Uncertainty in Debt Restructuring from Creditors is Delaying Sri Lanka’s IMF Bailout Package; Chinese Debt under Focus … writes Kaliph Anaz
Although Sri Lankan authorities are claiming that negotiations with creditors regarding USD 2.9 billion IMF package is “progressing well”, they are yet to spell out where exactly the government’s debt restructuring efforts stand. Debt restructuring is one of the pre-requisites of IMF’s bailout package for Sri Lanka. It is getting delayed given Sri Lanka’s dire situation. Sri Lanka seems to be missing the December deadline, but Governor of the Central Bank of Sri Lanka Nandalal Weerasinghe expressed optimism that if Sri Lanka missed the December deadline to report to the IMF, “we still have time until January”.
Ranil Wickremesinghe.(photo:Twitter)
No doubt Sri Lanka is working hard to obtain financing assurances from its diverse creditors. Observers assess that the loans obtained from China, the island nation’s largest bilateral lender, is under sharp focus, some even believing that a delay in concrete commitment from China is acting as impediment.
Opposition legislator from the Tamil National Alliance Shanakiyan Rasamanickam accused China of stalling Sri Lanka’s IMF deal and “forcing down” unnecessary projects by “paying bribes” to Sri Lankans. “If China is truly Sri Lanka’s friend, ask the Chinese to help with the [debt] restructuring and the IMF programme.” Referring to Rajapaksa-era mega infrastructure projects in Hambantota and Colombo funded by the Chinese, the Batticaloa MP said: “That is not China being Sri Lanka’s friend, that is China being Mahinda Rajapaksa’s friend.”
However, responding to the allegations, the Chinese Embassy claimed that working teams of different Chinese banks have visited the island, and “bilateral negotiations are on”. The Embassy contended that his understanding was “incorrect and incomplete.”
Months after opting for a pre-emptive and disorderly default on its USD 51 billion foreign debt, Sri Lanka reached a staff level agreement with the International Monetary Fund (IMF) in September. The government said the programme would put Sri Lanka’s battered economy on a path to recovery and reform, making the bankrupt country eligible to borrow again from international sources.
However, the IMF made its support contingent on Sri Lanka obtaining adequate financing assurances from all its creditors. While private lenders, mainly holders of International Sovereign Bonds, account for the largest chunk of Sri Lanka’s external debt, China, India, and Japan are the top three bilateral creditors, and play a crucial part in the ongoing negotiations.
(ANI)
In this scenario, research study published by the China Africa Research Initiative at the Johns Hopkins University School of Advanced International Studies in Washington D.C., authored by Sri Lankan Economists Umesh Moramudali and Thilina Panduwawala argued that China will have to play “a major role” in Sri Lanka’s debt restructuring process with USD 7.4 billion or 19.6% Sri Lanka’s outstanding public debt owed to China at the end of 2021.
The Chinese investments under the BRI and bilateral projects with other countries have always been seen with suspicion for their lack of economic feasibility as well as debt creating potential. Now as Sri Lanka is negotiating with China for debt restructuring and China has claimed to have shown readiness for restructuring its debt to Sri Lanka, “It will be the first time a major Asian Belt and Road Initiative borrower is going through the process… China’s approach to Sri Lanka’s debt restructuring and the extent of debt relief offered will set a precedent for China’s role and behaviour in other countries as well,” said the research report.
However, the uncertainty and lack of clarity regarding the extent and time frame of China’s restructuring of its debt to Sri Lanka is delaying its bailout package from the IMF. Meanwhile observers are wondering about the restructuring framework whether Sri Lanka is adhering to the principle of “comparative and equitable treatment” of all creditors, and the “salutary effect” the process might have on the Sri Lankan economy.
One of the silver linings is that the World Bank approved Sri Lanka’s request to access concessional financing on December 5, 2022 from the International Development Association (IDA). This type of financing, which is offered at low interests, will enable the country to implement its government led reforms programme to stabilize the economy and protect the livelihood of millions of people facing poverty and hunger. It is a development which marks Sri Lanka going reverse in economic stature. Ali Sabry, Minister of Foreign Affairs of Sri Lanka, rightly said, “The reverse graduation to IDA will enable us to access resources to help sustain institutions to become more resilient and responsive to the needs of the people of Sri Lanka.”
