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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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JMSDF MURASAME departs island

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Japan Maritime Self-Defence Force (JMSDF) MURASAME which arrived in Sri Lanka on 22 March 2025 for replenishment, departed the island on Tuesday (25 Mar).

The Sri Lanka Navy bade customary farewell to the departing ship at the Port of Colombo, following naval traditions.

During the stay in Sri Lanka, crew members of JMSDF MURASAME visited some popular tourist destinations within the Colombo city.

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UK sanctions Shavendra, Wasantha, others in line with Labour party’s election pledge – Secretary of State

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Lammy

UK Secretary of State for Foreign, Commonwealth and Development Affairs, David Lammy, has said that sanctions were imposed on former Army Commanders General Shavendra Silva, General Jagath Jayasuriya, Admiral of the Fleet Wasantha Karannagoda and one-time LTTE Ampara-Batticaloa commander Vinayagamoorthy Muralitharan, alias Karuna Amman, in accordance with an assurance given to the electorate at the 2024 July general election.

The Labour party won the July 2024 general election.

The British government statement quoted Lammy as having said that he made a commitment during the election campaign to ensure that those responsible would not be allowed impunity. Lammy emphasised that this decision ensured that those responsible for past

human rights violations and abuses were held accountable.

The text of the statement: “The UK sanctions former Sri Lankan commanders and an ex–Liberation Tigers of Tamil Eelam (LTTE) commander responsible for serious human rights violations and abuses during the civil war.

* Sanctions aim to seek accountability for serious human rights violations and abuses, committed during the civil war, and to prevent a culture of impunity.

* UK is committed to working with new Sri Lankan government on human rights, welcoming their commitments to national unity.

The UK government has imposed sanctions on 4 individuals responsible for serious human rights abuses and violations during the Sri Lanka civil war, including extra-judicial killings, torture and/or perpetration of sexual violence.

The individuals sanctioned by the UK today include former senior Sri Lankan military commanders, and a former LTTE military commander who later led the paramilitary Karuna Group, operating on behalf of the Sri Lankan military against the LTTE.

The measures, which include UK travel bans and asset freezes, target individuals responsible for a range of violations and abuses, such as extra-judicial killings, during the civil war.

Secretary of State for Foreign, Commonwealth and Development Affairs, David Lammy, said:

The UK government is committed to human rights in Sri Lanka, including seeking accountability for human rights violations and abuses which took place during the civil war, and which continue to have an impact on communities today.

I made a commitment during the election campaign to ensure those responsible are not be allowed immunity. This decision ensures that those responsible for past human rights violations and abuses are held accountable.

The UK government looks forward to working with the new Sri Lankan government to improve human rights in Sri Lanka, and welcomes their commitments on national unity.

During her January visit to Sri Lanka, Minister for the Indo-Pacific, Catherine West MP, held constructive discussions on human rights with the Prime Minister, Foreign Minister, civil society organisations, as well as political leaders in the north of Sri Lanka.

For communities to move forward together, there must be acknowledgement, and accountability for past wrongdoing, which the sanctions listings introduced today will support. We want all Sri Lanka communities to be able to grow and prosper.

The UK remains committed to working constructively with the Sri Lankan Government on human rights improvements as well as their broader reform agenda including economic growth and stability. As part of our Plan for Change, the UK recognises that promoting stability overseas is good for our national security.

The UK has long led international efforts to promote accountability in Sri Lanka alongside partners in the Core Group on Sri Lanka at the UN Human Rights Council, which includes Canada, Malawi, Montenegro, and North Macedonia.

The UK supported Sri Lanka’s economic reform through the International Monetary Fund (IMF) programme, supporting debt restructuring as a member of Sri Lanka’s Official Creditor Committee and providing technical assistance to Sri Lanka’s Inland Revenue Department.

The UK and Sri Lanka share strong cultural, economic and people to people ties, including through our educational systems. The UK has widened educational access in Sri Lanka through the British Council on English language training and work on transnational education to offer internationally accredited qualifications.”.

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China and US fund ambitious Ambuluwawa Cable Car Project

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By Samanthi Weerasekera

China and the United States are jointly funding the ambitious Ambuluwawa Cable Car Project, which, once completed, will offer an unparalleled experience, with cable cars operating over a kilometer between two mountains without any support structures.

During a visit to the project site on Saturday (23), Chinese Ambassador Qi Zhenhong said that this project is another symbol of the strengthening bond between Sri Lanka and China. “It is a pleasure to have a Chinese investor involved in such a project that further strengthens the bond between Sri Lanka and China,” the Ambassador said, reflecting on the significant international collaboration.

NDF Kandy District MP Anuradha Jayaratne, Chairman of the Ambuluwawa Board of Trustees, stated that the feasibility study for this project was first conducted 18 years ago. He credited the success of the project to the joint investments from China and the United States. “I would like to gratefully recall that it was possible to turn this dream into a reality because of the investors from China and America,” Jayaratne said.

He said that the first phase of the Ambuluwawa Cable Car Project, scheduled for completion later this year, is expected to provide a unique travel experience for visitors. Passengers will embark on a 600-meter cable car journey from the entrance gate of the Ambuluwawa Religious and Biodiversity Complex to the summit of Ambaluwawa Mountain. From there, a thrilling 1.2-kilometer ride will take them unsupported to the Ambuluwawa Tower, offering breathtaking views and a glimpse into Sri Lanka’s natural beauty.

Jayaratne noted that the second phase of the project will extend the cable car line to the Gampola Railway Station. This addition will provide a seamless connection for foreign tourists travelling by the Badulla train and those heading to Nuwara Eliya, allowing them to experience Sri Lanka’s first-ever cable car ride. The second phase will not only enhance tourism but is also expected to transform Gampola into a world-class tourist and commercial hub.

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