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DEW: IMF can’t intervene in rescheduling international sovereign bonds; SJB disagrees



By Shamindra Ferdinando

Former outspoken Minister D. E. W. Gunasekera says the unprecedented crisis faced by cash-strapped Sri Lanka in meeting its external debt obligations in 2022 and 2023 cannot be solved by seeking IMF intervention.

The government has ignored repeated calls by various parties, both in and out of Parliament, to seek IMF intervention as it is aware the IMF is not in a position to intervene as close to half of the country’s external debt obligations were to the international money market, one-time General Secretary of the Communist Party told The Island yesterday.

Referring to the New York-based Fitch rating agency, downgrading Sri Lanka’s sovereign rating to ‘CC’ last Friday (17) as the country struggled to meet two major obligations repayment of two international sovereign bonds of $500 million due in January 2022 and $1 billion due in July 2022, the ex-lawmaker said the government and the Opposition should stop playing politics with this issue.

The former MP said that there were other scheduled repayments during this period both foreign and local.

The Fitch statement reflected the daunting challenges faced by Sri Lanka, the former CP Chief said, urging the government to announce how it intended to meet its debt obligations.

The latest downgrade was announced in the wake of Finance Minister Basil Rajapaksa leaving the country. Foreign Minister Prof. G.L. Peiris, who is also the Chairman of the ruling SLPP, will handle the finance portfolio.

Gunasekera said that the IMF’s role would be limited as well over 50 percent of total debt comprised international sovereign bonds and Chinese and Japanese loans.

“The government also faces foreign-currency debt service payments, including principal and interest, of $6.9 billion in 2022, equivalent to nearly 430% of official gross international reserves as of November 2021. Cumulative foreign-currency debt service, including interest and principal, amounts to about $26 billion from 2022 through to 2026,” the rating agency said.

Asked whether the IMF could help re-schedule international sovereign bonds, former Central Bank Governor W.D. Lakshman told The Island that it was possible.  The government in Sept replaced Lakshman who had served as Governor since Dec 2019 with Ajith Nivard Cabraal. Underscoring the importance of addressing the issue at hand, Lakshman emphasized that Sri Lanka had never defaulted before.

SJB spokesman Dr. Harsha de Silva, MP, reiterated that the IMF could reschedule international sovereign bonds, too.  The former State Minister said that was his position throughout this period.

Gunasekera, too, stood by his assertion that the IMF couldn’t intervene in this regard.

Former Governor of Uva, Southern and Central Provinces Rajith Keerthi Tennakoon yesterday said that the snowballing problem couldn’t be solved by those countries willing to help Sri Lanka and international lending agencies as Sri Lanka obtained the majority of loans from the capital market. Tennakoon asserted that Sri Lanka faced a huge challenge in addressing this issue amidst continuing political turmoil. The civil society activist emphasized that those who sought to address the crisis by printing lorry loads of money owe the country an explanation. The debt-serving crisis and the growing difficulty in meeting the oil bill would ultimately overwhelm the country, Tennakoon said.

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“Foreign bond holders more important to govt. than hard-pressed people”



SJB slams GR’s policy speech

The main opposition SJB says that President Gotabaya Rajapaksa’s Policy Speech delivered in Parliament on Jan 18 failed to provide solutions to the crises faced by the country.

Addressing a press briefing held at the Opposition Leader’s Office in Colombo on Thursday, SJB MP Eran Wickremaratne said that the crises with regard to economic management and governance had gone beyond the control of the government subjecting the masses to severe hardships without essential goods and services.

Wickremaratne said that  there had been no increase in the value of  GDP supporting the domestic and foreign borrowings by this government during the last two years.

He accused the government of giving priority to paying off debts of foreign cronies while  starving the people without essential foods inclusive of fuel for electricity generation.

“People who could not afford to basic necessities despite having cash in hand due to the shortage of dollars and foreign exchange now had to stay in the dark for several hours a day without electricity due to lack of fuel as the govt has not been able to maintain a supply chain properly. But the government, having crossed its wires, gives priority to repaying the loan to its cronies while mounting pressure on its citizens,” Wickremaratne said.

