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DEW: IMF can’t intervene in rescheduling international sovereign bonds; SJB disagrees

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By Shamindra Ferdinando

Former outspoken Minister D. E. W. Gunasekera says the unprecedented crisis faced by cash-strapped Sri Lanka in meeting its external debt obligations in 2022 and 2023 cannot be solved by seeking IMF intervention.

The government has ignored repeated calls by various parties, both in and out of Parliament, to seek IMF intervention as it is aware the IMF is not in a position to intervene as close to half of the country’s external debt obligations were to the international money market, one-time General Secretary of the Communist Party told The Island yesterday.

Referring to the New York-based Fitch rating agency, downgrading Sri Lanka’s sovereign rating to ‘CC’ last Friday (17) as the country struggled to meet two major obligations repayment of two international sovereign bonds of $500 million due in January 2022 and $1 billion due in July 2022, the ex-lawmaker said the government and the Opposition should stop playing politics with this issue.

The former MP said that there were other scheduled repayments during this period both foreign and local.

The Fitch statement reflected the daunting challenges faced by Sri Lanka, the former CP Chief said, urging the government to announce how it intended to meet its debt obligations.

The latest downgrade was announced in the wake of Finance Minister Basil Rajapaksa leaving the country. Foreign Minister Prof. G.L. Peiris, who is also the Chairman of the ruling SLPP, will handle the finance portfolio.

Gunasekera said that the IMF’s role would be limited as well over 50 percent of total debt comprised international sovereign bonds and Chinese and Japanese loans.

“The government also faces foreign-currency debt service payments, including principal and interest, of $6.9 billion in 2022, equivalent to nearly 430% of official gross international reserves as of November 2021. Cumulative foreign-currency debt service, including interest and principal, amounts to about $26 billion from 2022 through to 2026,” the rating agency said.

Asked whether the IMF could help re-schedule international sovereign bonds, former Central Bank Governor W.D. Lakshman told The Island that it was possible.  The government in Sept replaced Lakshman who had served as Governor since Dec 2019 with Ajith Nivard Cabraal. Underscoring the importance of addressing the issue at hand, Lakshman emphasized that Sri Lanka had never defaulted before.

SJB spokesman Dr. Harsha de Silva, MP, reiterated that the IMF could reschedule international sovereign bonds, too.  The former State Minister said that was his position throughout this period.

Gunasekera, too, stood by his assertion that the IMF couldn’t intervene in this regard.

Former Governor of Uva, Southern and Central Provinces Rajith Keerthi Tennakoon yesterday said that the snowballing problem couldn’t be solved by those countries willing to help Sri Lanka and international lending agencies as Sri Lanka obtained the majority of loans from the capital market. Tennakoon asserted that Sri Lanka faced a huge challenge in addressing this issue amidst continuing political turmoil. The civil society activist emphasized that those who sought to address the crisis by printing lorry loads of money owe the country an explanation. The debt-serving crisis and the growing difficulty in meeting the oil bill would ultimately overwhelm the country, Tennakoon said.



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USS Canberra makes port call in Colombo

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The United States Navy’s USS Canberra (LCS 30) arrived at the port of Colombo for replenishment purposes on 12 Jun 26.

The visiting ship was welcomed by the Sri Lanka Navy
in compliance of naval traditions.

USS Canberra, a Littoral Combat Ship, is commanded by Commander J McLaughlin.

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Complete the Proposed Education Reform Policy Framework Within One Month – President

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President Anura Kumara Dissanayake has instructed officials to complete work on the proposed Education Reform Policy Framework within one month.

The President issued these instructions during a discussion held on Wednesday (10 June) at the Presidential Secretariat on the education policy concept paper presented by the National Education Commission.

At the meeting, the Chairman of the National Education Commission stated that the current education reforms are being undertaken across several pillars: early childhood education, general education (primary, secondary and tertiary), higher education, vocational education, technological education, digital education and non-formal education.

Attention was also given to Sri Lanka’s education system to date, the various education reforms implemented over the years, and the social changes brought about by those reforms. The President instructed officials to review previous education reforms and to take into account the key lessons emerging from them when formulating the new education policy framework.

