News
Private creditor debt restructuring to be completed by March
From June to November 2023, the Central Bank had reduced the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by about 6.5 percent, Assistant Governor of the Central Bank of Sri Lanka, Dr. P. K. G. Harischandra said.
That move had been made in response to the successful management of inflation, prompting the Central Bank to ease its previously tight monetary policy.
“Simultaneously, there was a gradual decrease in interest rates; however, this decline occurred at a measured pace. The transmission of policy rate adjustments to the money market is not instantaneous, requiring a certain period for full effect. During the Monetary Policy Board meeting conducted on January 22, 2024, the Central Bank of Sri Lanka opted to maintain the existing policy interest rates. This decision was based on the belief that additional time was needed for the money market to fully incorporate the earlier 6.5 percent reduction in interest rates, thus influencing a more comprehensive adjustment.,” he said.
Harischandra mentioned a decline in both lending rates and interest rates associated with Treasury bills. The Assistant Governor further indicated that forthcoming adjustments would involve a reduction in both lending rates and deposit interest rates.
“In December 2023, the inflation rate stood at approximately four percent. Interest rates for deposits persist in the range of nine to 10 percent, providing depositors with continued value for their savings. With the ongoing economic recovery, there is an opportunity to bolster it by lowering lending rates. This, in turn, would facilitate more accessible borrowing and encourage increased investment. Notably, the fourth quarter of 2023 marked a positive turn, breaking a streak of six consecutive quarters of negative growth, signaling encouraging economic progress.,” he said.
Harischandra emphasized the necessity of reducing lending rates to sustain the current positive economic momentum. He noted that the Central Bank of Sri Lanka aims to keep inflation at approximately five percent, enabling interest rates to range between eight and 10 percent. This strategy aims to provide depositors with the benefit of seeing an appreciation in their funds, while simultaneously offering entrepreneurs the opportunity to borrow at more affordable rates.
Harischandra said in late 2022, inflation was at 70 percent. In January 2024, inflation will be around seven percent because of the hike in the Value Added Tax (VAT). Inflation can happen because of supply-side and demand-side pressures.
“There is no inflationary pressure stemming from demand because the purchasing power of the population remains low. Over the course of 2022 and 2023, the prices of goods experienced a considerable increase of about 70 percent. While the value of the rupee saw a substantial 45 percent decline in 2022, it only appreciated by 12 percent in 2023. Currently, exchange rates are stable, and there is no inflationary pressure arising from that aspect. Additionally, with the price of crude oil staying below 80 dollars per barrel, we are confident that even if inflation reaches seven percent in January, it will likely be a temporary spike,” he said.
The Assistant Governor noted that an inflation rate of approximately five percent is considered typical in emerging markets and is viewed as an indicator of economic well-being. Nevertheless, the growth of purchasing power among the populace will require some time.
He further said, “a considerable number of individuals are opting to leave the country, prompting many companies to increase salaries. This adjustment has become necessary to retain the essential labour force for their operations. However, it’s important to clarify that these salary hikes may not be deemed sufficient.”
Harischandra said they had restructured domestic debt. International debt comes in two categories, i.e., international sovereign bonds and bilateral debt. Significant progress has been made in restructuring bilateral debt..
“Paris Club, China and India have agreed to help us. We now have to deal with the international sovereign bonds. We are working with the IMF and debt advisors. Furthermore, we hope to come to preliminary agreements by the end of this quarter,” he said.
News
Families of those sentenced to death for killing MP Atukorale seek AKD’s intervention
FSL assures legal backing for them
Families of those sentenced to death by the Three-member Gampaha High Trial-at-Bar, over the killing of SLPP MP Amarakeerthi Atukorale, and his police bodyguard, met a senior official of the Presidential Secretariat, yesterday (23), to seek backing for their move to appeal against the verdict.
Having made representations, they addressed the media, outside the Presidential Secretariat, where they declared their intention to move the higher court against the decision.
The SLPP MP and his security officer were killed by an Aragalaya mob on 09 May, 2022, at Nittambuwa. The same day Aragalaya mobs unleashed violence against the then government MPs across the country, torching dozens of their properties.