The International Bank for Reconstruction and Development, a member of the World Bank group, in response to the country crisis has repurposed USD 325 million and a further USD 70 million from other regular bank operations towards crisis response for basic service needs. This has also helped leverage support from other multilateral development institutions, bilateral donors, UN agencies around a common crisis response mechanism.
The requirement for a negative Covid-19 test on arrival or before boarding, includingPCR and rapid antigen tests (RAT), was no longer required…reports Asian Lite News
Sri Lanka’s Health Ministry on Wednesday said it has removed Covid-19 restrictions that were in place on for foreign arrivals.
In a statement, the Ministry that the requirement to produce a Covid-19 vaccination certificate by any person arriving from overseas has been removed with immediate effect, reports Xinhua news agency.
Also, the requirement for a negative Covid-19 test on arrival or before boarding, including polymerase chain reaction (PCR) and rapid antigen tests (RAT), was no longer required.
If foreign nationals or tourists test positive for the virus after landing in Sri Lanka, they should isolate themselves for seven days in a private hospital, hotel, or where they reside, said the Ministry.
It added that the cost of treatment or isolation should be borne by themselves.
It was the latest of a series of meetings High Commissioner Moragoda has had with Sitharaman since November last year on Indian economic cooperation and assistance to Sri Lanka…reports Asian Lite News
Sri Lanka High Commissioner to India, Milinda Moragoda on Tuesday met with Union Finance Minister Nirmala Sitharaman and thanked her for the brief emergency assistance India has provided to the island nation throughout its difficult period.
The Sri Lankan envoy also briefed the finance minister on Sri Lanka’s ongoing discussions with the International Monetary Fund (IMF) and the present status of the country’s debt restructuring process, according to the official statement of the High Commission of Sri Lanka in New Delhi. Taking to Twitter, Sri Lanka’s High Commission in New Delhi tweeted, “High Commissioner @MilindaMoragoda met with the Finance and Corporate Affairs Minister of India @nsitharaman today (06) to review the status of bilateral economic cooperation.#lka”
Notably, it was the latest of a series of meetings High Commissioner Moragoda has had with Sitharaman since November last year on Indian economic cooperation and assistance to Sri Lanka in the context of the present crisis, the official statement read.
Additionally, Moragoda informed her of the severe effects that Sri Lanka’s current economic contraction is having on the country’s poor and most vulnerable populations.
The High Commissioner emphasized that India could play a significant role in Sri Lanka’s economic revival through multifaceted economic integration between the two countries by enhancing investments, tourism, and trade. Minister Sitharaman and High Commissioner Moragoda also reviewed the status of bilateral economic cooperation.
Dairy devleopment
Sri Lankan President Ranil Wickremesinghe has appointed a committee to work with Indias National Dairy Development Board (NDDB) to develop the island nation’s dairy industry.
The committee consisting of representatives of the public and private sectors will work with the multidisciplinary team of the NDDB to prepare a short, medium and long-term plan to increase local milk production to reduce the country’s dependence on imported milk powder.
“The NDDB and India’s Amul Milk Company have taken steps to provide the necessary technical support for the production of liquid milk in Sri Lanka,” the President Media Division (PMD) said.
“It was discussed at length about doubling local milk production by implementing short and medium-term plans and making Sri Lanka self-sufficient in milk in the long run through a targeted program,” the PMD noted.
NDDB’s Senior General Manager Rajesh Onkarnath Gupta, General Manager Sunil ShivprasadSinha, Senior Manager Rajesh Kumar Sharma and other representatives participated in the discussion with officials from Sri Lanka’s Agriculture Ministry and the National Livestock Development Board.
Consuming mostly powdered milk, Sri Lanka imports milk powder from New Zealand and the island nation’s monthly consumption of milk powder is around 6,500 metric tonnes.
According to reports, Sri Lanka spends around $400 million a year for the importation of milk powder.
Various governments have tried to stop importing milk powder and promote liquid milk as drain of dollars has become a major burden on the ailing economy.
