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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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Fast Attack Craft P 4447 recovered in successful salvage operation

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The Sri Lanka Navy successfully recovered its Fast Attack Craft P 4447 following a successful salvage operation, bringing a multi-stage emergency response to a close.

The craft, which ran into distress during a routine patrol on 15th August 2026 off Angulana, was brought to the surface on 11th September, from a depth of approximately 80 feet. It was
subsequently towed to the Colombo Dockyard premises.
The initial phase of the operation immediately following the incident focused on search and rescue. A joint effort involving the Navy, Air Force, Police, and local fishermen from Angulana
resulted in the rescue of 11 crew members. The search and rescue phase drew to a close with the recovery of the remains of the Second in Command of the craft, on 4th September.

Following the search and rescue phase, specialized Navy diving and salvage teams launched a dedicated recovery phase against rough sea conditions and underwater challenges, adhering to
strict safety protocols. The Navy’s marine, hull, electrical, and electronic engineering teams utilized specialized technical know-how and equipment to raise the vessel in stages.

Thus, the salvage operation marked an outstanding achievement attained through the professionalism, technical expertise of Navy divers, and coordinated contribution of all
engineering and technical branches of the Sri Lanka Navy. Technical support and specialized expertise were also extended by the Sri Lanka Ports Authority and Colombo Dockyard PLC.

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CIABOC member’s appointment: Controversy over Speaker under probe heading selection process

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By Shamindra Ferdinando

The Opposition should intensity its focus on the forthcoming selection of a member of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) and remain vigilant as Speaker Dr. Jagath Wickremaratne, MP, the head of the Constitutional Council (CC) tasked with making the relevant recommendation, is under investigation by the CIABOC, sources familiar with the ongoing inquiry told The Island.

Chethiya Goonasekara, PC, is expected to complete his three-year term on Dec 31, 2026. Sources pointed out that CIABOC Commissioners are appointed by the President on the recommendation made by the 10-member Constitutional Council.

The CIABOC initiated the investigation following a complaint lodged by suspended Chief of Staff and Deputy Secretary General of Parliament Chaminda Kularatne in early February this year. Sources said that as Goonasekera is scheduled to complete his term toward the end of 2026, the CC would have to call applications soon to choose the successor.

Goonasekara received his appointment from President Ranil Wickremesinghe in January 2024. A Justice W. M. N. P. Iddawala was appointed Chairman of the CIABOC. The other commissioner is K. Bernard Rajapakse.

Asked whether Iddawala and Rajapakse, too, would complete their terms soon, sources said that in terms of the Anti-Corruption Act No 09 of 2023, the Chairman of CIABOC would hold office for a period of five years, second commissioner (K. Bernard Rajapakse) for four years and the third commissioner (Chethiya Goonasekara) for a period of three years.

Sources said that the Opposition as well as civil society representatives in the CC should take up the issue of Speaker facing an investigation by the CIABOC taking part in the forthcoming selection process. Responding to queries, sources emphasized that the issue was whether in terms of Section 107 of the Anti-Corruption Act the participation of the Speaker in the selection process amounted to a violation of the Act itself.

The current members of the CC are Dr Jagath Wickramaratne, Speaker and Chairman of the Constitutional Council, Dr. Harini Amarasuriya, Prime Minister, Sajith Premadasa, Leader of the Opposition, Bimal Rathnayake, MP, Aboobucker Athambawa, MP, Ajith P. Perera, MP, Sivagnanam Shritharan, MP, Austin Fernando, Civil society representative, Prof. Wasantha Seneviratne, Civil society representative and Ranjith Ariyaratne, Civil society representative.

Sources pointed out that in spite of the sensitivity of the case, the CIABOC recorded Kularatne’s statement in the second week of August, six months after he lodged the complaint.

The CIABOC on 3, 8 and 10 Sept recorded the statements from the Transport Officer, Deputy Director, Administration and Assistant Director, Finance regarding the use of facilities by the Speaker, those assigned to his staff and other relevant matters.

The NPP named Dr. Wickramaratne as the Speaker after Asoka Ranwala resigned over controversy regarding his higher education qualifications.

SJB lawmaker Dayasiri Jayaskera has repeatedly raised the issues concerning the Speaker with the focus also on the Speaker using two government-managed residences, relevant staff in addition to expenditure on food, transport and fuel provided to the Speaker’s private secretary.

Political sources said that trouble erupted after the Parliamentary Staff Advisory Council in late January sacked Kularatne accusing him of providing false information to secure his appointment. Before being appointed as the Deputy Secretary-General of Parliament in 2023, Kularatne held several high-ranking positions, including Secretary to the Chief Government Whip, Additional Secretary to the President, Additional Secretary to the Prime Minister, and Additional Secretary to the Leader of the Opposition.

The SJB declared in Parliament that Ranwala should be brought back as the Speaker as they have no faith in Wickramaratne. MP Mujibur Rahuman jokingly told parliament that the Opposition wouldn’t raise Ranwala’s educational qualifications.

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GMOA: Countrywide cadre revision not done since 2015

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Dhammika

The Government Medical Officers’ Association (GMOA) has stressed the need to conduct a comprehensive countrywide cadre revision urgently.

GMOA spokesman Dr. Lasitha Dhammika told The Island that the failure on the part of successive governments to conduct cadre revision caused the deterioration of the public sector health services. Due to the absence of required statistics, they hadn’t been able to fully comprehend the situation on the ground and to ascertain the requirements of the public.

Dr. Dhammika pointed out the expansion of the services without supporting statistics and the need to initiate an immediate cadre revision. According to him, the GMOA had raised this issue with successive governments without success. The GMOA spokesman said that they also sought relevant information from the Health Ministry in terms of the Right to Information (RTI) Act two weeks ago but was yet to receive response.

(SF)

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