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Lanka debt talks with India, China, Japan helped by investment projects: President
ECONOMYNEXT –Sri Lanka has been moving forward in bilateral debt negotiations by talking to individual creditors despite a clearly defined process for dealing with Paris Club and other creditors, President Ranil Wickremesinghe had said last week.
Sri Lanka was following a ‘debtor led’ strategy by reforming the economy and also aiming at a ‘highly efficient green economy’, which was going to increase financing needs, Wickremesinghe told a financing summit for a New Global Financing Pact in Paris.
“What else helped us was that Sri Lanka had ongoing negotiations with Japan, India and China and separately regarding further trade integration and also regarding some of the development programs for the future,” President Wickremesinghe said. “This assisted our process.”
Sri Lanka was supported by the International Monetary Fund and also India who gave about four billion US dollars in 2022 he said when all other funding dried up.
Sri Lanka’s currency crisis intensified in 2022 after central bank open market operations depleted forex reserves and float (full suspension of convertibility) of the currency failed due to a surrender rule leading to the collapse of the rupee from 200 to 360 to the US dollar.
India had supported Sri Lanka with about four billion US dollars in the worst time, Wickremesinghe said.
Sri Lanka went through a period of ‘reserve graduation’ with the World Bank and Asian Development Bank making the country eligible for concessionary funding.
After a staff level agreement was signed with the IMF there was no clearly defined path to follow in bilateral debt restructuring with some lenders outside the Paris Club, the president said. Ninety percent of the menu options in the IMF program was agreed, he added.
The lack of a clearly defined path was a problem but a ‘common framework’ for middle income countries may also not help, because such efforts tended to move at the pace of the slowest creditor, he said.Under an ‘ad hoc’ arrangement, India and several countries had come to work with the Paris Club and China was an observer.
“We are able to work with the most committed creditors, raising the general quality and efficiency of the process,” Wickremsinghe said. “We are still frustrated by the lack of progress.”
Wickremesinghe said a new debt negotiation framework was needed since geopolitical tensions played a part, which cannot be solved by the debtor countries.
“The mistrust between US and China and the growing tensions has to be address by you all, not merely Sri Lanka and the country concerned,” Wickremsinghe said. “If you do not resolve it, Asia and Africa we will get caught into another situation not of our making. Restructuring is needed. But it has to move fast, otherwise LIC or MIC, the countries will not have much hope.”
A number of countries with highly unstable, depreciating, soft-pegged (flexible exchange rates) who had engaged in inflationary open market operations and covid monetary re-financed funding, are now in the brink of default.
Many of the countries had loaded up of sovereign debt as bond buyers went on a yield seeking spree as reserve currency quantitative easing (money printing) kept interest rates artificially low and China also busted some of its reserves on the Belt and Road project.
It has been reported quoting police sources that the death toll from the renewed unrest at the Negombo Prison which this morning, has risen from nineteen to twenty five (25).
A clash initially broke out between two groups of inmates (a group of remand prisoners and a group of convicted inmates serving sentences) at the Negombo Prison at around 1.00 p.m. on Sunday (05).
Two inmates died in yesterday’s clash, while around 40 others sustained injuries and are receiving treatment at hospital.
Prime Minister Dr. Harini Amarasuriya stated that the children of Sri Lanka are well capable of viewing the world with creativity and critical ways of thinking, and that the Government is committed to equipping them with the required knowledge and modern technologies necessary to realize their full potential.
The Prime Minister made these remarks while attending the opening of the ’Arumasiya’ Exhibition and the occasion of laying the foundation stone for a new three-storey building at Balangoda Vidyaloka Central College, on the 4th of July.
During the visit, the Prime Minister officially declared open the exhibition showcasing the students’ innovations and creative talents and commended them for their remarkable achievements. The Prime Minister also participated in the ceremony of laying the foundation stone for the construction of the College’s new three-storey building.
Addressing the occasion, Prime Minister Dr. Harini Amarasuriya stated:
“It is a pleasure to participate in this special event at Balangoda Vidyaloka Central College, the school where Sri Lanka’s first female Prime Minister received her education
I had the opportunity to visit the exhibition featuring the outstanding creations and innovations of the students. What I witnessed was a group of talented young people who have moved beyond textbook learning and are capable of viewing the world with creativity and critical thinking.
We are introducing a new education reform process that moves away from a rote-learning, examination-oriented system towards a practical and skills-based one. The Government is now systematically completing all the necessary preparations to implement the new education reforms scheduled to commence in 2027.
Our objective is to ensure that every child leaving school has access to vocational and technical education that matches their individual talents and meets the demands of the modern labour market. We are committed to transforming vocational education into a field that enjoys the same dignity and recognition as university education.
Finally, I commend the Principal and the academic staff of Balangoda Vidyaloka Central College for organizing this exhibition, and to the students and parents whose dedication made this event a success.”
The event was attended by Members of Parliament for Ratnapura District Wasantha Pushpa Kumara and Sunil Rajapaksha, the Mayor of Balangoda and members of the Municipal Council, the Zonal Director of Education, the Principal and academic staff of Balangoda Vidyaloka Central College, parents, and students.
Prime Minister’s Media Division
The appointment of a Special Parliamentary Ombudsman (SPO) to inquire into the complaints against the Attorney General, as promised in the NPP manifesto, is on hold, pending the establishment of an Independent Office of the Public Prosecutor and provincial Sub Officers.
Authoritative sources told The Island that the Justice and National Integration Ministry was awaiting the recommendations, regarding the new legislation for the establishment of such an Office, from a Committee of Technical Experts, chaired by Justice Yasantha Kodagoda, PC.
Responding to a query raised in Parliament by SJB lawmaker Ajith P. Perera about the delay in appointment of SPO, Justice and National Integration Minister Harshana Nanayakkara said the government couldn’t take a decision until the Kodagoda Committee made recommendations.
Nanayakkara said that the positioning of the SPO couldn’t be decided before they differentiate the powers of the Attorney General and the an Independent Office of the Public Prosecutor and provincial Sub Officers.
According to the NPP manifesto, provincial Sub Officers were to be established under a senior Additional Solicitor General.
Opposition sources pointed out that the relevant Cabinet decision was taken on 7 May 2025. According to the Cabinet Office, the government decided to establish an Independent Office of the Public Prosecutor and provincial Sub Officers in line with a proposal made by the United Nations High Commissioner for Human Rights, in her final report on Sri Lanka, submitted in September, 2024.
By Shamindra Ferdinando
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