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Economic crisis: MR, ministers, CBSL Governor, Dr.PBJ ignored IMF warnings

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Dr. Jayamaha says Monetary Board acted regardless of strong opposition

By Shamindra Ferdinando

It was disclosed before the Committee on Public Enterprises (COPE) yesterday (25), the then Prime Minister Mahinda Rajapaksa, who served as the Finance Minister, had been briefed, in March-April 2020, on the impending financial crisis of unprecedented magnitude, but he had chosen to ignore the dire warning.

The parliamentary watchdog was told how the International Monetary Fund (IMF) had warned the then Governor of the Central Bank, Prof. W. D. Lakshman, and Treasury Secretary S. R. Attygalle, of Sri Lanka’s inability to procure loans unless the country undertook debt restructuring immediately.

COPE members received a briefing on the circumstances leading to the crisis when senior officials of the Central Bank appeared before the all-party body yesterday. CBSL Governor Dr. Nandalal has stated that the IMF warning hadn’t been heeded at all.

The COPE received confirmation of what has been widely speculated hours after UNP Leader Prime Minister Ranil Wickremesinghe, was sworn in as the new Finance Minister.

Janakantha Silva, Director Legislative Services / Director Communication, Parliament quoted Dr. Weerasinghe as having told COPE that following technical talks held in terms of the Finance Act pertaining to the IMF’s stand, recommendations were made to the then Premier and other senior officials. Dr. Weerasinghe has stated that the relevant decisions should have been made by the Premier, in his capacity as the Finance Minister and the entire Cabinet of Ministers.

The IMF has made its position clear after having asserted Sri Lanka lacked debt sustainability.

Asserting the failure on the part of those who managed the economy for causing a massive crisis, COPE Chairman Prof. Charitha Herath called it a crime. The first time entrant to Parliament recommended the setting up of a Special Parliamentary Select Committee to probe those who neglected their responsibilities thereby caused the current debilitating crisis. Prof. Herath blamed those few who managed the economy during that period.

SLPP National List MP Basil Rajapaksa succeeded Mahinda Rajapaksa in July 2021 as the Finance Minister whereas President Gotabaya Rajapaksa brought in SLPP National List MP Ajith Nivard Cabraal as the Governor of the Central Bank in Sept 2021. Cabraal quit in March to pave the way for Dr. Weerasinghe, the former Bank Deputy Governor to return from retirement in Australia, as its new Governor.

Dr. Harsha de Silva pointed out that the then Finance Minister Mahinda Rajapaksa delegated his responsibilities to the then State Finance Minister Cabraal who refrained from briefing the Parliament as regards the actual situation. Dr. de Silva said that the IMF’s declaration of debt sustainability should be examined against the backdrop of the revenue cut imposed on the recommendation of the then Secretary to the President and one time Central Banker and Treasury Secretary Dr. P.B. Jayasundera that deprived the Treasury of Rs 600 mn in taxes.

Dr. de Silva asked who decided on the tax cut in spite of the IMF specifically advising the government not to do so. The top SJB spokesperson and COPE member asked who decided on such reckless course of action.

COPE member and SLPP lawmaker Rear Admiral (retd) Sarath Weeraselera has said that tax cut was declared to encourage business and trade.

When COPE raised contentious issue of the Central Bank wasting precious funds to prevent depreciation of Sri Lanka Rupee, Dr. Weerasinghe has said this was the responsibility of the Monetary Board comprising five persons. The then Monetary Board member Dr. Ranee Jayamaha has revealed that the then Governor Prof. W.D. Lakshman, Treasury Secretary S.R. Attygalle and nominated member Samantha Kumarasinghe decided on that course of action in spite of her and Sanjiva Jayawardena, PC, opposing them. They had registered their protest in writing.

Dr. Weerasinghe assured the COPE that in spite of the difficulties likely to be experienced within the next three to four months he would try to achieve objectives.



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Tobacco and alcohol claim 22,000 lives annually

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Health and Mass Media Secretary Dr Anil Jasinghe speaking to NPP MP Samanmali Gunasinghe during the sectoral oversight committee meeting

NATA to be given more powers

The Parliamentary Sectoral Oversight Committee on Health, Mass Media and Women’s Empowerment has agreed in principle to ban single-stick sales of cigarettes and increase taxes on tobacco products, according to parliamentary sources.

The decision was reached during an institutional review of the National Authority on Tobacco and Alcohol (NATA) held recently in Parliament. The meeting was chaired by MP Dr. Nihal Abeysinghe.

During the review, NATA officials informed the committee that approximately 22,000 deaths occurred annually in Sri Lanka due to tobacco and alcohol consumption. They said the country suffered an economic loss of between Rs. 225 billion and Rs. 240 billion each year due to the consumption of tobacco products and alcohol.

