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Tuesday June 25th, 2024

Crisis-hit Sri Lanka opens education sector with reforms aiming at investments, opportunities

ECONOMYNEXT – Sri Lanka is in the process of opening up its education sector with crucial reforms to change its state-sector led universities to private sector-led investments to ensure professionalism and increase employability, Justice Minister Wijeyadasa Rajapakshe said.

Rajapakshe, who has come up with a report after consulting all stake holders, said the reforms are must to change the country’s education system.

“We propose to formulate a state policy which will be approved by the parliament and that policy will be changed with the change of government or ministers,” Rajapakshe told reporters in Colombo on Tuesday.

The plan is to abolish the current University Grant Commission and to establish a new Higher Education Commission which will monitor and regulate state universities, private universities, professional education entities, and quality assurances. A separate accreditation unit is expected to be established under the same Commission, the minister said.

The move will help to establish more private universities in the country and create more opportunities for the students who are not selected to state universities.

The island nation has faced with strong resistance for private universities in the country as leftist politicians and Marxists have protested in street against the move citing that the move will compromise the quality of the outputs.

But that has led to thousands of students leaving the country for foreign universities for higher education. The move also has resulted in outflow of foreign exchange.

“We can stop the foreign exchange outflow. We can provide a higher quality education. Internationally well-accepted universities are ready come here. But we have not created an enabling environment for that,” Rajapakshe said.

“We have discussed this with the BOI (Board of Investment) as well. The BOI has agreed to provide us University village infrastructure.”

“Last two to three decades, all were talking, and nothing has been happening. Now we are determined to do it. Otherwise, we can’t expect educated younger generation in the future.”

“Under any circumstances, no government can give higher education to all the students who are qualified to continue with the higher education. Out of around 190,000, the government can cater only for 45,000 students.”

Rajapakshe was critical of past demands by socialists and leftists for state-led higher education.

“What socialism, what Marxism? That’s nonsense. In all those (socialist) countries, the private education has been promoted,” he said.

“What they say is you must only concentrate on state universities. Don’t open this (sector) and give all the resources to us and don’t give anything to other 120,000 students. They are trying to have a monopoly. It is a crime.”

The minister said the report will be discussed and debated in the parliament while the public also will be consulted before the policy becomes a law. (Colombo/September 13/2023)

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  1. Sanath Gunawardena says:

    Good move

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  1. Sanath Gunawardena says:

    Good move

Sri Lanka to sign Paris Club debt deals as fresh ISB talks to also start

ECONOMYNEXT – Sri Lanka will sign agreements on restructured debt with Paris Club creditors Wednesday, Cabinet spokesman Minister Bandula Gunawardana said as sources said talks with private creditors are also due to start later in the week.

The relevant senior officials and State Minister Shehan Semasinghe has already left the country to sign the agreements, Minister Gunawardana said.

Sri Lanka has held detailed negotiations with bilateral creditors ever since a sovereign default in 2022 and President Ranil Wickremesinghe has personally met leaders of friendly countries to expedite the restructuring, he said.

The finalizing of the restructure was a ‘great victory’ for Sri Lanka he said.

Details will be revealed to parliament by President Wickremesinghe and an address to the nation on Wednesday he said.

Discussion with private bondholders are also taking place separately, he said.

Face to face talks with bond holders are likely to start Thursday, sources said.

Investors in a steering committee representing key bondholders have halted trading and are in a ‘restricted’ period Bloomberg Newswires reported.

Sri Lanka is attempting to restructure 12.5 billion dollars of sovereign bonds and about 1.7 billion dollars of past due interest following the declaration of an external default in 2022.

Private investors are seeking some so-called macro-linked bonds whose final haircut is linked to dollar GDP as well as some standard or ‘plain vanilla’ bonds with an upfront haircut.

The style of bonds have not been used in sovereign restructurings before. In the latest round of talks more plain vanilla bonds may be discussed, sources aware of the thinking of some bond investors said.

The ISB holders have proposed a 28 percent haircut and a 1.8 percent consent fee. The macro-linked bonds would have principle re-stated up to 92 percent of the original depending on the evolution of gross domestic product.

Sri Lanka is restructuring debt using an IMF debt sustainability model applied to middle income countries with market access as opposed to debt sustainability model used in countries like Ghana applicable to low income countries requiring deeper haircuts on both domestic and foreign debt.

Hair cuts may also depend on the maturity of bonds and the coupon interest.

Ghana has higher levels of commercial debt having started to access capital markets from around 2007.

Ghana also has a bad central bank like Sri Lanka and has gone to the International Monetary Fund 18 times.

The country is also operating flexible inflation targeting (inflation targeting without a clean float), which critics say is the latest spurious monetary regime peddled to hapless unstable countries without a doctrinal foundation in sound money.

Having done broad domestic debt restructuring as well as continued currency volatility both interest rates and inflation remains above 20 percent.

Ghana’s central bank has a worse monetary anchor (8 percent inflation plus 2 percent) compared to 5 percent plus two in Sri Lanka and runs into currency trouble despite being an oil producer like Iran, Venezuela and neighboring Nigeria.

Nigeria has an inflation target of 6-9 percent but ends up with around 20 plus inflation and currency trouble.

Sri Lanka has undershot its inflation target since reaching monetary stability in September 2022 and has appreciated the currency, amid deflationary policy giving a strong foundation for economic activity to resume. (Colombo/June26/2024)

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Sri Lanka to seek investors for 200MW BOOT power plant

EONOMYNEXT – Sri Lanka’s cabinet has given approval to seek investors for a 200 MegaWatt independent power plant on a build-own-operate-and-transfer (BOOT) basis, a government statement said.

The internal combustion power plant will be capable of running on natural gas and is part of the Long-Term Generation Expansion of state-run Ceylon Electricity Board.

The investor will get as 20-year power purchase agreement.

Land next to the ‘Sobhadanavi’ combined cycle plant will be made available for the developer.

According to the generation plan, the 200MW IC plant is expected to come on stream by 2026.

In 2026, a 115 MW gas turbine, a CEB owned diesel plants of 68 MW and 72 MW are due to be retired. (Colombo/June25/2026)

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Sri Lanka rupee closes steady at 305.25/35 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed fairly flat at 305.25/35 to the US dollar on Tuesday, down from 305.20/30 to the US dollar on Monday, dealers said, while bond yields up.

A bond maturing on 01.06.2026 closed at 10.75/11.05 percent.

A bond maturing on 15.12.2026 closed at 10.65/11.05 percent, up from 10.45/85 percent.

A bond maturing on 15.10.2027 closed at 10.65/11.10 percent.

A bond maturing on 15.03.2028 closed at 11.20/11.50 percent.

A bond maturing on 15.09.2029 closed at 12.10/15 percent, up from 12.05/17 percent.

A bond maturing on 01.12.2031 closed at 12.10/20 percent, up from 12.08/15 percent.

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