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Foreign debt manageable – CB Governor

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by Sanath Nanayakkare

Doomsayers had predicted that the country’s debt burden would be unmanageable, but that was not the case when one took the alternative economic indicators into account, Central Bank Governor Prof. W.D Lakshman said yesterday at the inauguration session of Sri Lanka Economic Summit 2020, held on a virtual platform.

Prof. Lakshman said that he particularly felt obliged to touch upon the current controversies surrounding Sri Lanka’s fiscal deficits and the current level of its debt.

“There are arguments that Sri Lanka’s fiscal deficits have been excessive and the debt levels are at unmanageable levels, but let me attempt to expand on this aspect in terms of alternative thinking in economic theory,” he said.

“Several countries including Japan, Singapore, and the United States have debt levels far exceeding their GDP. Firstly, this shows that even such high levels of debt could be sustainable when domestic debt is the predominant component in the debt portfolio. It can be shown through alternative indicators that even foreign debt is more manageable than doomsayers indicate.

“The ratio of government’s foreign non-concessional debt to GDP is around 23%, and the remainder is either domestic debt that can be rolled over or dealt with upon long term concessional financing. The annual foreign debt service payments as a percentage of export earnings and remittances stand at around 12% in ‘business as usual’ years such as 2018.

“With the adoption of a fiscal consolidation path from 2021 and the increased emphasis on domestic debt when it comes to financing budget deficits, the aforementioned indicators will improve further. The fears surrounding debt sustainability, therefore, indeed appear unfounded.”

Referring to widespread concerns on import restrictions, foreign trade and foreign economic relations the Governor said: “Import restrictions on non-essential goods working along with low oil prices have provided the country with a saving of US$ 4 billion in import expenditure in 2020. This saving is almost equivalent to the foreign currency debt service payments we settled during the year.

“Import restrictions have also provided an opportunity for our local enterprises to gather steam within the domestic market and to evaluate possibilities of expansion abroad – a mechanism used in all successful growth stories of the world. Those who argue for so-called ‘debt restructuring or debt reprofiling’ must realise that this means reforms of austerity. In my view, Sri Lanka is already undergoing some austerity, but on our terms. This is evident when the ongoing programme of import compression is considered.

“Sri Lanka is introducing ground-breaking reforms to improve its domestic production economy, enhance exports and reduce foreign debt dependence. It is commendable that Sri Lanka is following this approach without being prompted by any foreign agency, while continuing to honour all its financial obligations.”



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Cardinal: Was there any link between passage of 20A and Easter Sunday probe outcome?

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… stands by his claim of foreign involvement

By Norman Palihawadana

Archbishop of Colombo Malcolm Cardinal Ranjith yesterday said that there could be a connection between the outcome of the probe into the Easter Sunday attacks and the enlisting of Muslim MPs’ support for the passage of the 20th Amendment.

The Cardinal said: “The leader of a Muslim political party voted against the 2Oth Amendment. But his MPs voted for it. The brother of Rishad Bathiudeen too was released around the same time. These are questionable developments. These events could be part of a deal.”

The Cardinal reiterated that international forces were behind the Easter Sunday attacks and that he did not believe that there had been any local political group directly involved in the Easter attacks.

Addressing the media yesterday, the Cardinal said that the remarks he made on Sunday had been misunderstood. He stood by his claim that international forces had been behind the attacks, he said.

“However, some people claim that I said a local political group was behind the attack. I have always maintained that there are international forces that use religious and ethnic extremists such as Wahabists to create conflicts. I was referring to such groups.”

The Cardinal added that only a small group of Muslims was involved in extremism.

The Archbishop also said that former President Maithripala Sirisena believed that taking action against extremists like NTJ leader Zahran Hashim would create unnecessary issues.

“Something along these lines is also in the PCoI on Easter Sunday attacks. The report also implies that the then Prime Minister Ranil Wickremesinghe was lenient in dealing with growing extremism in Sri Lanka.”

The Cardinal urged the government to protect the country and ensure that there would be no repeats of incidents like the Easter Sunday attacks.

The Archbishop of Colombo requested all religious leaders to work on rebuilding trust among all communities.

 

 

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AG appeals to Supreme Court against granting of bail to Ravi, others

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The Attorney General yesterday appealed to the Supreme Court against bail for former Minister Ravi Karunanayake and seven others indicted in the bond case by the Colombo Special High Court Trial-at-Bar.

The eight accused were arrested and remanded over the bond scams. Later, they were released on bail.

The court warned that if the accused attempted to exert influence on the witnesses, by any means, bail would be revoked and they would be placed on remand until the end of the trial.

 

 

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26 more coronavirus cases detected in Jaffna Tirunelveli market area

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Another 26 COVID-19 cases had been detected on Sunday, from the Tirunelveli Market in Jaffna, which was the epicentre of the recent outbreak in the town, Dr. A. Kethiswaran, Regional Director Health Services told the media yesterday.

The market and its surroundings had been reopened on April 11 following a 19-day lockdown. However, 378 PCR tests were conducted after the Sinhala and Tamil New Year and 26 of them proved positive.

Dr. Kethiswaran warned last week that there might be a spike in COVID-19 cases in Jaffna after the New Year celebrations.

A large number of COVID-19 cases had been reported in Jaffna in the past few weeks. Thus, the people should adhere to health guidelines. If people did not follow the guidelines, there would be a spike in cases and then some places would have to be lockdown, he warned.

“It’s too early to say whether we have to close the area down. We are monitoring the situation,” DR. Kethiswaran said.

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