Among other essentials milk and powdered milk specially for children went on shortage early this year mainly due to inflation and dollar crunch.
Shortages of other food items, fuel, cooking gas and medicine lead people to take to streets and topple the Rajapaksa government earlier this year. (with inputs from ANI and IANS’ Susitha Fernando)
The island nation is going through the worst-ever financial crisis since the country’s independence in 1948 and battling with the skyrocketing inflation and dollar crunch..writes Susitha Fernando
Visiting representatives from the World Bank (WB), Asian Development Bank (ADB), International Monetary Fund (IMF) and Asian Infrastructure Investment Bank (AIIB) have ruled that a coordinated assistance program supported by multilateral financial institutions is vital for Sri Lanka’s recovery from the current economic crisis.
On Tuesday, the group of representatives, which included WB Vice President Martin Raiser, ADB Vice President Shixin Chen, IMF’s Senior Mission Chief Peter Breuer and AIIB’s Urjit Patel, met President Ranil Wickremesinghe, other ministers and top financial officials in Colombo.
Wickremesinghe, who also holds the Finance portfolio, presented Sri Lanka’s development programme associated with the economic recovery and growth along with the vision for long-term development.
The meeting also saw the participation of Prime Minister Dinesh Gunawardene, Governor of the Central Bank of Sri Lanka Nandalal Weerasinghe, former GovernorIndrajith Coomaraswamy and many other senior officials from the government institutions and other institutions.
Flag of Sri Lanka
Going through the worst-ever financial crisis since the country’s independence in 1948 and battling with the skyrocketing inflation and dollar crunch, Sri Lanka decided to default its $51 billion foreign debt in May.
In September the island nation reached a staff-level agreement with the IMF to obtain a conditional $2.9 billion package. But the country has to obtain assurance from its diverse creditors including India, Japan and China.
India, which has provided over $3.8 billion financial assistance since January, the biggest ever by a single country, has urged the IMF to assist its southern neighbour, while Japan in September announced its support for the island nation to secure the IMF bailout.
China, the top lender since the end of civil war in 2009, is yet to announce its stance.
Last week, Shanakiyan Rasamanickam, an Opposition lawmaker representing the Tamil National Alliance, charged that China was stalling Sri Lanka’s IMF deal.
“If China is truly Sri Lanka’s friend, ask the Chinese to help with the debt restructuring and the IMF program,” he challenged.
Questioned by the media on Monday, China’s Foreign Ministry spokesperson Mao Ning said that Beijing would assist the countries and financial institutions to resolve Colombo’s crisis.
“China attaches high importance to Sri Lanka’s difficulties and challenges. We support the financial institutions in working out ways with Sri Lanka to properly solve the issue. We also hope relevant countries and international financial institutions will work with China and continue to play a constructive role in helping Sri Lanka overcome the current difficulties, ease its debt burden and realize sustainable development,” the spokesperson added.
According to reports, Sri Lanka spends around $400 million a year for the importation of milk powder…reports SUSITHA FERNANDO
Sri Lankan President Ranil Wickremesinghe has appointed a committee to work with Indias National Dairy Development Board (NDDB) to develop the island nation’s dairy industry.
The committee consisting of representatives of the public and private sectors will work with the multidisciplinary team of the NDDB to prepare a short, medium and long-term plan to increase local milk production to reduce the country’s dependence on imported milk powder.
“The NDDB and India’s Amul Milk Company have taken steps to provide the necessary technical support for the production of liquid milk in Sri Lanka,” the President Media Division (PMD) said.
“It was discussed at length about doubling local milk production by implementing short and medium-term plans and making Sri Lanka self-sufficient in milk in the long run through a targeted program,” the PMD noted.
NDDB’s Senior General Manager Rajesh Onkarnath Gupta, General Manager Sunil ShivprasadSinha, Senior Manager Rajesh Kumar Sharma and other representatives participated in the discussion with officials from Sri Lanka’s Agriculture Ministry and the National Livestock Development Board.
Consuming mostly powdered milk, Sri Lanka imports milk powder from New Zealand and the island nation’s monthly consumption of milk powder is around 6,500 metric tonnes.
