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SJB warns against counting foreign loans as part of forex reserves

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Dr. Harsha de Silva

The SJB has cautioned the Wickremesinghe-Rajapaksa government against counting loans received from the IMF, World Bank and ADB as external buffers as they have to be paid back.

SJB MP Dr. Harsha de Silva said loans secured from whatever sources weren’t earned reserves. The former UNP State Minister and economist said so when we sought his opinion on the government declaration that with the IMF second tranche amounting to USD 337 mn and WB’s USD 250 mn loan official reserves were expected to pass USD 4 bn by end of next week.

The President’s Media Division (PMD) said that this figure was much higher than expected. The PMD issued the statement hours after SLPP leader Mahinda Rajapaksa, in a statement issued to the media declared that USD 10,000 million in new ISBs borrowed between 2015 and 2019 broke the back of our economy. The former President found fault with the Sirisena-Wickremesinghe administration.

The SJB MP said: “Generally, the net international reserves refers to gross usable reserves less short term drains. Now this is where the lies of the Rajapaksa regime led to a false sense of security on usable reserves. Why did Foreign Minister Ali Sabry, PC, announce on 12 April 2023 that the government was unable to meet two external debt payments amounting to approximately USD 200m even though former CBSL Governor Ajith Nivard Cabraal had claimed we had some USD 1.6 b in reserves?

Truth is the government apparently had only USD 20 m of usable reserves and not USD 1.6b. The USD 1.5b Chinese currency swap was not usable due to restrictions on imports cover. So if usable reserves have now increased due to import cover restrictions being met and the Chinese money is available for then one can say we are in a better place in terms of buffers.”

Commenting on funds received from various sources, the MP questioned the continuing practice of counting loans, whether from World Bank and ADB as external buffers. That is not the ideal. Because these need to be paid back and not earned reserves. Fact is most countries count such long term loans as reserves.

But there again the Rajapaksa was misled that when they lost the election in Jan 2015, USD 2.2b were short-term swaps and another USD 3.5b consisted of ‘hot money’ meaning foreigners investing in Treasury paper having converted USD in to LKR which could be reversed immediately depending on interest rate movements.

So of the then USD 8.2b forex reserves almost USD 6b was not stable. That is why counting short-term swaps and hot money is misleading. In fact, converting these large unstable reserves into long term reserves amounting to close to USD 6b is a major reason beyond rolling over some USD 5 billion during the Yahapalana government that saw large-scale borrowings through ISBs.

At the time Gotabaya Rajapaksa came in reserves consisted of less than USD 1b in such unstable reserves, down from almost USD 6b. Also given 2020 was an election year the CBSL had borrowed an additional USD 2.9b in ISB preparing for any potential market risk. In fact, if not for this move of building external buffers Sri Lanka would have gone bankrupt much earlier after that the government made serious policy blunders. As we all now know, the government kept using the reserves to pay back foreign loans after the country was downgraded by the rating agencies and doors to the international capital market were closed.

On the other side of the equation is the amount in short term drains, meaning the total amount of USD debt that needs to be paid by the government in usually one year.

So, if the government is comfortable on both counts then it’s ok to be a little confident. I don’t have the numbers to make that call. Having said that I must reiterate that ultimately it’s earned dollars not borrowed dollars that really matter.” (SF)



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Govt. urged to take action against deputy minister

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Ajith / Eranga

Allegation of doing business with state:

Civil society activist Oshala Herath has said that regardless of the political party one represents, all members of Parliament should abide by the law of the land. Herath said so when The Island sought his response to a report that he was planning to move court against Deputy Minister Eranga Weeraratne, Deputy Minister of Digital Economy, accused of holding the top positions at Omobio (Pvt.) and Eimsky Business Solutions (Pvt.) Ltd., at the time of the nominations, and took oaths as a National List MP of the NPP government.

President Anura Kumara Dissanayake is the Minister of Digital Economy, in addition to being Minister of Defence and Finance.

Herath is the Chairman of Abhinawa Niwahal Peramuna. Herath, whose legal challenge to SJB MP Diana Gamage over her citizenship issue, led to her removal from Parliament by the Supreme Court on 08 May, last year. He said the latest case underscored the responsibility on the part of political parties to ensure transparency in the nomination process as well as in the finalisation of National List.

Herath pointed out that the court rulings on petitions filed by him against two serving MPs were pending. He moved court against Jaffna District Independent MP Ramanathan Archchuna for handing over nominations to contest the 2024 November parliamentary elections without resigning from his post as a government medical officer. He also moved court against Minister of Rural Development, Social Security and Community Empowerment, Dr. Upali Pannilage, alleging that he had been an employee of the University of Ruhuna at the time he was declared an MP and subsequently appointed as a Cabinet Minister.

Our efforts to contact Deputy Minister Weeraratne were in vain. Our calls went unanswered.

Pointing out that there were many attorneys-at-law in the current Parliament, Herath emphasised the responsibility on their part to take up the issue. The Speaker should, on his own, inquire into such allegations in addition to the Parliamentary Privileges Committee stepping in, Herath said. Responding to another query, Herath said that such violations as well as cases of conflict of interests were far more serious than the recent controversy over NPP National List MP Asoka Ranwala’s educational qualifications.

SJB MP Ajith P. Perera told The Island that the Deputy Minister concerned admitted in Parliament that he had held top posts in the companies mentioned at the time he took oaths as an MP. Therefore, there couldn’t be any ambiguity with regard to his fault. Perera said that the conflict of interest issue involving NPPer was far more serious.