“President Rajapaksa’s Throne Speech did not provide answers to any of  the current problems  facing the country. Although the country faced two major problems, there was no answer to either of them in the President’s policy statement.

“First, rising commodity prices push up inflation increasing  vegetable prices. Secondly, the import of essential commodities has come to a complete standstill due to the foreign exchange deficit. There is a shortage not only for  food and fuel but also for  medicines for the people.”

He said only 25% of the country’s essential medicines are produced locally and the rest are imported. There is also a shortage of essential medicines due to lack of dollars for imports.

At a time when the people are under so much of  pressure, the government is  boasting of servicing   international sovereign bonds on time. People need to be told the secret of why foreign debtors are more important to the government than the citizens of the country, Wickremaratne said.

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COVID-19 on the rise again; 800+ new cases a second day running



(Economynext) New COVID-19 cases are on the rise again in Sri Lanka, with health authorities detecting over 800 new infections on Thursday (20) for a second consecutive day.

With the 827 new cases, total cases in the country have gone up to 599,363, official data showed.

Around 15,279 patients are currently receiving treatment in hospital or at home.

With 12 deaths reported in the last 24 hour period, the island nation’s COVID-19 death toll has reached 15,243.

Health authorities warned that the sector could face challenges managing new patients if daily cases continue to surge.

Officials are also concerned about an apparent hesitance for the booster dose of the vaccine that was largely absent in the initial rollout.

“We have provided the opportunity to get the booster countrywide. But because the fatality rate is now low people may think taking it is no longer necessary,” State Minister of Pharmaceutical Production Channa Jayasumana said speaking to journalists on Friday (21).

“Sri Lanka will go back to the previous state with people not taking the booster dose,” he warned.

The booster rate is very low compared to Sri Lanka’s otherwise impressive vaccination numbers, said Jayasumana.

“Only 4.8 million have taken the booster so far, and only 26,796 came forward yesterday to get it.

“With the increase of patients, even though the fatality rate is low, it can be overwhelming for the health sector if patient numbers in hospital wards and ICUs go up.”

Sri Lanka has so far vaccinated 16.3 with the first dose while 13.8 have received both doses.

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Prevention, cooperation, mutual assistance essential to counter connected nature of terrorists in South Asia – Army Chief



Prevention, cooperation and mutual assistance in controlled measures at international borders are essential to counter the transnational and connected nature of terrorists and criminal activists in the South Asian region, said Chief of Defence Staff and Army Commander General Shavendra Silva on Thursday, emphasising on the need of law enforcement’s institutional reforms based on common and agreed policies.”

“In the legitimate government efforts to fight terrorism or organised crimes, in this regard, a possible South Asian regional treaty could promote counter-terrorism and anti-crime measures by promoting institutional structures and decision-making processes to promote cooperation, coordination, shared expertise and common legal approaches,” said Silva while virtually addressing the “Countering use of Crypto Currencies to Finance Terrorism” event on Thursday.

“Due to the transnational and connected nature of terrorists and criminal activists in our region, prevention, cooperation and mutual assistance in controlled measures at international borders are essential,” he added.

The General also said that there are avenues for collaboration by establishing information exchange at customs, imposing immigration barriers and commonly agreeing on the regulation of transporting and stockpiling of weapons and drugs, dangerous goods or potential warlike equipment.

Emphasising that mutual assistance can be enhanced by extending measures for collecting evidence of suspects, exchange of wanted personnel and etc, Silva said that enhancing the capacities of regional countries to handle terrorism and criminals would depend extensively on the training of law enforcement agencies.

“Apart from training for military personnel, of a particular country, it is also essential to carry out joint training for various armed forces of the South Asian region. Conducting counter-terrorism operations at a regional scale would also require regional funding. It is understood that funding counter-terrorism campaigns in recent times has become quite expensive due to the sophistication of insurgence,” Silva added.

The General also said that “this is where we need cooperation as very experience armies, who have long been engaging in counter-terrorism operations, we have specialities, therefore we can share each other’s specialities to counter each other’s imitations.”

“Law enforcement’s institutional reforms based on common and agreed policies and principles in the regional countries feel enhanced the compatibility between the countries in fighting transnational crimes and terrorism,” he added. (ANI)

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