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SJB warns against counting foreign loans as part of forex reserves

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Dr. Harsha de Silva

The SJB has cautioned the Wickremesinghe-Rajapaksa government against counting loans received from the IMF, World Bank and ADB as external buffers as they have to be paid back.

SJB MP Dr. Harsha de Silva said loans secured from whatever sources weren’t earned reserves. The former UNP State Minister and economist said so when we sought his opinion on the government declaration that with the IMF second tranche amounting to USD 337 mn and WB’s USD 250 mn loan official reserves were expected to pass USD 4 bn by end of next week.

The President’s Media Division (PMD) said that this figure was much higher than expected. The PMD issued the statement hours after SLPP leader Mahinda Rajapaksa, in a statement issued to the media declared that USD 10,000 million in new ISBs borrowed between 2015 and 2019 broke the back of our economy. The former President found fault with the Sirisena-Wickremesinghe administration.

The SJB MP said: “Generally, the net international reserves refers to gross usable reserves less short term drains. Now this is where the lies of the Rajapaksa regime led to a false sense of security on usable reserves. Why did Foreign Minister Ali Sabry, PC, announce on 12 April 2023 that the government was unable to meet two external debt payments amounting to approximately USD 200m even though former CBSL Governor Ajith Nivard Cabraal had claimed we had some USD 1.6 b in reserves?

Truth is the government apparently had only USD 20 m of usable reserves and not USD 1.6b. The USD 1.5b Chinese currency swap was not usable due to restrictions on imports cover. So if usable reserves have now increased due to import cover restrictions being met and the Chinese money is available for then one can say we are in a better place in terms of buffers.”

Commenting on funds received from various sources, the MP questioned the continuing practice of counting loans, whether from World Bank and ADB as external buffers. That is not the ideal. Because these need to be paid back and not earned reserves. Fact is most countries count such long term loans as reserves.

But there again the Rajapaksa was misled that when they lost the election in Jan 2015, USD 2.2b were short-term swaps and another USD 3.5b consisted of ‘hot money’ meaning foreigners investing in Treasury paper having converted USD in to LKR which could be reversed immediately depending on interest rate movements.

So of the then USD 8.2b forex reserves almost USD 6b was not stable. That is why counting short-term swaps and hot money is misleading. In fact, converting these large unstable reserves into long term reserves amounting to close to USD 6b is a major reason beyond rolling over some USD 5 billion during the Yahapalana government that saw large-scale borrowings through ISBs.

At the time Gotabaya Rajapaksa came in reserves consisted of less than USD 1b in such unstable reserves, down from almost USD 6b. Also given 2020 was an election year the CBSL had borrowed an additional USD 2.9b in ISB preparing for any potential market risk. In fact, if not for this move of building external buffers Sri Lanka would have gone bankrupt much earlier after that the government made serious policy blunders. As we all now know, the government kept using the reserves to pay back foreign loans after the country was downgraded by the rating agencies and doors to the international capital market were closed.

On the other side of the equation is the amount in short term drains, meaning the total amount of USD debt that needs to be paid by the government in usually one year.

So, if the government is comfortable on both counts then it’s ok to be a little confident. I don’t have the numbers to make that call. Having said that I must reiterate that ultimately it’s earned dollars not borrowed dollars that really matter.” (SF)



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CIABOC tells court Kapila gave Rs 60 mn to MR and Rs. 20 mn to Priyankara

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USD 2.3 billion Airbus deal

The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) yesterday told the Colombo Magistrate’s Court that former SriLankan Airlines CEO Kapila Chandrasena had admitted delivering a total of Rs. 60 million in three instalments of Rs. 20 million each to the then President Mahinda Rajapaksa, and Rs. 20 million to Aviation Minister Priyankara Jayaratne. The funds were allegedly linked to the controversial Airbus aircraft deal.

Chandrasena, who was arrested on March 12 over bribery allegations connected to the deal, was further remanded until April 2 by Colombo Chief Magistrate Asanga S. Bodaragama. He was produced before court yesterday by prison officials.

Investigators say Chandrasena is accused of accepting a US$2 million bribe in the transaction and conspiring to secure a total of US$16 million. They also allege that €1.45 million was transferred to a bank account in Singapore.

Prosecutors told court that Chandrasena had created a shell company in Brunei in his wife’s name to channel the kickbacks into its Singapore account.

