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High interest rates keeping businesses afloat – CB Governor

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By Rathindra Kuruwita

Central Bank Governor Dr. Nandalal Weerasinghe yesterday told journalists that Sri Lanka was holding discussions with China on debt restructuring and the developments were positive in general.However, the Governor refused to elaborate on discussions with any creditor, stating that specific details of these discussions would affect markets.

“We can’t be specific. We have to maintain ‘radio silence’ to ensure markets are not affected. When we have a concrete agreement we will reveal it,” he said.Dr. Weerasinghe said that they were also continuously discussing with the IMF, bilateral donors and commercial donors.

“The government reached an agreement with the IMF on 01 September. Following that we have taken several steps towards restructuring and discussions with creditors. On 23 September, we made a presentation to our creditors. President Ranil Wickremesinghe has also held several discussions with bilateral creditors and international organizations like the Asian Development bank (ADB). Next week, the State Minister of Finance, the Secretary to the Ministry of Finance and others will go to the IMF and hold further discussions,” he said.

The Governor added that inflation would notably drop in the first quarter of 2023. He also said that inflation would begin to decline from October.Dr. Weerasinghe said that the UNHRC resolution on Sri Lanka would not affect its discussions with the IMF or the World Bank.The Governor also said that the problems faced by the business community had not been created by high interest rates. The problems they were facing had been created by high inflation.

“People complain that they can’t do business because of high interest rates. It’s not true. They can’t do business because of high inflation. The cost of production is high because of inflation. The finance cost of a business at most will be 10%; whereas 90% is transport, raw materials, etc. These have increased because of inflation. If we have runaway inflation, business will collapse. People have to understand why interest is high. If inflation comes down, we can bring down interest rates,” he said.

Dr. Weerasinghe added that the remittances through the banking system were slowly rising. The drop in remittances was mainly due to the open account system and black market.

“These illegal flows are decreasing now. There has been increased black market activity in the past few weeks but this is temporary. Also, I would like to remind you that we are getting more accurate data on remittances. A few years ago, the data said Sri Lanka was receiving around 600 million US dollars a month as remittances. However, there are issues with the way the banks calculated remittances in the past, but now they are calculating right. Previous bank data was problematic and now we are talking to banks about this. Given that more people are leaving the country for jobs, remittances will go up,” he said.The Governor said banks were receiving foreign currency and businessmen and students were allowed access to foreign currency.

“There are still shortages, but you have to remember that a few months ago we didn’t have money for fuel. We think things will continue this way. We monitor the remittances. We hope they come through the banking system,” he said.



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COPE discovers fake documents covering drug imports in 2022/23

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The Parliamentary watchdog Committee on Public Enterprises (COPE) has found that there were fake documents regarding the importing of medicines under the emergency procurement system in 2022 and 2023.

This was revealed during a COPE meeting held at Parliament probing the transactions of the National Medicine Regulatory Authority (NMRA).

NMRA CEO Saveen Semage told the committee that several fake documents have been found due to the lack of registration of medicines.

Stating that six such fake documents were found last year alone, Semage said he had recorded statements regarding each of the documents with the Financial Crimes Investigation Division.

He revealed that, however, no investigations have been conducted yet into the incidents.

“We have documents with confessions from a woman accepting that fake documents had been made. However, a statement has not even been recorded from that woman yet,” he said.

Meanwhile, COPE member MP Asitha Niroshana Egoda Vithana also revealed that the highest number of waive-off registrations (WOR) for medicines had been obtained in 2022 and 2023.

He said 656 such WORs had been obtained in 2022 and 261 in 2023, adding that this proves that discrepancies have taken place during the emergency procurement of medicines during these periods.

Furthermore, Deputy Director General of the Medical Supplies Division of the Health Ministry, Dr. G. Wijesuriya said discussions are underway on allowing the State Pharmaceutical Corporation (SPC) to directly import essential medicines.He pointed out that it was essential to take a policy decision in this regard as a solution to mitigate such discrepancies.

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Batalanda report tabled in parliament, forwarded to AG

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Bimal Ratnayake

The Batalanda Commission report was tabled in Parliament on Friday by the Leader of the House and Transport Minister, Bimal Ratnayake.

Minister Ratnayake announced that the government has decided to forward the report to the Attorney General for legal advice. Additionally, a Presidential Committee will be appointed to provide guidance and recommendations on how to proceed with the findings of the report.

Ratnayake said that the Cabinet of Ministers, along with President Anura Kumara Dissanayake, has made a policy decision to take necessary action in response to the report. He reassured the public that steps are being taken to ensure that such a dark chapter in the country’s history is never repeated.

Minister Ratnayake said that a two-day debate on the Batalanda Commission report will be scheduled in Parliament at an appropriate time, allowing for a detailed discussion on the report’s findings and recommendations.

The report, which will be printed in all three official languages—Sinhala, Tamil, and English—will be made available to the public in the near future. Ratnayake confirmed that printed copies would be provided to members of Parliament as well as the general public for their review.

The Leader of the House further revealed that there are 28 evidence volumes associated with the commission’s work, which will be submitted to Parliament at a later date for further scrutiny.

Ratnayake said that as entire country concerned of the Batalanda Commission’s findings, the government’s commitment to addressing the issues raised and preventing future atrocities stands clear. The next steps, including legal action and policy recommendations, will be shaped by expert advice and informed parliamentary discussions, he said.

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CB Governor stresses need to assist crisis-hit construction industry

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Governor of the Central Bank Dr. Nandalal Weerasinghe on Friday (14) emphasized the importance of promoting a sustainable and cost-effective construction industry in the country, highlighting key challenges and opportunities in the sector.

Speaking at ‘Construction Expo 2025’, Dr. Weerasinghe underscored the need for Sri Lanka to align with global trends in sustainable construction, integrating cost-effective energy solutions and eco-friendly building practices.

“I must say my views here are not necessarily as Governor of the Central Bank of Sri Lanka, but as a person looking at this construction industry and how this can be developed and what the issues are. Sustainability in construction is essential, not just for new projects but also for existing buildings,” he noted.

Dr. Weerasinghe acknowledged that the construction sector has been one of the hardest-hit industries due to multiple economic pressures in recent years including the decline in public investments, high material costs and the industry being dependent on government projects.

The CBSL Governor, who acknowledged that the government faced fiscal constraints, limiting infrastructure spending and delaying payments to contractors, said that however, the outstanding arrears had now been settled.

“Government did not have space to spend money for public investment, especially construction that had a significant impact on the industry in the last couple of years, plus the government inability to pay the arrears for a long period. That was an issue we all recognize that has been one of the adverse impacts the industry had in the past”, he expressed.

“Also the cost of materials went up significantly, partly because of foreign exchange shortages. As a result, the shortage had shot up the prices of construction materials, as well as depreciation of the currency, high interest rates, finance costs, and other factors. We all recognize that it had an adverse impact on the industry. It’s one of the worst affected industries because of all these factors.”

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