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Sunday January 29th, 2023

Extremist organisations to be banned to prevent future attacks such as the Easter strikes

Police and Ambulances outside the Shrine of St Anthony in Kochchikade after the Easter Sunday attacks

ECONOMYNEXT- Sri Lanka will ban 11 extremist organisations which allegedly contributed directly and indirectly to create the background that led to the Easter Sunday attacks, Minister of Public Security Sarath Weerasekara told Parliament this morning.

Opening the debate on the report by the Presidential Commission of Inquiry (PCol) into the Easter Sunday Attacks, he said that due to the lack of coordination and communication between security agencies the former government had missed out on 9 occasion which they could have prevented the Easter Sunday attack on April 21, 2019.

“Before the Easter Sunday attack, several incidents happened around the country, if they were properly analyzed and the suspects arrested there was a good chance the attack could have being prevented,” he said.

Some of the incidents revealed by the Minister in which extremist terrorists were involved before the Easter Sunday attacks include the bombing of the office of the National Movement for Good Governance in Kattankudy in 2018, Brother of Zahran Hashim, Rilwan Hashim getting badly injured in the same year while experimenting with explosives in Batticaloa, killing of the two Police officers in Vavunathivu and vandalizing of Buddha status in Mawanella.

Moreover, he said that 676 individuals have been arrested within the country so far related to the Easter Sunday attacks out of which 200 are imprisoned, 66 are being currently detained and questioned and 408 have being released on bail.

He also said that after the current government came to power 99 persons who were directly or indirectly involved in the Easter attacks were arrested within the country while 35 Sri Lankans living abroad was also detained.

Further, he said that the State Intelligence Service (SIS) was able to extradite 50 individuals from overseas by coordinating with 5 foreign intelligence services who had nurture extremism in those countries and provided funds for such activities in Sri Lanka.

“Four other individuals will also be extradited to Sri Lanka after they complete the court proceedings in those countries,” he added.

Weerasekara said that since 2018, the Dematagoda Ibrahim brothers Inshaf and Ilham had provided funds, vehicles and other facilities needed for the activities of Zahran worth close to Rs 50 million from their businesses.

He said that Ilham who was a suicide bomber at Shangri-La has given Rs 37 million from their businesses to Zahran’s brother Rilwan to plan the attacks and provide other facilities required out of which Rs 5 million was found 5 days after the Easter attack in the Sainthamaruthu house.

The Minister also said that investigations have also revealed Mohamed Ibrahim Mohamed Naufer who is currently in custody has connected Zahran with the ideology of the ISIS leader Abu Bakr al-Baghdadi who was killed in 2019.

“Investigations revealed that Naufer has ideologically handled Zahran up until the attacks, Naufur has being identified as the main fundamentalist and the one who directed Zaharan to violence,” he said.

Mentioning some of the measures which the government has taken to prevent present and future threats to national security, he said that the wearing of the Burqa will be banned in the near future, a common marriage and divorce law applicable to all citizens in the country will be introduced and the rehabilitation of youths with extremist views carried out.

“We should not condemn a certain religion but religious extremism, this attack was motivated by Wahhabism and not by the Islamic religion,” the minister said.(Colombo/Mar10/2021)

Reported by Imesh Ranasinghe Edited by Arjuna Ranawana

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  1. sacre blieu says:

    even some of the NGO’s are suspect,in that their activities are questionable for the reasons they have been formed, and the reason is that they are a conduit for the movement of illicit money. There has been an inflow of unprecedented wealth into the country and the banks have failed to report such a sudden and questionable movements. The previous governments have seen this happening and had chosen to ignore this as the party or its members have benefited by this, the results are now well known. Many innocent kives have been sacrificed at the alter of greed.

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  1. sacre blieu says:

    even some of the NGO’s are suspect,in that their activities are questionable for the reasons they have been formed, and the reason is that they are a conduit for the movement of illicit money. There has been an inflow of unprecedented wealth into the country and the banks have failed to report such a sudden and questionable movements. The previous governments have seen this happening and had chosen to ignore this as the party or its members have benefited by this, the results are now well known. Many innocent kives have been sacrificed at the alter of greed.

Sri Lanka exporters bring back nearly 100-pct of proceeds: CB Governor

ECONOMYNEXT – Sri Lanka exporters are bringing back almost all export proceeds, based on data generated from a monitoring mechanism, Central Bank Governor Nandalal Weerasinghe said.

Sri Lanka tightens rules on exporters and also on importers whenever the central bank prints money to mis-target interest rates and triggers forex shortages.

The rule requiring exporters to bring back dollars was put in August 2021, to his recollection, Governor Weerasinghe said.

The monitoring mechanism was put in July 2021, with some officials also claiming that there appeared to be a discrepancy between reported export numbers and conversions, firing public anger against the country’s export businesses.
“We have data from the time we started the monitoring mechanism,” Governor Weerasinghe said.

“Based on that we see that exporters have brought back almost 100 percent of proceeds as foreign exchange.”

Governor Weerasinghe was responding to a question by a Washington based agency which had claimed that there was large scale under-invoicing by businessmen who had kept money abroad.

Similar and even larger estimates had been made against other countries, he said.

Mis-invoicing is a matter for Sri Lanka Customs over had authority and not the central bank he explained.

“If anyone has any information that can reported to the Financial Intelligence, action can be taken against illegal money transfers using anti-money laundering laws,” he said.

While exporters are targeting by activists after forex shortages came, the usual accusation is that importers are under-invoicing.

Importers under-invoice to avoid excessive tax protection given to nationalist businessmen with political connection.

