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Central Bank extends debt moratorium till December 31

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Banks asked to prioritise requests made by MSME sector

With a view to meeting the challenges faced by businesses and individuals due to the new surge in COVID-19 outbreak in Sri Lanka, the Central Bank of Sri Lanka (CBSL) has directed licensed commercial banks and licensed banks to extend the debt moratorium to COVID-19 affected businesses and individuals for a further period of three months till 31 December 2021.

This directive to the licensed commercial banks was issued on Wednesday, September 1.

Accordingly, this circular is issued to give effect to the scheme in a consistent manner across all licensed banks.

However, licensed banks may offer any additional concessions to borrowers in a way that the overall benefits to borrowers are not less than the benefits offered under this circular.

The Central Bank further said: “The latest extension is not applicable for borrowers in the tourism sector who are eligible to obtain concessions granted for the tourism sector separately. (Tourism sector debt moratorium expires on 30 September).Banks are required to ensure deferment or restructuring of existing credit facilities in the performing category as of 1 September.”They can defer recovery of capital, interest or both of the existing performing credit facilities of borrowers who are affected by COVID-19, on case-by case basis, during the period up to 31 December, considering the financial difficulties faced by such borrowers, including loss of job, loss or reduction of income/salaries or sales, reduction or impairment business operations or the closure of business, etc.””Banks have been requested to prioritise accommodating the requests for concessions made by borrowers in the Micro, Small and Medium Enterprises (MSME) sector.””The deferment of capital, interest or both should be granted for one or more of the existing credit facilities granted in rupees and/or in foreign currencies, considering the financial difficulties and repayment capacity of the eligible borrowers. They can amalgamate the amounts fallen due during the previous moratorium/deferment schemes (i.e., capital, interest and applicable interest for the respective moratorium/deferment period on the respective moratorium/deferred amount) and the amounts falling due during the current scheme (i.e., capital and interest) in to one new loan.””Banks may charge an interest rate commencing from 1 September, on the new loan referred above and for the agreed period of repayment based on a separate loan amortisation schedule for this period.””In the case of rupee facilities considered for the deferment, banks may charge an interest rate not exceeding the latest available 364-days Treasury Bills auction rate as of 31 August plus 1% per annum (i.e., 5.93% + 1% = 6.93%).””In the case of foreign currency loans, licensed banks may charge a concessionary rate of interest. Further, interest for the remaining capital outstanding balance, excluding the deferred capital amount of the existing facility will continue to accrue at the contracted interest rate after the end of the deferment period.””In the case of instalment loans, including lease facilities, a licensed bank and the respective borrower need to agree on a repayment period commencing from 1 July 2022, up to six months, to settle the new loan referred to above, considering the financial difficulties faced by such borrowers. The borrower may commence the repayment of the new loan at an earlier date, if the borrower wishes to do so. However, the borrower shall commence repayment of existing facilities from 1 January 2022.””In the case where a borrower requests for a period beyond six months to settle the new loan, the borrower and the bank need to agree on a concessionary interest rate beyond the six-month period.””Banks should explain the benefits of commencing early repayment and the implications of extending the repayment period to the borrower, in order to encourage the borrower to commence early repayment of the deferred amount.””Alternatively, banks may restructure the existing credit facilities, on a case-by-case basis, over a longer period, considering the repayment capacity of the borrower and an acceptable revival plan. In this case, the licensed bank and the borrower shall agree on an interest rate, considering the prevailing low interest rates,” the Central Bank said.



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FSP warns of possible coal shortage

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“No shipment for 10 days; seas off western coast will become rough by April end”

Education Secretary of the Frontline Socialist Party (FSP) Pubudu Jayagoda says the Indian company which secured a tender to supply coal for electricity generation this year has delivered only 13 of the 25 shipments required and no vessel has arrived in Sri Lanka for the last 10 days or so.

Jayagoda said so while addressing the media during a protest held in Colombo yesterday.

Jayagoda said the Indian company Trident Chemphar, which secured the tender to supply 25 coal shipments for 2026, had placed the country’s coal stocks at risk.

Although all 25 coal shipments are required to be unloaded before the end of April, only 13 vessels have arrived in Sri Lanka so far, according to Jayagoda. He also claimed that no shipment had arrived during the first week of March, adding that coal vessels had not arrived for about 10 days.

Jayagoda warned that the situation could endanger the country’s energy supply as the seas off the western coast usually turn rough by the end of April, disrupting unloading operations.

