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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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Future of Sri Lanka will be determined by the economic policies implemented over the next five years – President

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President Ranil Wickremesinghe emphasized that the future of Sri Lanka will be determined by the economic policies implemented over the next five years.

The President delivered this statement while addressing the youth and business community in Mannar during his participation in the “Youth Conference” held on  Sunday (16).

The President initially attended the Mannar District “Youth Conference” held at the Conference Hall in Mannar Town Hall. The conference, themed “Journey for a Bright Future,” included an award ceremony where the President presented certificates and cash prizes to students who excelled in the 2023/2024 G.C.E Advanced Level Examination.

President Wickremesinghe interacted directly with the youth, addressing their questions and providing positive responses.  He explained that over the past four years, job creation was hindered by the COVID-19 pandemic and economic crisis and he assured the audience that the upcoming economic program would create new job opportunities for those previously unable to secure employment.

The President emphasized that it is up to the youth to decide whether they wish to advance their own future and contribute to the country through the government’s program.

[PMD]

 

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President assures that persons on pilgrimage to Madhu will not be hindered

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Addressing the Mannar District Development Committee meeting held at the Mannar District Secretariat on Sunday (16), President Ranil Wickremesinghe said  that it is unfair to arrest and fine pilgrims on their way to sacred sites like Madhu Church and Sri Pada.and assured that pilgrims visiting  Madhu Church will be provided with all necessary facilities to engage in their pilgrimage activities without any hindrance.

He instructed that if pilgrims are arrested in the future, the President’s Office should be informed immediately.

During the meeting, the President directed the Sri Lanka Army to clean and develop both sides of the existing Madhu Road for the convenience of the pilgrims visiting Madhu Church. He also said that a representative of the Bishop of Mannar, the Department of Forest Conservation, the Road Development Authority and the Sri Lanka Police should coordinate to ensure that these tasks are completed before the upcoming annual festival of the church of Our Lady of Madhu.

The DDC meeting, which focused on the future development plans for the Mannar district was attended by Political representatives and government officials.

 

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Abandon selfishness and embrace a life of sacrifice and harmony to achieve spiritual and worldly success – President

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President Ranil Wickremesinghe, in his Hajj message emphasizes that to achieve spiritual and worldly success, individuals must abandon selfishness and embrace a life of sacrifice and harmony. It is with this noble aim in mind that Muslims celebrate the Hajj festival each year.

On this occasion, Muslims from around the globe gather at a single place of worship, united in purpose, to pray for communal values that embody the hope of humanity. The Hajj celebration fosters feelings of equality and brotherhood among all people, delivering a profound message for world peace.

I extend my heartfelt wishes to the entire Muslim community in Sri Lanka and around the world for a meaningful Hajj celebration, where everyone comes together to fulfill the aspirations of humanity.

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