Protected business rake in the taxes which would otherwise have gone to the state but they escape censure. (Colombo/Jan28/2023)

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Sri Lanka operators seek higher renewable tariffs, amid exchange rate expectations

ECONOMYNEXT – Sri Lanka’s renewable companies say they need tariff of 40 to 45 rupees a unit to sell power to the Ceylon Electricity Board and the agency owes them tens of billions of rupees for power sold in the past.

The association has strong exchange rate expectations based on the country’s dual anchor conflicting monetary regimes involving flexible inflation targeting with a reserve collecting target.

“In the coming year of course because of the rupee devaluation, I think the solar energy sector might require tariffs closer to RS 40 or RS 45, hydropower will also require tariffs on that scale,” Prabath Wickremasinghe President of the Small hydropower Developers Association told reporters.

“I think right now what they pay us is averaging around RS 15 to RS 20.”

Some of the earlier plants are paid only 9 rupees a unit, he said. The association there is potential to develop around 200 Mega Watts of mini hydros, 700 to 1000MW of ground mounted soar and about 1,000 rooftop solar.

In addition to the rupee collapse, global renewable energy costs are also up, in the wake of higher oil prices in the recent past and energy disruption in Europe.

The US Fed and the ECB have tightened monetary policy and global energy and food commodity price are now easing.

However in a few years the 40 to 45 rupee tariffs will look cheap, Wickremesinghe pointed out, given the country’s monetary policy involving steep depreciation.

From 2012 to 2015 the rupee collapsed from 113 to 131 to the US dollar. From 2015 to 2019 the rupee collapsed from 131 to 182 under flexible inflation targeting cum exchange rate as the first line of defence where the currency is deprecated instead of hiking rates and halting liquidity injections.

From 2020 to 2022 the rupee collapsed from 182 to 360 under output gap targeting (over stimulus) and exchange rate as the first line of defence.

“The tariffs are paid in rupees,” Wickremasinghe said. With the rupee continuing to devalue in other 5 years 40 rupees will look like 20 rupees.”

Sri Lanka has the worst central bank in South Asia after Pakistan. Both central banks started with the rupee at 4.70 to the US dollars, derived from the Reserve Bank of India, which was set up as a private bank like the Bank of England.

India started to run into forex shortages after the RBI was nationalized and interventionist economic bureaucrats started to run the agency. Sri Lanka’s and Pakistan’s central bank were run on discretionary principles by economic bureaucrats from the beginning.

The Central Bank of Sri Lanka was set up with a peg with gold acting as the final restraint on economic bureaucrats, but it started to depreciated steeply from 1980 as the restraint was taken away.

Now under so-called ‘exchange rate as the first line of defence’ whenever the currency comes under pressure due to inflationary policy (liquidity injections to target an artificially low policy rate or Treasuries yields) the currency is depreciated instead of allowing rates to normalize.

Eventually rates also shoot up, as attempts are made to stabilize the currency which collapses from ‘first line of defence’ triggering downgrades along the way.

After the currency collapse, the Ceylon Electricity Board, finances are shattered and it is unable to pay renewable operators.

Unlike the petroleum, which has to stop delivery as it runs out of power, renewable operators continue to deliver as their domestic value added is higher.

However they also have expenses including salaries of staff to pay.

The CEB which is also running higher losses after the central bank printed money and triggered a currency collapse, has not settled renewable producers.

“In the meantime, we have financial issues with the investors and CEB owns more than 45 million rupees in the industry,” Warna Dahanayaka, Secretary of Mini Hydro Association, said at the conference.

“We can’t sustain because we can’t pay the salaries and we can’t sustain also because of the bank loans. Therefore, we are requesting the government to take the appropriate action for this matter.”

Sri Lanka and Pakistan have identical issues in the power sector including large losses, circular debt, subsidies due to depreciating currencies.

In Sri Lanka there is strong support from the economists outside government for inflationary policy and monetary instability.

The country’s exporters, expatriate workers, users of unofficial gross settlement systems, budget deficits and interbank forex dealers in previous crises have been blamed for monetary instability rather than the unworkable impossible trinity regime involving conflicting domestic (inflation target) and external targets (foreign reserves).

The country has no doctrinal foundation in sound money and there is both fear of floating and hard peg phobia among opinion leaders on both sides of the spectrum regardless of whether they are state or private sector like any Latin American country, critics say.


South Asia, Sri Lanka currency crises; only 2-pct know monetary cause: World Bank survey

A World Bank survey last year found that only 2 percent of ‘experts’ surveyed by the agency knew that external monetary instability was generated by the central bank. Most blamed trade in severe knee jerk reaction. (Colombo/Jan29/2023)

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Sri Lanka top chamber less pessimistic on 2023 GDP contraction

ECONOMYNEXT – Sri Lanka’s top business chamber said it was expecting an economic contraction of up to 2 percent in 2023, which is much lower than projected by international agencies.

“The forecast of 2023 is quite negative in terms of the international forecasters,” Shiran Fernando Chief Economist of Ceylon Chamber of Commerce told a business forum in Colombo.

“Our view is that there will be some level of contraction, may be zero to two percent. But I think as the year progresses in particular the second half, we will see consumption picking up.”

The World Bank is projecting a 4.2 percent contraction in 2023.

In 2022 Sri Lanka’s economy is expected to contract around 8 to 9 percent with gross domestic product shrinking 7.1 percent up to September.

Most businesses have seen a consumption hit, but not as much as indicated, Fernando said.

“Consumption is not falling as much as GDP in sense and we are seeing much more resilient consumer,” he said.

Sri Lanka’s economy usually starts to recover around 15 to 20 months after each currency crisis triggered by the island’s soft-pegged central bank in its oft repeated action of mis-targeting rates through aggressive open market operation or rejecting real bids at Treasuries auctions. (Colombo/Jan28/2023)

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