According to Jayagoda, a report submitted by the Public Utilities Commission of Sri Lanka to the Parliamentary Oversight Committee on infrastructure and strategic development, power cuts may become necessary from August even if the country falls short of five shipments unless electricity is generated using costly diesel-powered thermal plants.

Jayagoda also alleged irregularities in the tender process, claiming that the government had changed tender specifications and delayed the tender process by about four months, possibly to allow the Indian company time to register and secure performance guarantees.

He further alleged that the coal supplied by the Indian company was substandard.

Jayagoda questioned why the tender had not been cancelled despite several shipments allegedly failing to meet quality standards and why no investigation had been launched.He asked why legal action had not been taken against the company despite supply disruptions.

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Repatriation of Iranian naval personnel Sri Lanka’s call: Washington

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The US Department of State has said that Washington respects Sri Lanka’s sovereignty in handling matters relating to the Iranian warship IRIS Bushehr and its crew, according to agency reports, quoting a State Department Spokesperson. He has said the final decision regarding the vessel, its crew and the rescued Iranian sailors rests with Sri Lanka in accordance with its domestic laws and international legal obligations.

The statement follows comments by Foreign Minister Vijitha Herath that Sri Lanka was looking after 32 sailors rescued from the Iranian frigate IRIS Dena under Colombo’s international treaty obligations.

The frigate was sunk by a US submarine off Sri Lanka’s southern coast on Wednesday during escalating hostilities involving the United States and Iran.

Sri Lanka’s Navy conducted rescue operations, following the incident, recovering 84 bodies.

Asked whether Colombo was under US pressure not to repatriate the Iranian sailors, Herath said Sri Lanka had taken all actions in accordance with international law.

Sri Lanka also provided safe harbour to the second Iranian warship, IRIS Bushehr, and evacuated its 219 crew members a day after the Dena was torpedoed. The vessel was taken to the port of Trincomalee after reporting engine problems.

Citing an internal cable, Reuters reported that Washington had urged Sri Lanka not to repatriate the Iranian sailors. However, the State Department spokesperson reiterated that the disposition of the crew and survivors was a matter for Sri Lanka to decide, adding that the United States respects Sri Lanka’s sovereignty in managing the situation.

Meanwhile, India allowed a third Iranian warship, IRIS Lavan, to dock in a port on humanitarian grounds after it reported operational difficulties.

The ship docked at the port of Kochi, where many of the crew, including young cadets, were disembarked and transferred to a nearby facility.

President Anura Kumara Dissanayake said Colombo would follow the provisions of the Hague Convention, which requires neutral states to detain combatants of warring parties until the end of hostilities.

A senior administration official said Sri Lanka was in discussions with the International Committee of the Red Cross regarding the treatment of survivors from the torpedoed vessel. International humanitarian law would apply to the wounded, who could be repatriated if they requested it, the official added.

Iranian diplomats in Colombo have requested the return of the remains of sailors killed in the attack to Iran.

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Indian Ocean must remain peace zone: Sajith

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Opposition and SJB leader Sajith Premadasa, emphasised the critical need for the Indian Ocean region to remain peaceful and not become part of any conflict, said a news report published by NDTV yesterday.

It said: As the Iran-Israel war enters its second week, the theatre of the war has expanded dramatically, reaching the waters of Sri Lanka. With the sinking of Iranian warship IRIS Dena in international waters off Lanka’s coast and the docking of a second Iranian vessel, IRIS Busheher, Colombo has become embroiled in a conflict where it seeks to remain only a neutral bystander.

Speaking with NDTV, Sajith Premadasa, Leader of the Opposition in Sri Lanka emphasised the critical need for the Indian Ocean region to remain peaceful and not become part of any conflict.

“The Indian Ocean has on successive occasions been declared a peaceful area and should remain so,” said Premadasa.

The Sri Lankan government has said that it will attend to all survivors of the ill-fated IRIS Dena and IRIS Busheher as per international protocols and norms. Sri Lankan President Anura Kumara Dissanayake said his country had a “humanitarian responsibility” to take in the crew of the vessel, which was allowed to dock at Trincomalee in Northern Sri Lanka.

Premadasa, who is the leader of the opposition party SJB, called on all parties to cease the ‘asymmetric warfare’. He cautioned that the widening conflict would have devastating consequences for smaller countries like Sri Lanka, which is still reeling from its worst economic crisis in 2022.

“The Middle East conflict is already spreading to other countries, and this is having an impact on Sri Lanka and Sri Lankan people,” Mr Premadasa told NDTV.

A third Iranian vessel that was in the Indian Ocean, IRIS Lavan, has docked at Kochi in India. India has said it was a “humanitarian call” after the vessel sent out a distress call.

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