News
Keerthi: IMF conditions painful but necessary
Country paying heavy price for delaying decision
By Shamindra Ferdinando
Former Governor of Uva, Southern and Central Provinces Rajith Keerthi Tennakoon yesterday (16) said that those who objected to the government seeking IMF’s assistance had ruined the economy.
President Gotabaya Rajapaksa had, in his address to the nation on Wednesday, expressed his willingness to seek IMF assistance, Tennakoon said.
Tennakoon, one-time Executive Director of polls monitoring body CaFFE told The Island that in fact Sri Lanka had been engaged in discussions with the IMF since February 2019 in the run-up to the presidential election.
But the talks had suffered a setback following the change of government following the 2019 presidential election, Tennakoon said, adding that one of conditions was the enactment of Monetary Law Act to bring about discipline the financial sector and stability, Tennakoon said.
According to him, one of the key conditions had been to remove Secretary to the Finance Ministry from the five-member Monetary Board. The IMF believed far reaching changes were necessary to restore financial discipline, particularly uncontrolled printing of notes that had caused inflation.
Tennakoon said that Finance Minister Basil Rajapaksa favoured IMF’s intervention. As soon as he succeeded Mahinda Rajapaksa as the Finance Minister in July last year, Sri Lanka sought the IMF intervention. Much respected former Governor of the Central Bank and head of a Sri Lanka overseas mission arranged the IMF’s intervention, Tennakoon said.
Responding to queries, Tennakoon said that the government would be asked by the IMF to implement the late Mangala Samamaweera’s formula that helped Treasury to collect well over Rs 1,900 bn in 2019 and the current dispensation lost well over Rs. 500 bn due to a controversial decision to do away with a range of taxes, including PAYE (Pay As You Earn), NBT (Nation Building Tax), Withholding tax, Capital Gain tax imposed on the Colombo Stock Exchange, Bank Debit tax and unprecedented reduction of VAT (Value Added Tax).
Tennakoon said that the 15% VAT and the 2% NBT which amounted to 17% imposed on all goods and services were unified and reduced to 8%, effective from the first of December 2019.
He said that the decision was taken at the first cabinet meeting of the incumbent government held on Nov 27, 2019.
Sri Lanka would be also asked to introduce pricing mechanisms for electricity and fuel if the government wanted IMF’s assistance, Tennakoon said. Interest rates, too, shouldn’t be subjected to political whims and fancies, Tennakoon said, adding that the IMF conditions would cause tremendous pressure on the government though it was in such a desperate situation it couldn’t take a tough stand.
As many as 40 loss-making state enterprises including national carrier SriLankan were likely to be identified for privatization or re-structuring, Tennakoon said, urging political parties not to sabotage current efforts at reaching consensus on national economy.
The one-time favourite of former President Sirisena emphasised that the government should without delay inquire into the circumstances leading to the Central Bank suddenly floating rupee over a week ago. It would be pertinent to ask whether the Central Bank has sought Cabinet approval before the announcement was made, Tennakoon said, alleging the country suffered due to the Finance Ministry and the Central Bank pulling in different directions.
The civil society activist alleged that for want of a cohesive action plan, the government inadvertently caused serious mistakes though nothing could be as bad as handling of the national economy.
Tennakoon said that the IMF’s role undermined Pohottuwa policies but the ruling party couldn’t do anything about it. Commenting on social media reports of CBSL Governor Cabraal being asked to step down immediately, Tennakoon said that no one could force him to do so. Cabraal could continue till July 4, 2022 as he was in the process of completing the period allocated for his predecessor, Tennkoon said, adding that though the President could replace Cabraal after July 4 it wouldn’t help to address the crisis.
News
New Digitalization Policy draft reviewed
A meeting between representatives of UNICEF and Prime Minister Dr. Harini Amarasuriya was held on the 10th of December at the Prime Minister’s Office.
During the discussion, an initial review of the new digitalization policy draft was conducted, and it was emphasized that the new digital policy must be formulated to align with the ongoing education reforms.
The Prime Minister highlighted that the digital policy should be developed in a way that supports all five core pillars of the current education reforms, including curriculum reform, infrastructure development, and administrative restructuring.
It was further noted that the current draft is primarily focused on curriculum-related matters, and the digital policy should be structured to influence the overall education reform process.
Extensive discussions were also held on the importance of digital literacy, NEMIS, the provision of digital infrastructure, and minimizing the existing digital divide.
Attention was also drawn to the gaps in the current teacher training mechanisms , and the Prime Minister stressed the need to reduce paper usage.
The meeting was attended by the UNICEF representatives Dr. Emma Brigham and Deborah Wyburn, Secretary to the Prime Minister Pradeep Saputhanthri, Additional Secretary A.B.M. Ashraff, and several other officials.
[Prime Minister’s Media Division]
Business
The government is taking steps to streamline trade facilitation, customs processes, investment approvals, and improving export facilities – Prime Minister
Prime Minister Dr. Harini Amarasuriya stated that the government is taking steps to strengthen local exporters by making trade facilitation, customs procedures, and investment approvals more efficient, and by improving export services.
The Prime Minister made these remarks while addressing the 27th Presidential Export Awards 2024/25 ceremony organized by the Ministry of Industries and Industrial Development together with the Export Development Board.
At this ceremony, which was held to recognize the best exporters of Sri Lanka for the financial year 2024/2025, a total of 107 awards including 15 overall awards and 92 sectoral awards for products and services were presented. Merit awards were also presented to eligible sectors based on applicants’ performance and their contribution to national economic development. Awardees were selected on several criteria such as export market diversification, job creation, growth in export revenue, repatriation of export income, environmental sustainability, institutional social responsibility, and value addition.