According to reports, Sri Lanka spends around $400 million a year for the importation of milk powder.
Various governments have tried to stop importing milk powder and promote liquid milk as drain of dollars has become a major burden on the ailing economy.
Among other essentials milk and powdered milk specially for children went on shortage early this year mainly due to inflation and dollar crunch.
Shortages of other food items, fuel, cooking gas and medicine lead people to take to streets and topple the Rajapaksa government earlier this year.
With this app, tourists will be able to check their locations, and take some steps to ensure their safety if they face any danger…reports Asian Lite News
Sri Lanka will introduce a mobile app for the safety of tourists coming to the South Asian country, Minister of Tourism and Lands Harin Fernando said here.
He told reporters that the mobile app will also help boost Sri Lanka’s tourism, reports Xinhua news agency.
The Minister said that he has already informed a select group of parliamentarians about this proposal, and the mobile app will be launched in January 2023.
With this app, tourists will be able to check their locations, and take some steps to ensure their safety if they face any danger.
Pic credits Twitter @fernandoharin
A detachment of tourist police will be deployed at all beaches that are frequented by tourists, Fernando said.
Tourism, which is one of Sri Lanka’s leading foreign exchange earners, has suffered a setback due to the Covid-19 pandemic and the economic and political crises in the country.
Sri Lanka aims to attract around 1.5 million tourists in 2023 and 3 million tourists in 2024.
The Tourism Ministry said the arrival of the cruise liner gave a boost to the South Asian country’s tourism….reports Asian Lite News
A super luxury cruise ship arrived at the Colombo Port on Tuesday carrying over 2,000 tourists, the Sri Lanka Ports Authority (SLPA) said.
The “Mein Schiff 5” owned by a German operator docked at the capital city with ceremonies and cultural shows planned throughout the day, reports Xinhua news agency.
Officials from the SLPA said the ship received a ceremonious welcome at the Colombo Port and the passengers would be offered excursions for the majority of the locations and tours covering the city, the south and the central highlands.
The Tourism Ministry said the arrival of the cruise liner gave a boost to the South Asian country’s tourism.
Nine international passenger cruises were expected to arrive in Sri Lanka by March next year, which would revive the country’s pandemic-battered tourism and attract much-needed foreign exchange.
Lankan minister said that they plan on boosting renewable energy in 2023 and that this is the best source of power for Sri Lanka…reports Asian Lite News
Sri Lanka’s Power and Energy Minister Kanchana Wijesekera on Saturday said that he will take all possible measures to ensure uninterrupted power supply by January next year.
Sri Lanka has been experiencing daily power cuts since February 2022 and at one point the power cuts spanned for 13 hours, which are now down to around two hours a day, Xinhua News Agency reported.
Talking to journalists, the minister said that they have taken steps to drastically reduce power cuts in the last few months.
However, he pointed out that it is impossible to do that without revising the electricity charges, saying that it is best to revise the electricity bill every year in the months of January and June.
Wijesekera also said that they plan on boosting renewable energy in 2023 and that this is the best source of power for Sri Lanka.
Flag of Sri Lanka
IMF deadline
Sri Lanka is likely to miss next month’s deadline for securing the International Monetary Fund (IMF) loan, Daily Mirror reported citing financial analysts based in Washington DC.
The Sri Lankan newspaper said if the country missed the December IMF deadline, it would have to wait for March 2023 to secure a USD 2.9 billion loan from the IMF in eight equal tranches. Sri Lanka is facing an unprecedented macroeconomic crisis. Years of fiscal indiscipline and risky commercial borrowing have led to unsustainable public debt levels. Official reserves and net foreign assets in the banking system have been depleted, as the country continued to service debt and facilitate imports without access to international financial markets.
The Daily Mirror report said that even as the risk of default emerges, the island nation’s primary bilateral debtor China has shown little or no interest in restructuring its debt.
“If we can move and come to an agreement by December, which means coming to an agreement by mid-November, and going up to the IMF Board in mid-December, we will gain a big advantage. However, I don’t know whether we can do it for the simple reason that in China the focus has started now after the 20th party congress. However, we must aim to have it by January,” Sri Lankan President Ranil Wickremesinghe said.