Officials told the committee that steps were underway to amend the National Authority on Tobacco and Alcohol Act to grant it more powers.

Noting that 104 countries had already banned the sale of loose cigarettes, the underscored the need for Sri Lanka to adopt a similar policy. When loose cigarettes were sold, mandatory health warnings on cigarette packets were not visible to consumers, the NATA officials said.

The committee was also briefed on the importance of imposing taxes on cigarettes after determining their retail prices, as part of broader measures aimed at reducing tobacco consumption.

Commenting on the matter, Dr. Abeysinghe said the committee was prepared to extend its full support for the proposed amendments to the Act, as well as for other programmes and initiatives undertaken by the National Authority on Tobacco and Alcohol.

Deputy Chair of the Committees Hemali Weerasekara, committee members MPs Dayasiri Jayasekara, Muneer Mulaffer, Samanmali Gunasinghe, Prof Sena Nanayakkara, Dr S. Sri Bhavanandarajah, Dr Ramanathan Archchuna and with the permission of the Chair, MPs Dr. Janaka Senarathna and Dr Pathmanathan Sathiyalingam were present at the committee meeting.

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Development Officers hunger strike drags on for fourth day

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Development officers on hunger strike demanding absorption into the teacher service, outside the Presidential Secretariat at Colombo.

The hunger strike launched by a group of Development Officers demanding their absorption into the teacher service entered its fourth day yesterday (29) outside the Presidential Secretariat Colombo.The protesters, members of the Ceylon School Development Officers’ Union (CSDOU), began their satyagraha on January 26.

One of the four officers participating in the fast-unto-death fell seriously ill on the fourth day and was rushed to hospital for treatment, while the remaining three continued the hunger strike. Earlier, Dr. Chamal Sanjeewa, President of the Doctors’ Trade Union Alliance for Medical and Civil Rights, visited the protest site to examine the health of the protesters and oversaw the administration of saline to those suffering from dehydration.

CSDOU Secretary Viraj Manaranga criticised authorities for refusing to listen to the protestors.

“Not a single official from the relevant authorities has come forward to hear our grievances, which is a matter of serious concern,” he said, accusing the government of negligence and “stepmotherly treatment” of the issue.

The Ceylon Teachers’ Union (CTU) echoed the need for legal and procedural adherence, noting that there are currently 40,000 teacher vacancies nationwide. The union stressed that a significant number of development officers and graduates remain outside the teaching service, despite provisions in the teacher service constitution allowing for their appointments, which fall under the powers of Provincial Councils.

National People’s Power (NPP) MP Chandana Sooriyarachchi said graduate development officers are required to sit a compulsory competitive examination. Former Education Minister Akila Viraj Kariyawasam, who oversaw appointments under the Good Governance administration, also stated that direct appointments are legally not feasible. He added that school development officers were absorbed into the teacher service in 2018 through competitive exams and stressed that appointments must follow established procedures, warning that strikes would not alter this process.

The hunger strike continues to draw attention to the demands of the Development Officers as they urge the government to take immediate steps to address their grievances.

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IMF urges Lanka to diversify trade amidst global tariff risks

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Srinivasan

Sri Lanka and other small Asian economies must accelerate trade diversification or face heightened vulnerability to global tariff disputes and shifting supply chains, warned Krishna Srinivasan, Director of the Asia and Pacific Department at the International Monetary Fund (IMF).

Speaking in Colombo on the evolving global trade landscape, Srinivasan highlighted Asia’s growing exposure, particularly in the wake of tariff tensions between the United States and China. “Asia benefited a lot from trade integration, benefited a lot from openness to trade,” he said. “So much so that when tariffs were imposed by the US, Asia was subject to the highest level of tariffs.”

He cautioned that the region that gained most from open markets is now at risk of bearing the brunt of protectionist measures. For countries like Sri Lanka, he said, the message is clear: diversify or be exposed.

Srinivasan also noted that South Asia remains the least integrated sub-region in the continent. “Having greater integration with your partners within the sub-region will take you a long way,” he said. For small economies, he added, building deeper trade ties with neighbours and broadening export and production bases is essential for resilience.

Meanwhile, Sri Lanka has received a strong vote of confidence from the IMF following a high-level meeting between President Anura Kumara Dissanayake and the delegation at the Presidential Secretariat.

The visiting IMF representatives, who arrived on January 22 to assess the damage caused by Cyclone Ditwah, spent a week touring the island, engaging with affected communities and observing the impact firsthand. In a briefing, the delegation praised the government’s swift relief efforts, infrastructure restoration, and commitment to rebuilding lives, noting widespread appreciation among citizens for the administration’s handling of the crisis.

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