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Lanka can overcome its problems while avoiding foreign debt traps Prof.TISSA VITARANA

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Sri Lanka faces a severe economic, social and political crisis. More than sixty per cent of families have incomes below the poverty line and manage on one or at most two meals per day, many going to bed hungry. The level of malnutrition is 18.4%, close to twenty per cent. That is one out of five children are malnourished, and both mental and physical development will be retarded, with grave consequences to our future generation. The floating of the Rupee and the widening budget deficit has made matters worse. The present SLPP government has aggravated this situation by publicly stating that there will be no price control and traders are free to charge whatever they like. The trader middle men are making enormous profits and prices , specially of food, are going sky high. The massive printing of currency notes, without a commensurate increase in production, has led to very high inflation. Incomes have remained static or even dropped due to staff cuts or closures affecting the private sector. On this May Day, international Labour Day, one is sad to see that the trade union movement is too weak to fight back. The horrible contract labour system has undermined the strength of the unions. On this May Day the LSSP and the socialist Left state that we are categorically opposed to the above policies and are ready to support the workers to rebuild the Trade Union movement to what it was in the 1970s. Dr.NM Perera as Finance Minister in the 1970 Coalition Government overcame the severe economic crisis (when there was little or no local industry and the country depended on imports, and the price of a ton of sugar rose from 40 pounds to 600 pounds), not only balancing the budget but even showing a surplus. Through a dual value for the Rupee, locally and in relation to the dollar, the rupee and the country remained stable, and exports were promoted.

Besides the above rupee crisis, there is a massive dollar crisis. Most governments, whether green or blue, have resorted to loans from foreign sources to bridge the adverse foreign trade gap. As a result we have a massive foreign debt burden of US$ 52 Billion and the cost of debt servicing alone is about US $ 6 Billion per year. But our foreign reserve which averaged around US $ 7 to 8 Billion is now down to well below US $ 1 Billion, nearer 500 million. Internationally accepted rating agencies like Fitch and Moody have dropped us down to the bottom value of a single C in their scale. This means that our importers cannot get their requirements quickly for the market by sending letters of credit (LCs) through our major banks. They have to send dollars. But if there are no dollars available in the banks in the country the inevitable result is an acute shortage of medicines that endanger the lives of people. The import of essential food items, of fuel, of LP gas etc. is the result. More and more queues to torture the people, the middle class as well. Galle Face and “Gota go home” is the inevitable outcome. Is it that we in Sri Lanka cannot produce these items.

Development of the national economy can make us self- sufficient in food, and healthier through a gradual shift to proper organic farming ( Eco- Agriculture). The Medicinal Drug policy of Prof.Senaka Bibile ( a member of the LSSP) enabled every Government Hospital to provide every medicine to practically every disease free of charge in the 1970 – 1975 Coalition Government period. More than 100 Third world countries have adopted his policy under WHO leadership. Some like Bangladesh have become leading exporters. Senaka created the State Pharmaceutical Corporation (SPC)for the bulk purchase of all Sri Lanka’s entire needs at rock bottom prices under the pharmaceutical name. An off-shoot, the SPMC, manufactured over 50 essential and much used drugs. A good pharmaceutical industry will prevent patients’ lives being put at risk as at present, and also give many jobs for our youth and earn dollars abroad.

The import of LP Gas, can be replaced by popularizing the Bio-gas cookers developed by the Government owned NERD institution in Jaela. The team of engineers and technicians led by Sunil Weliwita have developed this so that the energy is obtained from kitchen waste and trees and plants in the garden. There is no need to pay nearly Rs 5,000 for imported LP gas as at present. We only need some Sri Lankan entrepreneurs to invest in setting up some factories to mass produce them. Under the theme ” Smart Home Garden” it not only achieves waste disposal, but also helps to produce water.

One of the major factors provoking the peoples’ protest is the cut in electricity supply, often at unexpected times, not according to the published time schedules. This can be better organized. The shift to renewable energy ( solar, wind, and water has been extremely slow. This must be speeded up. The anaerobic fermentation of all types of waste collected in towns can be used to produce good organic fertilizer and also bio-gas. We tried to introduce this to Colombo but it failed, but I am happy that it has worked in Yatiyantota and Balangoda and a few other towns.

