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State Minister Cabraal dispels fears about Sri Lanka’s debt service capacity

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State Minister of Money and Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal has said nobody should harbour fears of Sri Lanka’s ability to service its debt. Fears being expressed in some quartes are unfounded he has said, issuing a media statement.

Following is a statement issued by the State Minister of Money & Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal on 30th October 2020 “With the spread of the COVID-19 pandemic, all countries including Sri Lanka, observed a contraction in economic activity, reduction in foreign exchange earnings, decrease in revenue collection, and increase in health and welfare related expenditure. However, the prompt and measured policy support provided by the Government and the Central Bank enabled Sri Lanka to contain the unfavourable effects of Covid-19 to a great extent, and return the economy to near-normalcy by mid-May 2020. In fact, most economic activities have displayed a notable revival from May onwards, and this recovery is on-going. The recent detection of a new Covid cluster is now being decisively addressed by the Government, and this wave is also expected to be short-lived. Accordingly, the expansion of the fiscal deficit and the increase in debt levels in 2020, should not be generalised as a prolonged debt distress, but rather as a “one-off” deviation from the clear fiscal consolidation path that has been well articulated in the new Government’s policy framework.

“The election of a new President in mid November 2019 and the formation of a single-party Government with a sizable majority in August 2020, has enable the new Government to address the uncertainties in the political and policy spheres observed during the period 2015 to 2019. Consequently, Sri Lanka has been able to address public health concerns swiftly, as well as take difficult economic decisions with greater confidence. For example, when the Government was of the view that it was necessary to conserve forex, given the likelihood of low foreign exchange earnings due to the pandemic, and the need to prioritize foreign debt service obligations, the Sri Lankan authorities imposed restrictions on non-essential imports from March 2020. Such decisive and bold action, along with the reduction in global petroleum prices, resulted in a substantial saving of nearly US$ 3 billion in terms of expenditure on merchandise imports in the first nine months of the year, compared to the same period of the previous year. This saving, along with the better-than-expected outcomes in terms of merchandise exports, services exports other than tourism, and workers’ remittances, is now projected to compress the external current account deficit to below 1.5% of GDP in 2020.

“It would also be noted that capital flows and official reserves were also affected during the early months of the global outbreak of Covid-19. However, growing business confidence due to decisive action by the Government and the Central Bank has enabled the country to stabilize the exchange rate with only a marginal depreciation of around 1.5% so far this year, even while the Central Bank was able to purchase/absorb US$ 300 million from the domestic foreign exchange market during the year. As a result, official reserves remain close to US$ 6 billion, after settling foreign debt service repayments of around US$ 4 billion thus far during the year, including the repayment of the matured International Sovereign Bond of US$ 1 billion in October 2020. In the meantime, it would be further noted that the Sri Lankan authorities are presently negotiating a loan of USD 700 million from the China Development Bank which is expected to be at an interest rate and terms of repayment that are significantly more favourable than the USD 1 billion Sovereign Bond that was just re-paid. In addition, an attractive, exchange rate risk-free, Forex SWAP facility has been introduced for any foreign investor who invests in Sri Lankan government securities, which is expected to boost foreign exchange inflows particularly from the Middle-East, in the period ahead.

 

“In terms of growth performance, Sri Lanka is once again set to embark on a growth path, following the setback in the first half of 2020 caused by the pandemic. The formulation of the new Government Cabinet and State Ministerial structure, with clear performance indicators has been geared towards improving the efficiency and effectiveness of the economy. These new governance structures are bound to enhance agriculture and agro-based and mineral-based industries, increase export opportunities, as well as facilitate large projects within the Port City, Hambantota Port, and dedicated industrial zones. The expected revitalization of state owned enterprises, together with the private sector-led growth projects would also revert the Sri Lankan economy to the high growth path that was observed prior to 2015 whereby annual growth rates of over 6.5% were regularly recorded.

