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Fitch downgrades SL’s Long-Term Local-Currency IDR to ‘RD’

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Global rating agency, Fitch, in its latest report downgraded Sri Lanka’s Long-Term Local-Currency (LTLFC) Issuer Default Rating (IDR) to ‘RD’ (Restricted Default) from ‘C’.

In a press release Fitch said the ratings on its local-currency bonds tendered in the domestic debt exchange have been downgraded to ‘D’ from ‘C’ while its other four local-currency bonds not tendered in the domestic debt exchange have been affirmed at ‘C’.

The Long-Term Foreign-Currency (LTFC) IDR has been affirmed at ‘RD’, and the ratings on Sri Lanka’s foreign-currency bonds have been affirmed at ‘D,’ Fitch said.

Given that Fitch typically does not assign outlooks to sovereigns with a rating of ‘CCC+’ or below, all issue ratings have subsequently been withdrawn, the press release said.

“Fitch has withdrawn the issue ratings of Sri Lanka’s foreign and local-currency bonds as these are no longer considered to be relevant to the agency’s coverage,” Fitch said.

Given below is the press release in full: “Distressed Debt Exchange: The downgrade of Sri Lanka’s LTLC IDR reflects the partial completion of an exchange of Sri Lanka’s T-bonds on 14 September as part of a broader domestic debt optimisation (DDO) launched in July 2023. The DDO also includes conversion of T-bills held by the Central Bank of Sri Lanka (CBSL) into treasury bonds (T-bonds), which has not yet been completed.

“In Fitch’s view, the exchange of T-bonds constitutes a distressed debt exchange (DDE) under the agency’s criteria, given that the maturity extension of the tendered bonds represents a material reduction in terms versus the original contractual terms, and given that the exchange is needed to avoid a traditional payment default.

“Reduction in Terms: Eligible bonds for which tenders were received and accepted have been exchanged into 12 new instruments of equal size and the same aggregate principal amount, maturing between 2027 and 2038. Accepted tenders reached about 37% of the outstanding principal amount of eligible bonds outstanding as of 28 June 2023. Accepted tenders were predominantly by superannuation funds, which will face higher tax rates on income from T-bonds if they did not meet a participation threshold.

“Local-Currency Debt Service Continuing: Fitch believes that Sri Lanka has continued to service the T-bonds throughout the DDO process, and that T-bonds not tendered in the exchange will continue to be serviced as per their original terms, including but not limited to the entirety of the 12 series of T-bonds (out of 61 eligible series) for which no valid tenders were received. Four of these 12 series were rated by Fitch and were affirmed at ‘C’ prior to withdrawal.

“Local-Currency Restructuring Incomplete: Under Fitch’s rating criteria, the LTLC IDR will remain in ‘RD’ until the debt exchange is completed in its entirety. Fitch deems the process incomplete, as the exchange of T-bills held by CBSL is still pending. Fitch regards the T-bills as public debt securities, and they are also held by private investors.

“Foreign-Currency IDR in Default: The sovereign remains in default on foreign-currency obligations and has initiated a debt restructuring with official and private external creditors. The Ministry of Finance had issued a statement on 12 April 2022 that it had suspended normal debt servicing of several categories of external debt, including bonds issued in international capital markets, foreign currency-denominated loans and credit facilities with commercial banks and institutional lenders.

“ESG – Governance: Sri Lanka has an ESG Relevance Score of ‘5’ for Political Stability and Rights as well as for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model (SRM). Sri Lanka has a medium WBGI ranking in the 45th percentile, reflecting a recent record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and a moderate level of corruption.

“ESG – Creditor Rights: Sri Lanka has an ESG Relevance Score of ‘5’ for Creditor Rights, as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. The affirmation of Sri Lanka’s LTFC IDR at ‘RD’ and downgrade of LTLC IDR to ‘RD’ reflect a default event.

“The Country Ceiling for Sri Lanka is ‘B-‘. For sovereigns rated ‘CCC+’ or below, Fitch assumes a starting point of ‘CCC+’ for determining the Country Ceiling. Fitch’s Country Ceiling Model produced a starting point uplift of zero notches. Fitch’s rating committee applied a +1 notch qualitative adjustment to this, under the balance of payments restrictions pillar, reflecting that the private sector has not been prevented or significantly impeded from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments.

Fitch does not assign Country Ceilings below ‘CCC+’, and only assigns a Country Ceiling of ‘CCC+’ in the event that transfer and convertibility risk has materialised and is affecting the vast majority of economic sectors and asset classes.”



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Civil society activist accuses govt. of favouring Ven. Gnanasara

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Galagodaatte Gnanasara / Viyangoda

Court of Appeal issues warrant for monk’s arrest

by Shamindra Ferdinando

Civil society activist Gamini Viyangoda on Monday (28) lambasted the NPP government for its failure to act promptly on the Supreme Court cancelling the presidential pardon granted to the General Secretary of Bodu Bala Sena (BBS) Galagodaatte Gnanasara.

Addressing a gathering at the Sri Lanka Foundation to mark the launch of ‘Rajapaksha Samagama’ and ‘Pasku Praharaye Thoththa Babala’ by Lasantha Ruhununuge and Tharindu Uduwaragedara and M.F.M., Faseer, Viyangoda alleged that President Dissanayake’s government was also acting in a manner partial to Gnanasara Thera, the way all previous governments had done.

The NPP should be ashamed of its pathetic failure to act swiftly and decisively, immediately after the Supreme Court revoked President Maithripala Sirisena’s pardon. Viyangoda said that the government owed an explanation as to why law enforcement authorities couldn’t apprehend Gnanasara, following the announcement made on 14 Sept. “For two weeks what were they doing,” he asked.