There is no need to go begging to the IMF for dollar loans. These take over 3 months to arrive and the amounts are small e.g. US $ 300 to 600 million. The conditions are harmful to us e.g. the insistence that Sri Lanka permits uncontrolled imports, the major cause of our present problem. We get into more debt. Instead what should be done is to negotiate a Moratorium on our debt with our creditors. This is common practice when countries are faced with crises like ours. I am told that Uruguay and Argentina have done so this time. The principle is to delay our annual debt servicing payments, which was US $ 6 Billion last year, for about 5 years. This would mean that we save about US $ 30 Billion , which can ensure our peoples’ needs as well as be used for productive development. Why has the SLPP Government not done this yet?

Why are we sending out valuable raw material at rock bottom prices, as was done during British rule. We have the best graphite in the world in Bogala and other places which is being converted into the wonder material, Graphine, which is being used to produce a whole range of goods in UK and Europe. The latter is spending over one billion Euro on related research. Why are we sending the mineral rich earth from Pulmoodai in ship loads abroad. The Ilmenite alone is a source of Titanium dioxide, a base for all paints. From the latter is obtained Titanium , a highly priced substance essential for the aeronautics industry. What about the Phosphate deposits in Eppawela that the McMorran Co. of USA tried to steal from us for a pittance. But the LSSP stopped with our former General Secretary, Batty Weerakone, defeating the move in the Supreme Court.

We have so many raw materials as the basis for industry. As the Minister of Science and Technology I targeted setting up one technology transfer centre in in each Administrative Division. I succeeded in 263 out of the 341 ( LTTE was a obstacle). In the 5 years I was Minister 12,643 entrepreneurs emerged, all SMEs, a majority also providing jobs. I am glad to learn that more than a thousand of them are exporting their products. Hi Tech is important for large industry. I planned and developed SLINTEC as the only Nanotechnology Centre in South Asia, the 18th in the world. One benefit is that Dr. Kottegoda and her team have produced in a pilot plant, nanoparticles with 43% nitrogen. But our SLPP Government chooses to buy from India Nanoparticles with only 4.7% Nitrogen at a huge cost.

When are we going to think of developing our country, and not to line certain peoples’ pockets. It is also high time that the tax policy is changed and the upper limit raised from 14% to 75%.



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Diesel replacement costs up to Rs. 4.5 bn in April

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Norochcholai Power Plant

Coal power generation falls by 27 GWh

A sharp decline in coal-fired electricity generation in April 2026, compared to the corresponding month last year, may have cost Sri Lanka more than Rs. 4.5 billion, as the country was compelled to rely on significantly more expensive diesel-powered generation to make up the shortfall, according to power sector data.

The coal-based electricity generation, in April 2026, was 27 GWh lower than in April 2025, a development that has sparked concern among energy experts and economists over the mounting financial burden on the country’s already strained power sector.

Industry calculations reveal that generating the lost 27 GWh through diesel-fired power plants would require approximately 8.1 million litres of fuel, based on a standard consumption rate of 0.3 litres per kilowatt-hour.

With fuel costs estimated at around USD 286 per barrel, or roughly USD 1.80 per litre, the replacement power would have cost approximately USD 14.57 million. At the prevailing exchange rate of about Rs. 315 to the US dollar, the bill exceeds Rs. 4.5 billion for April alone.

Energy sector analysts say the figure highlights the enormous economic value of maintaining high availability at coal-fired power plants, particularly at a time when Sri Lanka is seeking to reduce electricity costs and strengthen energy security.

“The financial impact of losing low-cost coal generation is substantial. Every unit not generated by coal has to be replaced by a much more expensive source, usually diesel or fuel oil, which ultimately affects the finances of the power sector and the wider economy,” a senior energy analyst said.

Even under a more conservative calculation, based on the average electricity generation cost of around Rs. 72 per unit recorded in 2025, the loss remains significant. The 27 million units not generated from coal would translate into an additional cost burden of nearly Rs. 2 billion.

The decline in coal generation comes at a critical juncture for Sri Lanka’s energy sector.

 The government has repeatedly emphasised the need to maintain affordable electricity tariffs, while reducing dependence on imported fossil fuels and expanding renewable energy capacity.

Experts warn that any sustained reduction in low-cost baseload generation could undermine these objectives, increasing the need for costly thermal power and placing additional pressure on foreign exchange reserves.

The latest figures are expected to intensify scrutiny of generation planning, fuel procurement strategies and the operational performance of major power plants. They also underscore the importance of ensuring uninterrupted operation of coal-fired facilities until sufficient renewable and storage capacity is available to replace them reliably.

