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It’s China that happens to have the cash now, says Sri Lanka Minister

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Each country works out its own financing arrangements, says Ajith Nivard Cabraal, referring to Sri Lanka’s borrowing from China

by Meera Srinivasan

While government critics and the Opposition in Sri Lanka raise concern over the Rajapaksa administration’s growing reliance on China, in the wake of Colombo seeking a new $700 million loan from Beijing, a State Minister has said it is China that has the “most amount of cash now”.

“In different times in world history, different countries have been the ones who have had the most amount of cash. And now it happens to be China, so China will naturally invest all over the world,” Ajith Nivard Cabraal, State Minister of Money and Capital Market and State Enterprise Reforms, told The Hindu in a recent interview, on Sri Lanka’s response to the economic impact of the global pandemic. “I think we should all respect that,” said the Minister, who was the Governor of the Central Bank of Sri Lanka during Mahinda Rajapaksa’s last term in office.

Amid the World Bank and International Monetary Fund’s (IMF) worrying forecast of a GDP contraction up to almost 7%, credit rating agency Moody’s downgrading of Sri Lanka by two notches to the “very high credit risk” category, the daunting $4.5 billion foreign debt due in the coming year, falling revenues and rising living costs, the Minister expressed optimism. Sri Lanka is exploring different options to repay its debt, including additional loans from China, currency swap facilities with India and China, and Samurai and Panda bonds, he said.

Mr. Cabraal’s remarks came a week after a high-powered delegation from Beijing flew into Colombo, and met President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa, who is also the Finance Minister. China, which sanctioned a $500 million loan in March to help Sri Lanka cope with the coronavirus’s blow, is likely to favourably consider the Rajapaksa government’s request for an additional $700 million now, having pledged support to the island nation’s pandemic recovery effort. Further, Sri Lanka is also negotiating a nearly $1.5-billion currency swap facility with the People’s Bank of China. Sri Lanka owes China over $5 billion so far.

Trade practices

“Nobody says China has given $1.5 trillion loans to the U.S.? We are talking about $700 million coming in… these are the trade practices, financing practices, prevalent in the world. Each country works out their own financing arrangements in line with what they feel is best for them,” Mr. Cabraal said, adding, other countries such as Japan, the U.S. and India have also been big investors in Sri Lanka. The U.S., for instance, “is a very strong investor in Sri Lanka’s sovereign bonds. I met the Indian CEO forum here, and I was quite surprised that there are more than 50 in Indian CEOs here.”

‘Different sources’

Government critics, including former Finance Minister Mangala Samaraweera, has urged the Rajapaksa administration to engage the IMF, rather than fall into a “Chinese debt trap”, but the government has ruled out an IMF bailout.

The rapid credit facility that the government had earlier sought from the multilateral lender is yet to come through. Expressing displeasure, Mr. Cabraal said: “Rapid means rapid, no. Where is rapid in October when the accident occurred in March,” adding the government would still talk to the IMF.

While President Rajapaksa has vowed to disprove the “Chinese debt trap analysis”, few other sources seem as willing to lend readily. As for India, the Reserve Bank of India signed a $400 million swap agreement with Sri Lanka in July, to help boost Sri Lanka’s foreign reserves, and is perusing a further $1 billion requested by Sri Lanka. New Delhi is also yet to respond to PM Rajapaksa’s request for a debt moratorium — Sri Lanka owes $ 960 million to India — but Mr. Cabraal observed bilateral moratoriums cannot help much. “Emerging nations have all faced external sector stresses, which is not peculiar to Sri Lanka. Recently, some of the international agencies had provided some support for around 70 odd countries, which have been ad-hoc arrangements. This is a global problem, which needs a global solution,” he said.

Despite the external sector weakening significantly, Sri Lanka is “fortunate”, in Mr. Cabraal’s view. The country’s foreign reserves have “not been affected too much”, exports have “held firm” and remittances have been “pretty strong”. In September, Sri Lanka recorded over $700 million from worker remittances. Exports in July crossed $1 billion and the government’s move to restrict imports “has paid off”, according to Mr. Cabraal. “Our foreign reserves will be around $5.8 billion. I would say that is not an uncomfortable level.” A clearer picture will emerge only by end of the year, as the Department of Census and Statistics postponed the release of the second quarter GDP figures until then.

However, Sri Lanka’s challenge is far from over. It remains to be seen if the remittances will continue flowing in. Some 50,000 Sri Lankan migrant workers, who were employed in West Asian countries, want to return, while thousands lost their jobs and at least 67 succumbed to Covid-19 in their host countries. Domestically too, a new wave of COVID-19 infections is rapidly spreading within the garment manufacturing sector that is crucial to exports.

Falling revenues

Meanwhile, Sri Lanka’s revenues have fallen drastically, by an estimated LKR 440 billion (about $2.3 billion), also in the wake of tax cuts on imported items, prompting economists to emphasise a sound fiscal policy in the coming budget. Asked if the government was taking a fresh look at its tax regime to boost revenues, including considering a wealth tax that the IMF has recommended in its recent World Economic Outlook, Mr. Cabraal said: “You cannot make poor people rich, by making the rich people poor…we don’t want to put mansion taxes and these silly taxes which have actually crippled the more affluent people and remove them from the equation of providing jobs and providing support,” adding that the upcoming Budget, to be tabled next month, would reflect a “a balanced partnership”, where small and medium scale businesses will be supported, so they can extend job opportunities to the poor.