“In the meantime, Sri Lanka’s entire local debt stock of about Rs. 7.7 trillion (USD 42 billion) as at end July 2020 is being rolled-over and re-priced now at interest rates which are almost half of what was paid in 2019, while the Rupee remains stable. It may also be noted that a new trend has been established where greater reliance is being placed on domestic financing, and that strategy has already improved the “domestic: foreign” ratio of the debt from 51:49 at end 2019 to 56:44 now, which trend the authorities are keen to improve further in the period ahead. It is therefore clear that the Government’s commitment and support towards better debt management, both directly and indirectly, has already started to take effect.

“Sri Lanka is justifiably proud of its immaculate debt service record, without a single default. It would also be noted that Sri Lanka has experienced similar challenging circumstances previously, with high levels of debt. For instance, during 2001-2004, the country’s debt to GDP ratio was well over 100%, and by end 2005, it was at 91%. Nevertheless, Sri Lanka was able to gradually reduce the debt to GDP ratio to just 72% by end 2014 through decisive and innovative action.”



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COVID-19: Jaffna faces serious risk

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Top medical man in North threatens lockdown

Five villages isolated in Ganewatta DS area

20% of IDH patients need oxygen

By Dinasena Ratugamage and Rathindra Kuruwita

Tough restrictions would have to be imposed in Jaffna if religious leaders did not help health authorities, Northern Province Director General of Health Services, Dr. A. Kethiswaran said yesterday. Jaffna was facing a serious risk of COVID-19, he said.

Dr. Kethiswaran said so during a meeting with religious leaders at his office. He said that a large number of devotees were seen at various places of religious worship during the festive period.

“None of these people follow health guidelines. It is impossible to control the virus because of this. At this rate we will have to impose travel restrictions in the Jaffna District. We need everyone’s support, if we are to avoid this fate.”

He then urged religious leaders to inform devotees of the dangers of the virus and not to gather at places of worship in large numbers.

 

Dr. Kethiswaran also said that a large number of policemen in Jaffna had contracted COVID-19. About 258 PCR tests had been carried out on Wednesday after it was found that 13 policemen attached to the Jaffna Police station were infected. Altogether 788 PCR tests were done in the Jaffna District on Wednesday, Dr. Kethiswaran said.

One hundred and forty eight new COVID-19 cases had been detected in several villages in the Ganewatta Divisional secretariat area, Divisional Secretary Niranjala Karunaratne said yesterday.

On Wednesday alone 733 PCR tests had been done there, she said, adding that about 175 individuals had tested positive for COVID-19 there.

Given these developments, Tittawelgala, Hunupola, Siradunna, Aluthgama and Hettigama Grama Niladari divisions at Ganewatta Divisional secretariat area have been isolated.

Travel restrictions were imposed on Kuliyapitiya Town, Thunmodara, Dhandagamuwa – West, Kanadulla and Pahala Weerambuwa as COVID-19 cases were increasing there.

PHI in charge of Divulapitiya said that 84 new COVID-19 cases had been reported from the area during the last 48 hours. However, no decision had been taken to impose travel restrictions in the area, PHI, S.A.U.T Kularatne said.

“Twenty-eight of these patients were among people who attended a sports event organised for the New Year in Aswennawatta Grama Niladari area. Forty-four people who went on a trip at Mellawagedara have also tested positive for SARS-CoV-2. If people are not careful, things might rapidly deteriorate,” he warned.

Deputy Director of IDH said that over 130 COVID-19 patients were undergoing treatment there although the hospital could accommodate only 120 patients.

All eight ICU beds at the IDH are occupied and 20% of the patients there need oxygen. The number of people admitted to hospital had increased after the Sinhala and Hindu New year, health ministry sources said.

Director General of Health Services – Western Province Dr. Dhammika Jayalath urged people to refrain from travelling to Colombo unless it was very urgent.

Director General of Health Services, Dr. Asela Gunawardane said that the coming three weeks would crucial.