Members of the Education Commission noted that, since the establishment of the National Education Commission in 1991, education policies have been formulated from time to time. They pointed out that a significant portion of the 1997 policy had been applied to primary education.

It was further observed that although a policy was formulated in 2016 for general education, it was not implemented accordingly. Likewise, while an education policy was prepared in 2023, it was not adopted as the national education policy. Attention was also drawn to the fact that previous education reform efforts had often been based on programmes developed according to the functions of education-related institutions, rather than on a clearly established policy framework guiding educational change.

Describing the present moment as a significant opportunity, the President emphasised that education reforms should be implemented in a manner that does not disrupt the continuity of the existing education process. Rather than creating a separate policy framework and attempting to operate independently through it, reforms should be integrated carefully into the functioning education system.

The President stated that this represents a considerable challenge for the National Education Commission. He also noted that it would be inaccurate to conclude that either the previous education system or the current one is entirely successful or entirely unsuccessful.

He stressed the importance of carefully identifying both the strengths and weaknesses of the existing system. He further observed that it is not possible to determine in the short term whether an education reform is successful or unsuccessful, as its impact must be assessed over the long term through the changes it brings about in society. For this reason, he emphasised that education reforms require greater caution and consideration than many other types of reforms.

Discussions also focused on the need to conduct an in-depth review of anticipated future social challenges and to incorporate into the new policy framework the elements necessary for developing citizens suited to a changing society.

Special attention was given to the need for a policy framework to regulate all sectors of education that are currently not subject to proper regulation, as well as to the adverse consequences arising from the lack of regulation of private education.

The importance of conducting research into university education reform and the regulation of private universities was also discussed.

Among those present were Prime Minister Dr Harini Amarasuriya,  Deputy Minister of Education and Higher Education Dr Madhura Seneviratne,  Deputy Minister of Vocational Education Nalin Hewage,  Secretary to the President Dr Nandika Sanath Kumanayake,  Senior Additional Secretary to the President Kapila Janaka Bandara,  Secretary to the Ministry of Education, Higher Education and Vocational Education Nalaka Kaluwewa,  Chairman of the National Education Commission Professor A. Sarath Ananda,  and other members of the National Education Commission.

(PMD)

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Committee appointed for restructuring SriLankan Airlines

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The Cabinet of Ministers has approved the appointment of a Committee, chaired by Senior Presidential Advisor on Digital Economy Dr. Hans Wijayasuriya, to conduct a strategic review and restructuring of SriLankan Airlines.

The other members of the committee are as follows:

• Senior Presidential Economic Advisor Duminda Hulangamuwa

• Financial and corporate strategy expert Deshal De Mel

• Transaction and investment banking, mergers and acquisitions expert Dumith Fernando

• The Secretary to the Ministry of Finance or his Representative

• The Secretary to the Ministry of Transport, Highways and Urban Development / a representative of the Civil Aviation Authority

• The Chairman of SriLankan Airlines

• Legal experts with specialised knowledge in corporate, aviation and public law

• Aviation industry experts to be appointed

The Government has recognised the urgent priority of undertaking a comprehensive strategic review of SriLankan Airlines, taking into account the broader macroeconomic context.

The main objective of this exercise is to establish a financially sustainable and commercially efficient national carrier, while reducing the long-term fiscal burden on the Government.

Accordingly, it has been deemed appropriate to establish a dedicated committee to carry out the strategic review and restructuring process in collaboration with the International Finance Corporation (IFC), which is serving as the Transaction Advisor.

The committee will be responsible for:

• Conducting an independent review and assessment of the airline’s strategic direction and future course of action

• Recommending restructuring requirements and possible restructuring models

• Evaluating specific strategic options and identifying the most suitable course of action aligned with the Government’s overall objectives

• Providing oversight, guidance and support for the implementation of the selected strategy and execution framework determined by the Government

The committee will function for the duration of the strategic review and restructuring process, or until it is formally dissolved by the Government of Sri Lanka.

 (PMD)

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