Institutions that demonstrated outstanding performance in the export sector were presented with the prestigious Presidential Export Awards for the year under the patronage of Prime Minister Dr. Harini Amarasuriya and Minister of Industries and Industrial Development, Mr. Sunil Hadunnetti.
Further expressing her views, the Prime Minister stated:
“The Presidential Awards Ceremony for exporters reminds us that Sri Lanka’s progress depends not merely on policies or administration, but on the ability to produce, to create value, and to compete internationally.
Over the past year, we faced numerous challenges. As a result, global markets and supply chains were disrupted. Economic uncertainty prevailed. We faced natural disasters. Despite this, many exporters had to adjust to these changes, reorganize production processes, diversify customers, and adopt digital technologies in order to remain competitive in the market.
The impact of the Ditwah cyclone also affected several industries within the export sector. Production facilities, storage facilities, and transportation routes in affected areas were damaged. Production chains and delivery schedules were disrupted.
Under such a difficult situation, some exporters experienced significant setbacks while trying to meet international export demands.
The government is taking steps to support exporters by assessing the damages they suffered due to the emergency situation, restoring their operations, and helping them recover. The government is also working to strengthen resilience against future natural disasters and to rebuild affected areas in a way that minimizes the risk of similar situations arising again.
Sri Lanka is currently undergoing a new economic transformation. For many years, instability, policy inconsistencies, and administrative inefficiencies hindered the progress of the country. This weakened investor confidence and made it difficult for businesses to plan ahead.
However, the present government is committed to governance based on stability, transparency, and accountability. This is not a short-term approach. It is a long-term process to ensure that the country does not fall back into uncertainty.
For this purpose, the government is implementing strong fiscal management, predictable policies, clear and simplified regulations, anti-corruption measures, major institutional reforms, measures that allow businesses to plan ahead, instill investor confidence, minimize unnecessary barriers, and support the development of the private sector.
For a long time, we relied heavily on international loans to sustain national expenditures. However, this is not leading a path toward a stable future. Our progress depends on our ability to earn through trade, innovation, and global engagement.
Your ability to take Sri Lankan expertise and creativity to the world is a strength for the entire nation. The government is ready to extend the necessary support to achieve this.
We understand that issues such as policy inconsistencies, delays that increase operational costs, limited access to competitive financing, gaps in infrastructure and technology, weaknesses in trade facilitation, and slow progress in expanding market access have impacted you. I would like to assure you that the government is directly addressing these challenges.
The focus of the government has drawn to build efficient, transparent, and predictable systems, streamlining trade facilitation, customs processes, and investment approvals, improving export facilities, and minimizing the gap between local businesses and global markets.”
This event was attended by Ministers Kumara Jayakody, Ramalingam Chandrasekaran, Sunil Kumara Gamage; Deputy Ministers Chathuranga Abesingha, Eranga Weerarathna, Arun Hemachandra, Nishantha Jayaweera, Muditha Hansaka Wijayamuni; Governor of the Central Bank Nandalal Weerasinghe; Secretary to the Ministry of Industries and Industrial Development Tilaka Jayasundara; Chairman of the Export Development Board Mangala Wijesinghe, along with ambassadors, foreign delegates, exporters, and a large gathering.
[Prime Minister’s Media Division]
News
Big fossil fuel companies are responsible for climate crisis but poor countries like Sri Lanka are battered by it – Greenpeace South Asia
Greenpeace South Asia yesterday sounded a renewed alarm after a rapid analysis by World Weather Attribution (WWA) confirmed that human-induced climate change significantly intensified the extreme rainfall that battered Sri Lanka during Cyclone Ditwah and fuelled severe flooding across the Malacca Strait.
Greenpeace South Asia said that according to the study, the five-day rainfall extremes, like those unleashed by Ditwah, are now 28% to 160% more intense due to the 1.3°C of global warming already driven by greenhouse-gas emissions. Warmer sea surface temperatures in the North Indian Ocean — 0.2°C above the 1991–2020 average — supplied the additional energy that powered the cyclone’s rapid strengthening and heavy downpours.
WWA researchers stressed that Sri Lanka’s existing vulnerabilities magnified the disaster’s impact. Steep highlands funnelled water into densely populated floodplains, while unplanned urbanisation in flood-prone areas heightened exposure. Breakdowns in ICT systems meant early warnings failed to reach many, leaving low-income and marginalised communities to absorb the worst of the cascading disruptions to transport, electricity and essential services.
Avinash Chanchal, Deputy Director of Greenpeace South Asia, said the human toll was worsened by forces far beyond the island’s control.”During Cyclone Ditwah, we saw people coming together — neighbours rescuing neighbours, volunteers working through the night,” he said. “But while ordinary Sri Lankans showed up for each other, the real culprits were nowhere to be seen. The WWA study confirms what we already knew: this disaster was intensified by the carbon pollution of the world’s biggest fossil fuel companies. They caused the crisis, yet it’s the frontline communities who pay the price.”
Greenpeace warned that events like Ditwah signal a dangerous new normal for the region.”With increasing incidents, like Cyclone Ditwah, it is clear that extreme weather events are no longer isolated,” said Kumar. “Communities in South Asia will continue to struggle to cope with such conditions.”
The organisation urged countries most responsible for historic emissions to respond decisively. “This is high time that developed-country governments stop pretending this is normal,” Greenpeace said. “They must immediately cut emissions, phase out fossil fuels, and deliver real finance for loss and damage. Anything less is a betrayal of the people already living on the frontlines of climate breakdown.”
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