Ven. Gnanasara was sentenced, in 2018, for a six-year period for contempt of court and intimidating Sandya Eknaligoda, the wife of Prageeth Eknaligoda who disappeared in 2010. But, President Sirisena pardoned him before the convicted monk completed one year of his six-year term.

Viyangoda said that Ven. Gnanasara had openly moved about freely, launched a book and acted as if the Supreme Court ruling didn’t have any impact. Every minute Gnanasara stayed in the open it was an affront to the Supreme Court, Viyangoda said, accusing the government of shielding a wrongdoer.

Referring to certain incidents during the Yahapalana time, Viyangoda revealed that he personally sought the then Prime Minister Ranil Wickremesinghe’s direct intervention to have Ven. Gnanasara, hiding at a faraway temple, apprehended. “I met Wickremesinghe at Temple Trees. When I raised the failure on the part of police to apprehend Gnanasara, Wickremasinghe immediately called Sagala Ratnayake, who was in charge of public security at that time. Ratnayake promised to take the monk to custody the following day. The next day, Gnanasara surrendered through a lawyer.”

Viyangoda alleged that the Wickremesinghe government had shielded Vem. Gnanasara. The Wickremesinghe-Sagala Ratnayaka duo did that in style, he said, accusing the present government, too, of doing the same.

The Court of Appeal yesterday (29) issued a warrant for the arrest of Gnanasara Thera and ordered that he be produced before the court on 1 Oct.

The court further directed that the warrant be executed through the Inspector General of Police.

This happened when a motion filed by the Attorney General, seeking an order to enforce the prison sentence imposed on Gnanasara Thera, was taken up before the Court of Appeal.

The motion was heard before a Court of Appeal bench, comprising Justices Mayadunne Corea and Lakmali Karunanayake.

President’s Counsel Anura Meddegoda, appearing for Gnanasara Thera, told the court that his client was resting due to illness and requested a date to study the motion and make submissions.

But State Counsel Sajith Bandara declared that the matter concerned a criminal case and requested that the court issue a warrant if the accused failed to appear before the court.

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More cops than cones

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Colombo’s bus priority lane rule returned today, 29 September, as a pilot programme across the city and nearby areas. It applies from 6 a.m. to 9 a.m. and from 4 p.m. to 7 p.m. daily. The renewed operation covers seven designated lanes, meant to cut delays and make public transport more predictable.

Transport Minister Bimal Rathnayake said officials would monitor the trial to assess its effect on congestion and public transport efficiency. Police have told all officers to take legal action against violators. Drivers may enter a lane only in unavoidable cases, such as emergencies, exceptionally heavy traffic, or to cross it when turning.

The Lanka Private Bus Owners’ Association has welcomed the move, and Metro Bus is adding five new routes.

The rule has been revived before, and past efforts struggled with enforcement, so the pilot project’s results will matter.

(Image courtesy Hiru)

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Sajith accuses govt. of using data selectively in crucial report

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Sajith Premadasa

Opposition Leader Sajith Premadasa has said the government is attempting to paint a falsely beautiful picture of the country’s situation through the Socio-Economic Data report issued together with the Census and Statistics and the Central Bank. “They have selectively included certain information while intentionally omitting other vital facts,” Premadasa has said in a media statement. When presenting data, there must be chronological consistency and integrity. The Central Bank and the Department of Census and Statistics have no right to present outdated data to formulate a conclusion, thereby marginalising an entire segment of the population, Premadasa has argued, pointing out that their primary duty is to report accurate information to the public.

Premadasa says that up to page 18 of the report, recent data from 2023 to 2025 have been used. For main economic indicators, macroeconomic indicators, demographic data, and life expectancy, 2024 data have been used. Indicators such as external trade finance, consumer price indices, Real GDP, imports and exports, prosperity indices, and human development indices have also been compared with Asian and SAARC countries using recent data. However, for the section detailing socio-economic conditions from page 19 to page 34, the data used are exclusively from the outdated 2016–2019 period.

When discussing socio-economic conditions, the data used for household income and expenditure surveys, provincial-level conditions, housing facilities, energy consumption, cooking, and population distribution are entirely from 2016 to 2019, the Opposition Leader has said. Specifically, the data on poverty mentioned on page 33, and even the data on per capita daily food consumption capacity on page 34, belong to this old 2016–2019 timeframe. Formulating a report for the year 2026 using such outdated data is a deliberate attempt to mislead the country and its people.

Premadasa says that from page 35 onwards, fresh 2025 data have been used for sections on prosperity, demographics, the labour force, and employment. Recent data based on current market conditions have also been provided for Gross National Income (GNI) by industrial sources, food prices, imports and exports, tourism, government revenue, state debt, and interest rates.

“If the authorities can present recent data (for 2023, 2024, and 2025) for foreign debt, financial activities, financial sector trends, and money supply, why are they using 2016 and 2019 data for poverty to mislead the country?” the Opposition Leader has asked, pointing out that the main report and its summary prove that while the government uses updated data for macroeconomic aspects, it uses obsolete data regarding poverty, inequality, income distribution, and living standards. The Opposition Leader has called this a historic deception regarding the country’s poverty, asking whether the 12.11.2026 Budget will be on these false data?

Premadasa has said that the government claims that a person can survive for 30 days on Rs. 17,315, which is an absolute lie and a deception. “This Government lacks updated data or definitions for poverty. Since the country went bankrupt, a proper household income and expenditure survey has not been conducted, nor has the poverty line been accurately identified.” He questioned whether the upcoming budget, scheduled for 12.11.2026, will be based on these false and flawed data.

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