The Frontline Socialist Party (FSP) yesterday said that they would help the families of those sentenced to death to move court against the Gampaha High Court Trial-at-Bar decision. Responding to The Island queries, FSP spokesman Pubudu Jayagoda said that their representatives had already met the families and necessary work was being done to move the Supreme Court. Twenty three persons were acquitted and four handed six-month prison terms, suspended for five years
Jayagoda said that one of the HC judges differed in the ruling. Asked whether they received backing from any other political party and groups that had been involved in the 2022 protest campaign to defend those who had been found guilty, Jayagoda said such support was lacking.
The JVP/NPP played a significant role in the violent protest campaign that forced President Gotabaya Rajapaksa to step down. Pointing out that the Attorney General, too, was appealing against the court decision on the basis that the number of persons sentenced to death should be much higher, Jayagoda said that the Nittambuwa incident couldn’t be examined in isolation without taking into consideration the SLPP goon attack on Galle Face protesters on 09 May, 2022. (SF)
News
OPV leaves Baltimore, expected in Colombo in May
Offshore Patrol Vessel P 628 of the Sri Lanka Navy departed Baltimore, USA, for Colombo, on 20 February.
The ex-United States Coast Guard Cutter, USCGC Decisive was officially handed over to the SLN on 02 December, 2025, as the latest addition to the SLN fleet, under the Pennant Number P 628.
Measuring 64 metres in length, this ‘B-Type Reliance Class 210-foot Cutter’ is equipped with advanced technological systems and facilities, capable of conducting extensive surveillance operations spanning up to 6,000 nautical miles per patrol.
The vessel’s voyage to Colombo is historic, possibly marking the longest-ever passage undertaken by a Sri Lanka Navy ship. Covering approximately 14,775 nautical miles, the journey will see the P 628 navigate from Baltimore through the Atlantic Ocean, the Panama Canal (a first for a Sri Lankan naval vessel), the Pacific Ocean, and into the Indian Ocean, via the Straits of Malacca. The ship is expected to arrive in Sri Lanka during the first week of May, 2026.
News
Unions sound alarm over coal procurement and power sector restructuring
Power sector is once again facing mounting turbulence, with trade unions alleging serious irregularities in coal procurement and warning that ongoing restructuring efforts could trigger far-reaching consequences for the country.
Kosala Abeysinghe, President of the Ceylon Electricity Board Technicians’ Union, said the energy sector is being pushed towards “a dangerous and avoidable crisis” at a time when the nation is still navigating a fragile economic recovery.
Abeysinghe alleged that a “coal scam” has created serious concerns within the sector.
“There are grave questions surrounding the coal procurement process,” Abeysinghe said. “If these irregularities are not immediately investigated and rectified, the financial burden will ultimately fall on the people of this country.”
Coal-fired generation remains a critical pillar of Sri Lanka’s electricity supply. Any disruption in procurement or pricing mismanagement has the potential to increase generation costs and impact consumer tariffs.
“This is not just about a tender or a contract,” he stressed. “It directly affects electricity tariffs, supply stability and the economic wellbeing of millions of citizens.”
Abeysinghe also voiced strong opposition to what he described as an “irregular and unstructured” restructuring of the power sector. According to him, reforms are being carried out without adequate technical consultation or stakeholder consensus.
“The restructuring process appears to be moving forward without a clear, transparent and technically sound framework,” he said. “Weakening the institutional strength of the power sector in this manner could create long-term vulnerabilities.”
He further emphasised that the unfolding situation goes beyond trade union interests.
“This is not merely a labour issue,” Abeysinghe said. “It is a national issue. The stability of the electricity supply underpins every household, every business and every industry in Sri Lanka.”
Warning of possible escalation, he noted that trade unions are prepared to consider further action if their concerns are not addressed.
“We do not wish to inconvenience the public,” he added. “However, we cannot remain silent if decisions are being taken that endanger the country’s energy security.”
With electricity supply forming the backbone of Sri Lanka’s economic activity, the allegations and warnings are likely to intensify scrutiny over the management and future direction of the energy sector in the coming days.
by Ifham Nizam
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