With the country striving to maintain economic stability and energy affordability, analysts argue that avoiding such generation shortfalls must remain a top priority for policymakers and power sector planners.

By Ifham Nizam

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Sallay on hunger strike: Counsel warns CID

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Sallay

Asith Siriwardena Counsel for former Director of State Intelligence Service, Major General (Retd.) Suresh Sallay, detained under the Prevention of Terrorism Act (PTA) over the 2019 Easter Sunday attacks, has called upion the Director of the CID, SSP G. S. Abeysekara, to transfer his client either to a private or government hospital to receive urgently needed teatment.

Sallay was on a hunger strike, claiming mistreatment by the CID, his wife said, after visting him, yesterday.

Siriwardena wrote to the CID Director yesterday (07) after Sallay was visited by his wife, son and brother.

The text of the letter: “The family observed that Mr. Sallay’s physical condition has deteriorated to an alarming and critical level.

“He is reportedly unable to attend the visitation without the physical assistance of two officers. During the visit, he informed his family that he had refused medication, saline, food, and water. He further expressed a belief that his death is imminent and requested that arrangements be made for the donation of his eyes. He also requested an immediate visit from his Attorney for the purpose of executing his last will and other related legal documentation.

“These statements, and circumstances, demonstrate a grave deterioration in his physical and psychological condition. It is apparent that he is no longer capable of making rational decisions concerning his own welfare, health, and survival.

The prolonged conditions, under which he is presently being held have, at the very least, created a serious and immediate risk to his life.

“The State assumes a non-delegable duty of care toward every person held in its custody. Once an individual is deprived of liberty, the responsibility for safeguarding that person’s life, health, and wellbeing rests squarely upon the authorities exercising control over that individual. Any failure to discharge that duty in the face of a known and imminent medical emergency is a matter of the utmost legal seriousness.

“You are hereby formally notified that Mr. Sallay requires immediate medical intervention by qualified independent medical professionals and urgent transfer to an appropriate hospital facility capable of providing comprehensive assessment and treatment. Any delay, refusal, or failure to act despite clear knowledge of his precarious condition may give rise to personal and institutional liability under the criminal and civil law of Sri Lanka

“Should General Sallay suffer irreversible injury or death while remaining in the present conditions despite this explicit warning, it will be open to the relevant authorities, courts, and investigative bodies to examine whether such conduct amounts to a deliberate disregard of a known and foreseeable risk to life. Those responsible for decisions concerning his continued detention and medical care may be required to account personally for their actions and omissions.

“Accordingly, I demand that:

1. Mr. Sallay be transferred forthwith to a government or private hospital equipped to provide urgent medical treatment;

2. He be examined immediately by independent medical specialists, including psychiatric professionals if necessary; His legal representatives and family be granted reasonable access to him;

3. A written update on his medical status and the measures taken for his protection be provided without delay. This letter constitutes formal notice. Any further failure to act despite knowledge of the circumstances set out herein will be relied upon in any future judicial, criminal, constitutional, or international proceedings arising from harm suffered by my client.”

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Opp. questions why Rs 10 bn meant for Ditwah victims held in Treasury account

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Sanjeewa

The Opposition says the NPP government should explain why the funds received by Rebuilding Sri Lanka haven’t been utilised to provide relief to those affected by Ditwah cyclone in late November last year.

The failure on the part of the government to utilise as much as Rs 10 bn, received from local and foreign donors, came to light when the National Audit Office (NAO) appeared before the Public Finance Commission recently.

The NAO told the House Committee that no statutory fund currently existed under the name “Rebuilding Sri Lanka” and the programme operated through an account maintained under the Deputy Secretary to the Treasury.

The NAO declared that no payments had been made through this account to date.

Former SLPP MP Sanjeewa Edirimanne said that until the disclosure made by the NAO the country had been led to believe the Rebuilding Sri Lanka fund provided post-Ditwah relief. Pointing out that JVP General Secretary Tilvin Silva’s declaration in Jaffna that funds allocated to hold Provincial Council polls

had been utilised to assist Ditwah victims, Edirimanne said such blatant lies were propagated while the government held on to Rs 10 bn meant for the disaster victims.SJB MP Mujibur Rahman questioned the rationale behind keeping funds received specifically for Ditwah victims still living under extremely difficult conditions. (SF)

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