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Ex-CB Governor calls for disciplined fiscal policy, hopeful of agreement with external commercial lenders soon

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Dr. Coomaraswamy

By Shamindra Ferdinando

Former Central Bank Governor Dr. Indrajith Coomaraswamy has warned that the period ahead required the continued commitment to disciplined fiscal policy, a data dependent and forward-looking monetary policy, as well as a flexible exchange rate procedure.

Dr. Coomaraswamy stressed that the above mentioned strategy should be strongly backed by a laser-like focus on constructing an outward-looking competitive economy that drives sustained growth and higher value employment generation, primarily through export transformation.

The former head of the Monetary Board said so when The Island asked him what the government should do (whoever is in power) to bring the debt restructuring to a successful conclusion. Dr. Coomaraswamy appreciated the simultaneous finalization of Memorandum of Understanding (MoU) between the government and Sri Lanka’s Official Creditor Committee (OCC) and another MoU with China’s Exim Bank on Wednesday.

The Presidential election is scheduled for Sept/Oct this year.

Dr. Coomaraswamy, who had served the Central Bank for 15 years, was invited to rejoin as Governor in July 2016 in the wake of the Treasury bond scams that were perpetrated in Feb 2015 and March 2016. Having succeeded Singaporean Arjuna Mahendran, who had been implicated in the Treasury bond scams, Dr. Coomaraswamy was replaced soon after Gotabaya Rajapaksa’s election as the President in Nov 2019.

Dr. Coomaraswamy said that those who represented Sri Lanka had done extremely well to secure the IMF Executive Board approval for the EFF (Extended Fund Facility) second review. “Performance has exceeded targets on a number of key macroeconomic indicators. On debt restructuring, they have completed the DDR (Domestic Debt Restructuring) some months ago and have done very well to sign agreements with the OCC and Exim Bank China,” Dr. Coomaraswamy said.

Having said so, Dr. Coomaraswamy pointed out the pivotal importance of finalizing an agreement on, what he called, a comparable basis with the commercial external creditors, particularly the ISB holders and the China Development Bank (CDB). The former outspoken official underscored the need to bring negotiations between commercial external creditors to a successful conclusion as soon as possible.

Dr. Coomaraswamy said: “The IMF Executive Directors would not have approved the payment of the third tranche unless they were confident that the negotiations were progressing well in good faith. One can, therefore, be hopeful that these negotiations will be completed soon with the terms of restructuring being aligned with Sri Lanka achieving debt sustainability. This would constitute a major landmark in stabilizing the Sri Lankan economy. Completing the debt restructuring is a sine qua non for creating a platform that creates the space for achieving sustained recovery.

The period ahead requires the continued commitment to disciplined fiscal policy, a data dependent and forward-looking monetary policy and a flexible exchange rate policy. This needs to be complemented by a laser-like focus on constructing an outward-looking competitive economy that drives sustained growth and higher value employment generation, primarily through export transformation.”

So, we could be quite hopeful that these negotiations would be completed soon with the terms of the restructuring being aligned with Sri Lanka achieving debt sustainability. Asked to explain, Dr. Coomaraswamy said that he was very confident that the anticipated deal with the private creditors could be reached quickly though at this point it is too early to tell whether debt sustainability can be achieved with just one restructuring.

Dr. Coomaraswamy said: “This is crucial to address the sharp reversals that have taken place in poverty and multidimensional vulnerability.”

The Island

also sought Dr. Coomaraswamy’s opinion on anti-corruption measures. Asked how anti-corruption measures fit into our overall strategy, the former Governor said that at a minimum the government must implement the time-bound programme it has agreed with the IMF to give effect to the 15 recommendations of its Governance Diagnostic. Dr. Coomaraswamy emphasized that this should apply for any government that took office.

Top Opposition spokesman Prof. G. L. Peiris, MP, recently pointed out that the external debt had increased to USD 100 bn from USD 82 bn since July 2022 therefore efforts on the part of the government to portray a much better or improved performance under Ranil Wickremesinghe’s watch is nothing but propaganda. The former External Affairs Minister said that the borrowings from commercial external creditors were included in the USD 100 bn debt.



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PNB detect large haul of methamphetamine and heroin in local fishing trawler intercepted by Navy

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Acting on credible information, the Sri Lanka Navy launched a special operation on the high seas on 11 Apr 25, resulting in the apprehension of  06 suspects along with a local multi-day fishing trawler, believed to be involved in smuggling of narcotics.

Subsequently, the intercepted trawler was brought to the Dikkowita Harbour, where a thorough inspection was carried out with the assistance of the Police Narcotic Bureau (PNB) experts, leading to the detection of  approximately 77kg and 484g of heroin and 42kg and 334g of methamphetamine (Ice).