Photo taken on April 19, 2022 shows the IMF headquarters in Washington, D.C., the United States. (Photo by Ting Shen/Xinhua/IANS)
According to a report by World Bank, the foreign exchange liquidity constraint has translated into shortages of fuel, food, medicines, cooking gas, and inputs needed for economic activity.
Amid depleted reserves, Sri Lanka announced an external debt service suspension in April 2022 and appointed financial and legal advisors to support debt restructuring. Unprecedentedly high inflation has adversely affected real incomes, food security and living standards.
The economy was already showing signs of weakness before the COVID-19 pandemic. Growth and poverty reduction had slowed in the five years leading into the pandemic. A restrictive trade regime, weak investment climate, episodes of loose monetary policy and an administered exchange rate had contributed to external imbalances.
Combined with these pre-existing fiscal imbalances, the tax cuts in 2019 contributed to a rapid growth in debt, to unsustainable levels. Following credit rating downgrades, Sri Lanka then lost access to international financial markets in 2020.
As the crisis deepened, Sri Lanka sought support from the IMF. A staff-level agreement between the IMF and authorities – on a 48-month Extended Fund Facility program of about USD 2.9 billion – was reached in September 2022.
However, financing assurances to restore debt sustainability from official creditors and making a good faith effort to reach a collaborative agreement with private creditors are crucial before the IMF can provide financial support. (ANI)
China also wants to facilitate the export of the species from Sri Lanka to China…reports Asian Lite News
Over 12,32,749 farmers will be provided with fuel and over 3,796 fishing vessels in Sri Lanka.
“The 10.6 million litres of diesel donation by #China will be provided free of cost to:1232,749 farmers for harvesting 342,266 hectares paddy fields across in Maha season 2022/23 (20L/hectare). 2all the 3,796 fishing vessels below 40 feet in (1,000L/vessel),” the Chinese Embassy in Sri Lanka tweeted. As per a recent report by Geo-Politik, China has been extensively taking interest in Sri Lanka as the report revealed that the communist nation is investing in the sea-cucumber farms in Sri Lanka, that has the capability of boosting exercise performance and have anti-fatigue effects.
China also wants to facilitate the export of the species from Sri Lanka to China.
However, there have been reports of protests by the local farmers saying that these aquaculture projects are likely to have an adverse impact on their livelihood, the local marine ecology and the land, reported Geo-politik.
The world knows that there are no bounds to Chinese ambitions, but their pursuit of becoming the most powerful in the world is likely to cause tremendous harm to vulnerable countries such as Sri Lanka.
Investment in cucumber farms
China is investing in the sea cucumber farms in Sri Lanka, that has the capability of boosting exercise performance and have anti-fatigue effects.
China want to facilitate the export of the species from Sri Lanka to China. The Chinese joint venture company, Gui Lan (Pvt) Ltd had already established an artificial breeding production facility (hatchery) in Jaffna’s coastal village of Ariyalai as far back as 2016 to provide juvenile cucumber stock to support further production, reported Geo-politik. While the climate in Sri Lanka is quite suitable for sea cucumber production, there can be catastrophic consequences for the local marine ecology if large-scale production is undertaken.
There have been reports of protests by the local farmers saying that these aquaculture projects are likely to have an adverse impact on their livelihood, the local marine ecology and the land, reported Geo-politik.
In 2021 alone, Sri Lanka exported about 336 tons of sea cucumbers with China being the biggest importer. The Sri Lankan government is undoubtedly willing to give into the Chinese pressure as currently, it would do anything to stabilize its battered economy. The Sri Lankan government is therefore welcoming all Chinese investment in the production of sea cucumber with open arms.
In June of 2022, the Cabinet approved a proposal for a large-scale commercial sea cucumber project spanning 5000 acres in the Jaffna, Mannar, Kilinochchi and Batticaloa districts in the northern and eastern regions of Sri Lanka.
In some of these places, the designated areas for sea cucumber farming have been fenced off, restricting access to some of the adjoining land and adversely affecting the only means of livelihood of the local fishermen, reported Geo-politik.
