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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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‘Investigations won’t be stopped due to protests’

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Easter Sunday carnage:

Investigations into the 2019 Easter Sunday terror attacks will not be halted due to protests, demonstrations or Satyagraha campaigns, Minister of Public Security Ananda Wijepala told Parliament yesterday (10), while alleging that investigators had gathered sufficient evidence to establish the involvement of former State Intelligence Service (SIS) Director, retired Major General Suresh Sallay, in a conspiracy linked to the attacks.

Making a special ministerial statement in the House, the Minister said that evidence uncovered during ongoing investigations indicated that Sallay had prior knowledge of the planned attacks and related extremist activities before the coordinated bombings that claimed more than 270 lives and injured hundreds of others, on April 21, 2019.

Wijepala claimed that three weeks before the attacks, Sallay had deployed four Muslim individuals to gather intelligence, including information on the number of worshippers attending mass at a church in Negombo.

According to the Minister, the principal individual among the four had been identified by witnesses to the CID as an ISIS extremist and had subsequently gone missing following the Easter Sunday attacks.

“There is evidence suggesting that Major General Sallay met the informant who had tipped off Army Intelligence regarding the attacks at a hotel in Colombo,” Wijepala said.

The Minister maintained that investigators had uncovered evidence indicating that Sallay had taken steps to prevent the disclosure of information that could have revealed crucial details relating to the attacks and the events leading up to them.

Referring to allegations that Sallay had been subjected to inhumane treatment while in custody, Wijepala rejected such claims, describing them as false and misleading.

He told Parliament that the former intelligence chief had been afforded all facilities and privileges due to a primary suspect under the law, including unrestricted access to legal counsel.

“The Magistrate personally visited Sallay to ascertain his health and wellbeing. At no stage did he complained of any inhumane treatment. Neither has he lodged complaints with any other relevant authority in that regard,” the Minister said.

Wijepala also disclosed that Sallay had thus far declined to provide investigators with the passwords to his laptop computer and mobile phone, a move he described as an attempt to obstruct the investigative process.

“He is acting in a manner that hinders the progress of investigations,” the Minister alleged.

The Public Security Minister maintained that the government remained committed to uncovering the full truth behind the Easter Sunday attacks and bringing all those responsible before the law, irrespective of their status or position.

Emphasising that the investigation would continue without interference, Wijepala said attempts to exert pressure through public protests or Satyagraha campaigns would not influence the course of the inquiry.

“The investigations into the Easter Sunday attacks will not be halted by any protests or Satyagraha,” he said.

By Saman Indrajith

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267,138 Lankan children dropped out of school system between 2018 and 2024

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A total of 267,138 children dropped out of the school system between 2018 and 2024, Prime Minister and Minister of Education Dr. Harini Amarasuriya informed Parliament yesterday (10).

Responding to a question raised by SJB Ratnapura District SJB MP Hesha Withanage, the Prime Minister said that the government did not possess definitive data on school dropouts from 2010 to the early part of 2017.

She explained that the figures for the period from 2018 to 2024 had been derived from annual school census reports using an internationally recognised methodology that takes into account student enrolment figures and dropout rates from Grade One to Grade Ten.

According to the statistics presented to Parliament, 38,839 students dropped out of school in 2018,

while the figure increased to 41,503 in 2019. In 2020, the number stood at 32,540 before declining further to 25,492 in 2021.

However, a sharp increase was recorded in 2022, when 52,596 students were identified as having left the school system. The figure remained high in 2023 at 50,345 before declining to 25,823 in 2024.

The Prime Minister cautioned that the figures did not necessarily indicate that all students classified as dropouts had completely discontinued their education.

She noted that some students may have transferred to schools in other provinces, enrolled in international schools, or migrated overseas with their families while continuing their studies.

Dr. Amarasuriya said that such cases could not be separately identified under the methodology used to compile the statistics and were, therefore, included in the overall dropout figures.

Addressing the causes of school dropouts, the Prime Minister said a range of factors contributed to students leaving the formal education system.

These included personal circumstances, school-related issues, family and economic difficulties, social influences, as well as students opting for alternative educational pathways and training opportunities, she said.

By Saman Indrajith

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PM declares PC polls only under new electoral system

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Prime Minister Harini Amarasuriya told Parliament yesterday that Provincial Council elections would not be conducted under the existing proportional representation system and would instead be held under a new electoral system.

Responding to a question raised by MP Ravi Karunanayake, the Prime Minister said there was no justification for holding elections without ensuring adequate representation for women and youth in Provincial Councils.

She said that the government’s position was to first finalise reforms to the electoral system before proceeding with polls.

The Prime Minister also provided a detailed breakdown of when the terms of Provincial Councils expired, noting that all nine councils had been without elected administrations for several years. According to her, the Sabaragamuwa Provincial Council term ended on September 29, 2017, followed by the Eastern and North Central Councils on September 30 and October 1, 2017 respectively.

The Central and North Western Provincial Councils ended their terms on October 08 and 10, 2018, while the Northern Provincial Council term ended on October 24, 2018. The Southern Provincial Council term expired on April 10, 2019, followed by the Western Provincial Council on April 21, 2019, and the Uva Provincial Council on October 8, 2019.

Amarasuriya said that under Section 10(a) of the Provincial Councils Elections Act No. 2 of 1988, the Election Commission was required to publish a notice of intention to hold an election within one week after the dissolution or expiry of a council, following a direction from the President.

However, she noted that the Election Commission had not issued such notices due to the absence of enabling legal provisions following subsequent amendments.

She further explained that under Section 3A of the Provincial Councils Elections (Amendment) Act No. 17 of 2017, the holding of elections is linked to the completion of a delimitation process. This requires the appointment of a Delimitation Committee by the President to define electorates within administrative districts and submit its report to Parliament, with elections to be held only after parliamentary approval.

The Prime Minister said the delimitation process has not yet been completed, which has prevented the conduct of Provincial Council elections under the revised framework.

Amarasuriya also informed Parliament that a parliamentary select committee had been appointed to examine and make recommendations on whether Provincial Council elections could be conducted under the previous electoral system through further amendments to existing legislation.

The committee, titled the “Select Committee of Parliament to look into and report to Parliament on the matter of selecting the Electoral System under which the Provincial Council Elections should be held and submit its proposals and recommendations in that regard,” comprises MPs Vijitha Herath (Chairman), Nizam Kariapper, Chandana Sooriyarachchi, Darmapriya Wijesinghe, Samanmali Gunasingha, Shanakiyan Rasamanickam, Lakshman Nipuna Arachchi, Mano Ganesan, Ranjith Madduma Bandara, Arun Hemachandra, Sunil Watagala and Muneer Mulaffer.

She said further decisions regarding the holding of Provincial Council elections will be taken based on the recommendations of the parliamentary select committee.

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