened during the Covid-19 pandemic. However, Sri Lanka continued the practice, the CBSL chief said, comparing the actions of the then government to a person who didn’t want to give up the use of ‘abing’ (opium).

Dr. Weerasinghe said that at the time he took over the Central Bank in April this year, both Bank of Ceylon and People’s Bank had defaulted. The reserves in April amounted to just USD 20 mn and the economy was in tatters, Dr. Weerasinghe said.

Commenting on his immediate predecessor Ajith Nivard Cabraal’s much touted road-map meant for economic recovery didn’t yield expected results. In spite of projected USD 10 bn in terms of fresh funding there was absolutely nothing, Dr. Weerasinghe declared.

The CB Governor strongly defended the declaration he made as regards Sri Lanka’s failure to meet its loan obligations. The declaration was made in the wake of the IMF turning down Sri Lanka’s request for USD 800 mn which was made available due to covid. Sri Lanka was denied that on the basis the country couldn’t have repaid that facility provided to all countries affected by covid-19.

Then having squandered precious USD by fixing Rs at 203 to the dollar, the currency was floated without following proper procedures. That was nothing but a disastrous measure that finally led to street protests and the change of government. Emphasizing the responsibility on the part of the incumbent government to ensure strict implementation of measures currently in place to control expenditure by imposing import restrictions, Dr. Weerasinghe warned that unless the government achieved that there would be a change of government again.

Acknowledging the extreme difficulties experienced by fixed income earners and the poor, Dr. Weerasinghe underscored the pivotal importance of what he called a social security safety net. The IMF expected the government to pay attention to the issue at hand as whatever the proposed reforms they couldn’t be sustained unless the administration looked after those vulnerable groups. If those unable to make ends meet come onto the streets, there would be a bloodbath. Such a scenario would be far more dangerous than the Galle Face protest campaign that forced the change of government in July, Dr. Weerasinghe said.

The CBSL Chief said that he was also concerned about the sustainability of the banking sector. The outspoken official pointed out that with food inflation at over 90 percent sustaining the economic reforms and taking forward the staff level agreement with the IMF to the next level would be a challenge.



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Low-quality coal causes power cuts: Ex-LECO Chief

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Chandrasekera

By Shamindra Ferdinando

The use of low quality coal, over a period of time, had led to the developing crisis at the Lakvijaya Coal Power Plant (LVPP) at Norochcholai that compelled the boastful NPP government to implement power cuts, former Lanka Electricity Company (Private) Limited (LECO) Chairman Bandula Chandrasekera said yesterday.

The government imposed one-hour countrywide power cuts on 19 Oct.

Chandrasekera, now a consumer rights activist, warned that though the government declared the power cuts would be limited to three days, the situation could take a turn for the worse.

The top United Republican Front (URF) activist said so in response to the government’s claim that Saturday’s sudden drop in electricity generation at the country’s only coal-fired power plant hadn’t been caused by the quality issue of coal.

The former LEOCO Chief emphasised that the country was paying a very heavy price for the controversial procurement of low-quality coal for the 2025/2026 season.

“Procurement of low quality coal is not an allegation. It has been accepted by a seven-member committee, headed by K. L. R. C. Wijayasinghe, Additional Secretary, Energy Ministry, appointed by Parliament,” Chandrasekera said, pointing out that the government was trying to mislead the public into believing that the use of coal supplied by Trident Chemphar wasn’t the cause of the current power crisis.

The expert committee that investigated the coal scam had disclosed losses caused by substandard coal, Chandrasekera said, adding that the total losses/damages could be as much as Rs 20 bn.

Trouble erupted in Dec, 2025 when LVPP began using coal purchased from the new supplier, whose selection was challenged by the Auditor General in a special report submitted to Parliament, in April this year, he said.

Since the government entered into a deal with the Indian company, LVPP has so far received 19 ship loads of coal. An investigation conducted on the orders of the Public Utilities Commission of Sri Lanka (PUCSL) revealed that the use of low-quality coal had had a detrimental impact on the LVPP.