Referring to the issue at hand that had been first raised by SJB lawmaker Amila Prasad Siriwardena in Parliament during committee stage of the debate on the 2026 Budget, Attorney-at-Law Perera said that Weeraratne’s companies were engaged in mega business deals with the government. Declaring that they had secured contracts for government projects since 2019, Perera said that one of the companies Weeraratne was involved in had recently won a major contract from the incumbent government regarding the electronic ticketing system.

Kalutara District MP called for a comprehensive inquiry into the issue as the NPP had come to power, accusing all other political parties of waste, corruption, irregularities and mismanagement of state funds. MP Perera queried whether the current dispensation followed proper procedures in selecting Weeraratne’s company for the ticketing project

Both Herath and Perera urged the JVP and NPP to look into what they called the Weeraratne affair.

Over the years, several MPs had been disqualified to hold parliamentary seats. Dr. Rajitha Senaratne is one of them. When the Court of Appeal dismissed Dr. Senaratne from Parliament for being a supplier to the government, Ranil Wickremesinghe brought him back to Parliament, through the National List.

MP Perera said that since the last parliamentary election, the NPP had been embroiled in many controversies, including the release of 323 containers from the Colombo Port, in January this year, followed by signing of seven Memorandums of Understanding (MoUs)/agreements with India in April.

By Shamindra Ferdinando

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India sends stock of life-saving medicines

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Misri with Colonne

The government has appealed to India for immediate help to overcome the serious shortage of life-saving drugs and injections.

The Sri Lankan High Commission in New Delhi confirmed the appeal made by the government. The following is the text of statement issued by the Sri Lankan mission in New Delhi: “The Foreign Secretary of India, Vikram Misri, over the weekend handed over a consignment of urgently required essential medicines to Sri Lanka’s High Commissioner to India, Mahishini Colonne, in New Delhi. The assistance, extended in response to a request from the Government of Sri Lanka, forms part of Operation Sagar Bandhu, India’s humanitarian mission supporting Sri Lanka’s relief, recovery, and reconstruction efforts following the devastating Cyclone Ditwah.

The consignment consists of over 400 boxes of life-saving medicines and injections, which will be airlifted to Colombo by an Indian Air Force C-17 aircraft, alongside further additional relief assistance from India.

Deputy Indian High Commissioner Pandey shaking hands with Health Minister Dr. Nalinda Jayathissa

Foreign Secretary Misri reiterated the condolences of the Government and people of India for the tragic loss of lives and the extensive damage to infrastructure caused by the Cyclone. He reaffirmed India’s steadfast commitment to supporting Sri Lanka’s immediate humanitarian needs as well as rebuilding and reconstruction efforts. He also highlighted India’s readiness to work with Sri Lanka on a mix of initiatives tailored to the needs of affected communities.

High Commissioner Colonne conveyed the sincere appreciation of the President, Government, and people of Sri Lanka for India’s timely, continuous, and sustained support, and handed over to the Foreign Secretary, a letter of gratitude from the President of Sri Lanka to the Prime Minister of India.

 Describing the extensive nature of the damage, the High Commissioner appreciated the ongoing and consistent engagement of the Indian High Commission in Colombo, in collaboration with government officials and local authorities in coordinating relief, rescue, and recovery efforts.

SLAF personnel unloading medicine from IAF transport plane

The High Commissioner also requested India’s support in sharing its expertise and leadership in enhancing disaster-response capabilities and disaster-resilience frameworks, especially lessons from Odisha and Andhra Pradesh, both globally recognized for their advanced disaster resilience frameworks. Apart from this support that is under discussion, the New Delhi-based Coalition for Disaster Resilient Infrastructure (CDRI) has also been requested to undertake a visit to Sri Lanka to explore avenues for strengthening Sri Lanka’s disaster resilient infrastructure capacities. Noting the importance of having an effective and real-time warning system, efforts are being made to deploy a team to explore the establishment of an early warning system that would provide real-time geo-targeted alerts to citizens.

The High Commissioner reiterated Sri Lanka’s gratitude to the Government and people of India for their continued solidarity under Operational Sagar Bandhu, reaffirming the strength of the longstanding partnership between the two nations.”

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George Keyt Foundation contributes to national disaster relief efforts

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(L-R): The donation was handed to Prime Minister Harini Amarasuriya by Professor Jagath Weerasinghe (Trustee), Suresh Dominic (Treasurer), Malaka Talwatte (Chairman) and Abbas Esufally (Trustee) of the George Keyt Foundation.

The George Keyt Foundation (GKF) has extended meaningful support to the Government of Sri Lanka’s disaster relief efforts following the severe devastation caused by Cyclone Ditwah.

The text of the press release issued by the GKF: “In 2023, the Foundation undertook its first major fundraiser in recent years by issuing 30 numbered limited edition prints of Kangodi Rangi, a painting by George Keyt entrusted to the Foundation. Twenty-eight prints were acquired by donors to support charitable causes, while another was gifted to the President’s collection. Print Number 1 of 30 was retained to support the Foundation’s long-term priorities.

In light of the unprecedented impact of Cyclone Ditwah and the urgent national need for disaster assistance, the trustees unanimously resolved to seek a donor for Print Number 1 of 30, with clear disclosure that the proceeds would be channeled directly to the Government’s disaster relief programme. This appeal received an immediate response, resulting in a private donation of Rs. 3 million.

The contribution was formally handed over to Prime Minister Harini Amarasuriya for utilisation in the Government’s ongoing relief and recovery efforts.

The George Keyt Foundation is honoured to support the people of Sri Lanka at this critical moment and reaffirms its commitment to serving national needs while preserving and promoting the artistic legacy of George Keyt.

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