The National Aquaculture Development Authority under the Ministry of Fisheries in the leading authority on the issue, facilitating such exploitation to take place.
Pungudutivu, the region where the farm is being proposed is very close to Nainativu, one of the three islands which have been cleared for the Chinese renewable energy projects. The Chinese, in this fashion, use their influence to further expand their interests at the cost of other countries.
It is worth asking why the Chinese insist so vehemently on acquiring sea cucumbers, with so much money being pumped into other countries for their production. Are they living in the hope of becoming a superior race with ultra-human capabilities of longer lifespans and young and tireless bodies?
The country, quite possibly also has aspirations to produce the best high-performing athletes in the world, merely to prove its superiority, reported Geo-politik.
Sea cucumbers are known for improving ‘exhaustive swimming time, increasing fore limb grip strength, reducing metabolite accumulation, relieving muscle injury, enhancing muscle glycogen and energy metabolism.’
Other reports also suggest that sea cucumbers are highly used in Traditional Chinese Medicines (TCM) that claim to cure impotence, constipation, frequent urination, joint pain, and increasing longevity.
Sea cucumbers are barrel-shaped Holothuroidea that are a part of a larger animal group called Echinoderms which also include starfish and sea urchins. These creatures survive in the ocean, inhabiting either the shallow or the deep end.
The species is not only used in the production of TCM but is also considered a delicacy in China. It is in high demand in the international market with China being one of the major buyers, making it one of the most expensive seafood items sold globally, reported Geo-politik.
The world knows that there are no bounds to Chinese ambitions, but their pursuit of becoming the most powerful in the world is likely to cause tremendous harm to vulnerable countries such as Sri Lanka. (ANI)
The New Democratic People’s Front stressed during the protest that Pakistan should not contribute to the rise of terrorism under any circumstance…reports Asian Lite News
The New Democratic People’s Front, a political party, held a protest outside the High Commission of Pakistan in Sri Lanka’s capital Colombo and remembered the victims of 26/11 Mumbai attack, asking Islamabad to take steps to end terrorism, Trueceylon reported.
The protest was conducted under the themes of ‘eradicate terrorism’, ‘Pakistan should support to end terrorism’, and ‘Pakistani terrorism is a threat not only to South Asia but the entire world’ and lasted for over one hour. A Sandeshaya was handed over to the commission with the request that terrorism is eradicated from the world, according to Daily Mirror.
The General Secretary of the New Democratic People’s Front Party, VG Yoharajan Pillayi, presented an appeal to the Administrative Officer of the High Commission of Pakistan, Thilanka, requesting the government of Pakistan to take steps to end terrorism.
The New Democratic People’s Front stressed during the protest that Pakistan should not contribute to the rise of terrorism under any circumstance.
The letter further pointed out the incident where the Sri Lankan, Priyantha Kumara Diyawadana was brutally beaten to death by the Pakistanis as a result of their terrorist beliefs, reported Trueceylon.
Terrorism.
According to the Pakistani newspaper Dawn, on December 3, 2021, Kumara, 49, who was the manager of a factory in district Sialkot, was lynched by a mob, comprising hundreds of protesters, including the employees of his factory. The mob tortured him to death and later burnt his body.
Pakistani’s anti-terrorism court indicted 89 individuals involved in the lynching of a Sri Lankan national in Sialkot over blasphemy allegations last year.
While highlighting the extreme Pakistani terrorism demonstrated in the Mumbai attack on 26/11, the appeal concluded that the government of Pakistan should emphasize taking measures to end terrorism for a safer world, reported Trueceylon.
On November 26, 2008, 10 Lashkar-e-Taiba (LeT) terrorists arrived through sea and open fire, killing 166 people, including 18 security personnel, and injuring many during the three-day siege in Mumbai.
Though nine terrorists were killed by the security forces, then ATS Chief Hemant Karkare, Army Major Sandeep Unnikrishnan, Mumbai’s Additional Police Commissioner Ashok Kamte, and Senior Police Inspector Vijay Salaskar were among those killed in the attack. (ANI)