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Covid figures: Govt. accused of misleading the country

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By Rathindra Kuruwita

The College of Medical Laboratory Science (CMLS) yesterday claimed that State Minister of Production, Supply and Regulation of Pharmaceuticals, Prof. Channa Jayasumana was making statements on new strains of SARS-CoV-2 without any scientific proof.

Speaking to the media on Wednesday, Prof. Jayasumana said that there had been an increase in the spread of Covid virus in the country, especially among the young people and that was due to a new strain of the virus.

President of the CMLS, Ravi Kumudesh said: “The Minister claimed they were doing a research on this. As far as we know, neither the Ministry nor the University of Sri Jayewardenepura has done any research to identify this new strain. The Ministry of Health stopped identifying new variants a long time ago.”

The Ministry of Health could neither plan for new variants of COVID-19 nor determine what vaccine was effective as it simply didn’t have the equipment to identify new strains, Kumudesh said, adding that identifying COVID-19 variants across the country had been outsourced to the University of Sri Jayawardenepura.

“I have repeatedly said that the Health Ministry officials can’t make science and evidence-based decisions or statements on new strains. Institutions under the Health Ministry do not have the ability to identify new strains of the coronavirus; only the University of Sri Jayewardenepura has a gene sequencing machine. We said this was having a disastrous impact on the country’s pandemic response and here we are,.”

Kumudesh said that identifying various strains of COVID-19 was essential to respond to the pandemic as everything from PCR testing to selecting a vaccine, depended on that.

“There are a number of strains of the virus in the world now and we now know that the new variant that led to a lockdown in the UK is here. We have to be ready to identify what strains are coming.”

Kumudesh said that since the country had opened its airports people from various countries would arrive, carrying new strains. He added that there might also be a new strain that originated here without “our knowledge because we don’t do adequate gene sequencing.

“To identify new variants, we must sequence the genes of viruses detected through PCR testing. We need many gene sequencing machines because one cannot identify new strains through a PCR test. However, the Ministry of Health has not provided a single gene sequencing machine to labs under its purview.”

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CEA accused of turning blind eye to cardamom cultivators raping Knuckles Forest

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By Rathindra Kuruwita

A government decision to allow cardamom plantations inside the Knuckles Forest Reserve, which came under the Forest Conservation Department,it was already having a negative impact on the ecosystem, Sajeewa Chamikara of the Movement for Land and Agriculture Reform (MONLAR) said.

Chamikara said that Knuckles Forest Reserve was not only a unique ecosystem but also an important catchment area for rivers such as Mahaweli and Kalu.

“Illegal Cardamom planters had been operating in the forest area for many decades and there had been many attempts to get rid of them,” Chamikara said

About six years ago, there was an attempt to remove illegal Cardamom planters from the Knuckles Forest Reserve. When the Forest Conservation Department tried to remove these encroachers, based on a court order, several politicians and officials intervened on their behalf, the environmentalist said. Due to those interventions, illegal Cardamom planters could not be removed from the Knuckles Forest Reserve, he added.

“In many areas of the Dumbara mountain range, forest undergrowth has been cleared to make way for cardamom plantations. This has drastically increased soil erosion and the soil that is swept away by rains have been deposited in many reservoirs after being taken downstream to the Mahaweli Ganga. Moreover, many trees have been cut to use as firewood to dry cardamom. There are many structures used to dry the cardamom dotting the Knuckles mountain range and these activities cause significant damages to the ecosystem.”

Chamikara said it was illegal to cut trees, cultivate and clear land in a Conservation Forest. The offences carried jail terms or fines or both. Moreover, the court could estimate the damage done to the forest and make the guilty pay that amount. Under the law, even people who encouraged such violations could be prosecuted.

“The CEA has the power to act against those who carry out such illegal activities. According to Section 23 (a.) (a.) of the National Environmental Act, when a project is carried out without obtaining approval, the CEA can present such people before a magistrate’s court. If found guilty a person can be fined up to Rs. 15,000 or imprisoned up to two years or subjected to both. Unfortunately the authorities concerned are turning a blind eye.”

 

 

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