(THE HINDU)

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Sajith blames ‘Viyathmaga doc’

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Cause of Mahara Prison riot:

By Saman Indrajith

The recent Mahara Prison riot erupted as 120 inmates afflicted with COVID-19 had been taken there from the Welikada prison at the behest of a Director in charge of prisoners’ health, who was a Viyathmaga member, Opposition Leader Sajith Premadasa told Parliament yesterday.

“Many explanations have been given by ministers about the riot at Mahara Prison. The number of deaths is not yet known and around 120 are wounded. One minister said that there was an invisible hand behind the clashes. Another said the motive was to bring the government into disrepute internationally. A theory was concocted that prisoners had taken some narcotic tablets called Reverse and they and fought because they wanted to see blood. But the truth is otherwise. The real cause is that 120 inmates infected with coronavirus were transferred to Mahara from the Welikada prison at the behest of a director in charge of prisoners’ health. That director is a member of the Viyathmaga. Those who were transferred to Mahara prison caused a cluster of 183 persons. As the infection spread fast there was unrest and tension. That was the reason for Mahara riots.”

He said that ministers had their own theories, but one day the truth would surface. “I hope that the ministerial committee appointed to probe the riots will conduct an impartial investigation and they will reveal the truth.”

“Prisoners have rights. I do not wish that this country would permit the perpetuation of the killing culture and state terrorism. The government members should keep in mind that there is a concept called rule of law and we all are expected to uphold it. So, we should dump those theories of Reverse tablets and strive to find the truth.”

Public Security Minister Rear Admiral Sarath Weerasekera: The health officer in charge of Mahara Prison is not a member of Viyathmaga.

Opposition Leader Premadasa: I did not say so. What I said was that 120 inmates were transferred from Welikada prison to the Mahara prison violating COVID-19 protocols. That order to transfer those had been given by a doctor who is a member of Viyathmaga. I do not mention his name. You can easily find it.

Chief Government Whip Highways Minister Johnston Fernando said that the Opposition leader talked of lofty ideals of prisoners’ welfare but the yahapalana government had failed to construct at least a single prison to ease the congestion in the prisons. “When I was incarcerated by your government, I was in a cell with 51 other inmates. There was no place to sleep. In the Kegalle prison, they put 225 in a hall enough for 50 inmates. The former government pre-occupied with the task of constructing new courts to imprison its political enemies but did not build a single prison for the benefit of inmates.”

Opposition Leader Premadasa: We did not want to build prisons, we built schools. Mahatma Gandhi has once said that when you open a single school, thousand prisons could be closed. We followed that.

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‘It will take four years to ensure quality of drinking water from small projects’

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By Saman Indrajith

The safety of drinking water from small scale community drinking water projects could guaranteed only after the implementation of a project to check the quality of water and that would take four years, Water Supply Minister Vasudeva Nanayakkara told Parliament yesterday.

The Minister said so, when Matara District SJB MP Buddhika Pathirana pointed out that although the safety of drinking water from the National Water Supply and Drainage Board was guaranteed the same could not be said of water from small scale projects.

“There are many harmful elements in water such as lead, cadmium and mercury. We know that Water Board supplied water is purified, but water from small scale project could be contaminated with them. It is said that mercury in a CFL bulb has the potential to pollute around 6,000 litres of ground water and causing kidney diseases. This is a dangerous situation. One trillion rupees have been allocated for the Water Supply ministry. Apart from the COVID-19 threat, the biggest threat to the lives of people in this country is from non-communicable diseases. Can the ministry introduce a mechanism to provide each district with at least a single testing unit to ensure the safety of drinking water supplied by the small scale community drinking water projects.”

Water Supply Minister Vasudeva Nanayakkara said that safety of water from the Water Board was guaranteed owing to sophisticated purification methods employed by treatment plants. He said that it would take at least four years to provide testing units to ensure drinking water from the small scale community drinking water projects countrywide too is safe from harmful elements.

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Teachers’ Union boss Stalin accuses govt of attempting Akila’s failed stunt

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By Rathindra Kuruwita

There was an attempt to create a new post, Director General – Sports, at the Ministry of Education and to appoint a political henchman, Ceylon Teachers Union (CTU) General Secretary, Joseph Stalin told The Island yesterday.

“According to the Education Administrative Service minute, any appointment has to be made through a competitive exam. However, this post has been created through a Cabinet paper and an SLPP henchman is to be appointed to it.”

The CTU General Secretary said that during the yahapalanaya administration, then Education Minister Akila Viraj Kariyawasam had tried to appoint a UNP henchman to the post of Director – Sports at the Ministry. Kariyawasam had been compelled to back off due to the stiff opposition of the education sector unions, Stalin said.

“The court has also ruled that people should be appointed in keeping with the Education Administrative Service Minute. The President came into power promising to uphold the rule of law, but this government, too, is attempting to undermine the education system by appointing unqualified people to high posts.”

The post of Director General – Sports would have the same perks of an Assistant Secretary and the person to be appointed was a person representing a government affiliated union, Stalin said.

“95% of unions of the education sector will oppose if the government creates this post for the benefit of a henchman. We will resort to trade union and legal action.”

Minister of Education, Prof. G. L. Peiris was not immediately available for comment.

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