The consignment, which had been meticulously hidden in the trawler, was handed over to the PNB for onward legal action on 12 Apr.

 

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Government to initiate new projects to help rural communities to strengthen the national economy – Prime Minister

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Prime Minister Dr. Harini Amarasuriya stated that the government is currently working to initiate new projects across every area of Sri Lanka and to bring the necessary investments to rural areas in order to improve the participation of the communities in strengthening the national economy.

The Prime Minister made these remarks while addressing a public gathering held on Saturday (12th) in Nanattan, Mannar.

Prime Minister further stated:

“Our country has reached a decisive point. The government of the National People’s Power (NPP)  understands the expectations of the people. The general public came together despite the ethnic and religious barriers to exercise their voting right against  corruption in politics that existed in this country. Consequently, Anura Kumara Dissanayake was able to become the President in 2024. A month later, we formed a Parliament that will initiate in changing the history. Today, we have a government made up of 159 members. There is now a strong group in Parliament standing against corruption and a government that represents all ethnicities, religions, and regions. For the first time in history, we have formed a government made by a single party that represents everyone. The people are the ones who made this victory possible and they are the true victors in this cause.

We are committed to protecting the trust the people have placed in us and to fulfill their expectations.

You are well aware of how weak the economy was when we came to power. Officially, we had been declared a bankrupt nation before the world. For many years, Sri Lanka had no economic growth and was in a debt-ridden economy. The tourism sector had collapsed. Due to the corruption in political authority, investors were unwilling to invest the country. Today, we have changed all that.  We have managed to steer the economy towards growth leading to investments being restored while the confidence in Sri Lanka is increasing internationally.

We are working to start new projects in every area of Sri Lanka to bring the necessary investments to the rural sector, with the aim of improving the participation of rural communities in the national economy.

The first budget of the NPP government has passed. Even though the economy is not yet strong, we focused on two main priorities in the budget: one was to develop infrastructure necessary for economic growth, and the other was to provide relief to people burdened by economic hardships. That’s why we have increased and extended the period of Aswesuma benefits. Further, vouchers to buy schoolbooks was distributed at schools with less than 300 students.

Previous governments were a burden to the people. But today, we have a very small Cabinet of Ministers. The government is no longer a burden to the people. We have reduced expenses, minimized losses, and eliminated corruption.

Because the government  is not a burden to the people, it was able to provide relief to the people. Through this budget, the basic salaries of  the public service has been increased. They have been given the opportunity to work freely. Decisions are now made on statistical data and not based on political preferences. What we expect is an independent public service. We are in need of a people-centered government as well as a public service which should be an efficient, corruption-free and people-sensitive. We have already created the necessary environment for that.

In order to develop the rural economy, the government has allocated a large amount of funding through this year’s budget. But, to ensure that these allocations are used properly to serve the people, the local government institutions need to be cleaned up. If the leaders who represents the villages are corrupt, the funds allocated will become worthless. That is why the upcoming local government elections has become extremely significant and decisive.”

The event was attended by the Members of Parliament Jegadeeswaran and S .Thilakanadan, public representatives, and candidates of local government election representing the NPP.

[Prime Minister’s Media Division]

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Batalanda: Why only now and what about the others, asks Mujibur

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SJB Colombo District MP Mujibur Rahuman launched a fierce critique of the political hypocrisy surrounding the Batalanda Commission report during Thursday’s (10) parliamentary session.

Rahuman pointed to the violent actions of the JVP, which had devastating effects on politicians, police officers, and civilians, as detailed in the Commission’s final report.

He said that the violence had disrupted vital services and created a state of lawlessness, severely affecting the public.

The MP accused political opponents of exploiting the Batalanda issue for electoral advantage, noting that for 36 years, no proposals were made to investigate the assassination of JVP leader Rohana Wijeweera.

He criticized the JVP for forming “probationary” governments with Chandrika Kumaratunga and backing Ranil Wickremesinghe in the yahapalana effort, yet failing to address the Batalanda issue during their tenures.

Rahuman also questioned the current attacks on Wickremesinghe, highlighting that many of his critics had previously collaborated with him. He called attention to the JVP’s statements regarding Gotabaya Rajapaksa’s alleged involvement in a Matale mass grave and the distribution of pamphlets on the subject during the 2022 Galle Face protests.

The MP called for accountability, questioning why no proposals were put forward on these issues when the current government came into power. He also criticized the NPP for its leaders, who, despite being involved in suppressions during the 80s and 90s, now sought positions within the government. Rahuman accused them of hypocrisy, warning against dragging the Batalanda issue into the ongoing election.Rahuman said that the historical wrongs committed by JVP political leaders cannot be erased, regardless of attempts to downplay them.

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