The case stems from a 2013 agreement in which SriLankan Airlines purchased 10 aircraft valued at US$2.3 billion. Court proceedings are ongoing.The court fixed the date for March 24 to consider evidence with regard to issue warrants for Priyanka Neomali Wijearatne and Shamindra Rajapaksa.

By AJA Abeynayake

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Opposition moves no-faith motion against Energy Minister Kumara Jayakody

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Kumara Jayakody

Opposition lawmakers yesterday handed over a no-confidence motion against Energy Minister Kumara Jayakody to Speaker Dr Jagath Wickramaratne over alleged irregularities in coal procurement, etc.

Chief Opposition Whip MP Gayantha Karunathilaka submitted the motion to the Speaker yesterday morning. It has been signed by Opposition Leader Sajith Premadasa, members of the SJB, and several other Opposition representatives.

The motion accuses the Minister of failing to fulfil his primary responsibility of ensuring the procurement of adequate and high-quality coal for the Lakvijaya Coal Power Plant at Norochcholai. It states that such negligence in managing a critical national energy asset amounts to a serious breach of ministerial responsibility.

It further notes that the Minister has been formally charged before the Colombo High Court by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) under Section 70 of the Bribery Act. The charge relates to an alleged act of corruption during his tenure as Procurement Manager of the Ceylon Fertiliser Company Limited.

The Opposition maintains that the combination of administrative failures and pending legal proceedings undermines the Minister’s ability to hold office, warranting a vote of no confidence.

By Saman Indrajith

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NJC takes up cudgels on behalf of Sallay, who played pivotal role in combating terrorism 

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The National Joint Committee (NJC) has raised concerns over the arrest and detention of retired Major General Suresh Sallay, calling for due process and caution in handling sensitive national security matters.

Issuing a statement signed by Dr Anula Wijesundera, the NJC has said the former senior military officer served the country for decades in the armed forces and intelligence services during critical periods of the conflict against terrorism.

While acknowledging that all citizens are subject to the law, the Committee has stressed that due process, fairness and respect for institutions tasked with safeguarding national security must be upheld.

Full text of the statement: The National Joint Committee (NJC) expresses deep concern regarding the recent arrest and detention of Retired Major General Suresh Sallay under a detention order.

Major General Sallay served Sri Lanka for decades in the armed forces and in the intelligence services during some of the most challenging periods of our country’s struggle against terrorism.

While all citizens are subject to the rule of law, the NJC believes that due process, fairness, and respect for the institutions that safeguard national security must be upheld at all times.

Particularly troubling are reports that sensitive intelligence-related details, including references to intelligence structures and personnel, are being publicly discussed in ways that could compromise operational security. The exposure of intelligence methodologies or personnel in the public domain can place lives at risk and weaken the effectiveness of national security institutions.

Sri Lanka has already experienced the grave consequences of such actions in the past. The Millennium City incident in 2002 led to the exposure of intelligence operatives who had been working against terrorist networks. Following the disclosure of their identities, many of those officers became targets of retaliation by the LTTE, resulting in the tragic loss of numerous lives and the dismantling of critical intelligence networks at a time when the nation most needed them.

It is therefore imperative that lessons from that painful episode are not forgotten.

It is also important to recall that prior investigations and public records confirm that intelligence warnings regarding potential attacks were received in Sri Lanka before 21 April 2019. The tragic loss of life that followed was therefore not the result of an absence of intelligence, but rather the failure of responsible authorities to act effectively upon those warnings in time to prevent the attacks. The numerous Commissions and Committees have identified these individuals and recommended action against them.

Equally relevant to the current public discussion is the factual record that Major General Suresh Sallay was neither serving as the Head of the State Intelligence Service nor present in Sri Lanka at the time when the attacks took place.

The NJC urges all authorities involved in the present investigation to ensure that the legal process is conducted with the utmost professionalism, transparency, and responsibility, while safeguarding sensitive national security information.

At a time when Sri Lanka continues to face evolving security challenges, the morale and integrity of the armed forces and intelligence services must be protected. Public confidence in these institutions is essential to the safety and stability of the nation.

The National Joint Committee therefore calls upon all responsible stakeholders — including investigators, public officials, media institutions, and civil society — to act with caution and responsibility so that the pursuit of justice does not inadvertently undermine the very institutions entrusted with protecting the country.

Sri Lanka’s patriots must remain vigilant to ensure that the sacrifices made by our armed forces and intelligence officers are not disregarded, and that national security institutions are not weakened in ways that could endanger the country in the future.

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