The Frontline Socialist Party (FSP) exposed the corrupt deal in Sept. 2025. The NPP run Parliament ignored the disclosure made by the JVP breakaway faction.

Chandrasekera said that the Committee asserted that it would cost approximately Rs 80 mn to restore the LVPP to the previous status. Responding to The Island queries, Chandrasekera emphasised the country couldn’t meet the power requirement unless the LVPP operates without hindrance. Those who had been, for whatever reason, switched to South African coal provided by the Indian supplier should be held accountable and punished, Chandrasekera said, recalling how the NPP parliamentary group defeated the no-confidence motion moved against the then Power Minister Kumara Jayakody, who later quit, as the enormity of the scam and its repercussions shook the government.

Chandrasekera said that the government couldn’t maintain services though the powers that be intended to meet the power deficit with the help of hydropower generated by the Victoria power station. The ex-official underscored the need to inquire into the failure of the authorities to implement the backup plan last Saturday. Had Victoria met the requirement, last Saturday’s countrywide power failure, that lasted from 11.43 am to 11 pm could have been averted, Chandrasekera said.

He also questioned the controversial government decision to disconnect solar power over the weekend as the absence of solar generation obviously aggravated the problem. Chandrasekera emphasised that the latest countrywide power outage exposed the government whose basic strategy was to blame everything on the Opposition.

“We sincerely hope the Presidential Commission inquiring into the coal scams also looks into the situation developing at LVPP due to the use of substandard coal. According to him, the loss caused by the recent outage was estimated to be around Rs 16 bn and the crisis could not be addressed by propaganda campaigns, especially on social media. But, if other factors, including the expenditure on hydro and thermal generation were taken into consideration, the losses could be as much as Rs 20 bn.

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Power cuts continue

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Power cuts continued across the country yesterday and are expected to continue today following the shutdown of all three generating units at the Lakvijaya Power Plant in Norochcholai.

The Public Utilities Commission of Sri Lanka (PUCSL) said approval had been granted on Monday (19) following a request by the National System Operator (NSO) to impose scheduled power cuts.

Accordingly, one-hour power cuts were scheduled between 4.30 p.m. and 9.00 p.m., with the country divided into four zones. Hospitals and locations providing essential services were exempted.

The three Norochcholai generating units remain out of operation following the countrywide power failure last Saturday, prompting the NSO to introduce daily power cuts to manage the available electricity supply.

NSO Chief Executive Officer Buddhika Samarasekara said the power cuts would be necessary yesterday and today (21).

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GL stresses importance of post-war Shangri-La investment after CIABOC questions him

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Prof. G. L. Peiris

By Shamindra Ferdinando

Prof. G. L. Peiris yesterday said he had not been concerned at all about being arrested when the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) summoned him to record a statement regarding an ongoing investigation.

Addressing the media outside the CIABOC, the former External Affairs Minister emphasised that his family had never taken anything from people but contributed to their welfare. The internationally renowned academic said that he didn’t accept lucrative opportunities abroad but remained committed to do whatever possible for the public here.

The CIABOC questioned Prof. Peiris on the launch of the Shangri-La Hotel project here. The Convener of the Janathawadi Joint Opposition said that when the top management of the hotel got in touch with

him, he had brought the matter to the notice of the then President Mahinda Rajapaksa, who promptly gave the go ahead.

Shangri-La was opened in Nov. 2017 with the participation of the then President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe.

Prof. Peiris said that he had been appointed External Affairs Minister nearly a year after the successful conclusion of the war against the LTTE in May 2009. Shangri-La, which owned over 100 hotels at that time, was keen to explore the possibility of opening a hotel here and the government had swiftly grabbed the opportunity. Referring to the opening of ITC Ratnadeepa, in late April 2024, Prof. Peiris explained the importance of foreign investment, particularly after the end of the 30-year war that caused massive devastation.

Responding to media queries, Prof. Peiris said that he strongly opposed efforts to silence political opponents but accepted the need to investigate waste, corruption and irregularities. “People shouldn’t be targeted over their political stand,” the ex-lawmaker said, adding that he as the Minister tasked with attracting such special investments worked in line with the overall government policy.

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