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CBSL: Adjustments made to external debt according to international standards

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It was an ‘accounting gimmick’, says Opposition MP

By Sanath Nanayakkare

The internationally accepted practice was to classify domestic debt and external debt based on the resident or non-resident status of the holder of such debt, Dr. Chandranath Amarasekara, the Director Economic Research at the Central Bank told The Island yesterday.

Dr. Amarasekera said so when he was asked to explain why the Central Bank had decided to reclassify US$ 2.2 billion worth of international sovereign bonds held by local entities as domestic debt.

“We did not have accurate information on ISB holdings by the resident/non-resident status of the holder, and accordingly a new survey was commenced in 2020 to collect this information, and this survey is continued on a monthly basis. According to the survey, ISB holdings of resident banks was around USD 1.1 billion at end 2019, which increased to over USD 2.2 billion by end 2020. With this new information, adjustments were made to external debt for 2019 and 2020. This does not mean that they are not shown in total government debt. The total gets the same treatment, while this was only a reclassification within the given total, where the entire ISB liability at face value of USD 15.05 billion at end 2019 and USD 14.05 billion at end 2020 are included in the outstanding government debt. Nevertheless, the international norm of reporting ISB liabilities at market value has been continued in relation to external statistics, as practiced in the past.” he explained.

When asked whether these sovereign bonds now shown in the books as domestic debt are going to be repaid in rupees, Dr. Amarasekara denied it saying, “Definitely not. This is similar to Sri Lanka Development Bonds which are mostly held by resident entities being repaid in US dollars. Also, it is the same with foreign currency loans taken by the government in USD from offshore banking units of local banks. They are also repaid in US dollars. In addition, we have continued to report non-resident holdings of Rupee denominated Government Securities as external debt although they are repaid in Rupees.”

The Island posed those questions to the Director of Economic Research of the Central Bank as Opposition MP Dr. Harsha de Silva questioned on Friday as to how Sri Lanka’s foreign debt stock was reduced suddenly.

“In fact, a big accounting gimmick has been performed this time. The Central Bank Annual Report states that ISBs to be repaid by Sri Lanka are about US$ 14.1 billion. Out of this, US$ 2.2 billion worth of sovereign bonds were bought by local entities like banks in the secondary market this year. Through an accounting gimmick, these ISBs have been accounted as domestic debt instead of foreign debt and thus it has been taken away from the foreign debt stock. But therein lies the hitch; to whomever it is to be repaid, it has to be settled in US dollars,” Dr. De Silva argued.

According to the Central Bank’s Annual Report, out of outstanding US$ 14,050 million of ISBs issued, US$ 2,230 million was held by domestic entities by end 2020, up from 1,113 million in 2019.



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INS GHARIAL makes port call in Colombo

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The Indian Naval Ship (INS) GHARIAL made a port call in Colombo for operational turnarounds on 04 Feb 26. The Sri Lanka Navy welcomed the visiting ship in compliance with naval traditions.

Commanded by Commander Gaurav Tewari, INS GHARIAL is a vessel with a length of 124.8 meters.

During this visit, ten (10) Bailey Bridges, brought by ship, through the coordination of the High Commission of India in Sri Lanka, will be handed over to the Disaster Management Center. These bridges will provide temporary transportation links while bridges damaged across the island by adverse weather conditions are repaired.

The crew’s itinerary features scheduled goodwill activities with the Sri Lanka Navy, alongside visits to several tourist attractions across the island.

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Speaker’s personal secretary accused of interference with ongoing bribery investigation

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Harshana

SJB Gampaha District MP Harshana Rajakaruna yesterday told Parliament that the Speaker’s Personal Secretary had written to the Secretary-General of Parliament seeking information on a complaint lodged with the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) by a former Deputy Secretary of Parliament against the Speaker. Rajakaruna called for an immediate investigation into what he described as interference with an ongoing probe.

Raising the matter in the House, Rajakaruna said he had formally requested the Commission to initiate an inquiry into the conduct of the Speaker’s Personal Secretary, Chameera Gallage, questioning the authority under which such information had been sought.

Rajapakaruna tabled in Parliament a copy of the letter allegedly sent by Gallage to the Secretary-General requesting details of the bribery complaint.

Addressing the House, Rajakaruna said that the letter, sent two days earlier, had sought “full details” of the complaint against the Speaker. He maintained that seeking such information amounted to interference with an investigation and constituted a serious offence under the Bribery Act.

“The Speaker’s Secretary has no right to interfere with the work of the Bribery Commission. Under what law is he acting? What authority does he have? The Speaker, like everyone else, is subject to the law of the land,” Rajakaruna said, urging the Commission to take immediate action.

He noted that the Bribery Act treated the obstruction of investigations and the destruction of documents relating to such inquiries as serious offences punishable by law, and said he believed the Minister of Justice would concur.

The allegations sparked sharp reactions in the Chamber, as Opposition members called for accountability and due process in relation to the complaint against the Speaker.

By Saman Indrajith

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Govt: Average power generation cost reduced from Rs. 37 to Rs. 29

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Kumara

The Ceylon Electricity Board has managed to reduce the average cost of electricity generation from Rs. 37 per unit to Rs. 29, marking a 22 percent reduction, Minister of Power and Energy Eng. Kumara Jayakody told Parliament yesterday.

Responding to an oral question raised by Opposition MP Ravi Karunanayake, the Minister said that electricity tariffs cannot be reduced unless the cost of generation is brought down.

“You cannot reduce electricity tariffs without reducing the cost of generation. What we are currently doing is buying at a higher price and selling at a lower price. When we assumed office, the cost of purchasing and generating electricity was Rs. 37 per unit. We have now managed to bring it down to Rs. 29, a reduction of 22 percent.

Our target is to further reduce this to Rs. 25. Once that is achieved, we will reduce electricity tariffs by 30 percent within three years, as we promised,” Minister Jayakody said.

He added that the government has already formulated a long-term generation plan to further expand the country’s power generation capacity.

According to the Minister, key measures include increasing the absorption of renewable energy into the national grid, expanding the national transmission and distribution network, introducing renewable energy storage systems, and constructing thermal and liquefied natural gas (LNG) power plants to replace aging facilities and meet future demand.

He also said that steps would be taken to enhance the capacity of existing hydropower plants as part of the broader strategy to ensure energy security and reduce long-term electricity costs.

By Ifham Nizam

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