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Sunday January 29th, 2023

FBI confirmed Maulavi Naufar masterminded Sri Lanka Easter attacks: Minister

ECONOMYNEXT – The United States Federal Bureau of Investigation (FBI) has confirmed that Maulavi (Islamic preacher) Mohamad Ibrahim Mohamad Naufer masterminded Sri Lanka’s 2019 Easter Sunday bombings, Minister of Public Security Sarath Weerasekara told parliament today (19).

The minister was responding to a May 18 statement by Attorney General Dappula De Livera that there was a grand conspiracy behind the attacks that killed 269 people and injured over 500.

De Livera in a letter written to the Inspector General of Police (IGP) C D Wickramaratne and a subsequent statement to the public said that he has been unable to press charges or file indictments against the conspirators and abettors of the Easter Sunday attack due to the Criminal Investigation Department (CID) investigations being incomplete.

Related: Sri Lanka Attorney General claims “grand conspiracy” behind Easter attack: report

Minister Weerasekara said in parliament today that the investigation into the Easter Sunday attacks was an international investigation as many foreign nationals lost their lives in the attack. The CID conducted investigations along with international investigative teams such as the FBI and the Australian Federal Police.

It takes a long time complete international investigations, the minister said defending the delay.

Usually, it takes a long time to complete international investigations,” he said.

“Khalid Sheikh Mohammed, who was considered the mastermind of the 9/11 attacks is still in detention. It took years to file a lawsuit against the terrorist who assassinated former Indian Prime Minister Rajiv Gandhi. It took three years to file charges against the assassins of former Foreign Minister Lakshman Kadirgamar,” he said.

Similarly, said Weerasekara, it takes years to file charges in the case of an attack such as the Easter bombings as investigations must be thorough in order to gather all evidence so that suspects cannot escape through a loophole in the law.

The minister said AG has already filed indictments against 16 suspects in the Kegalle High Court for damaging a Buddha Statue in Mawanella and six suspects in the Puttalam High Court for storing explosives in Wanathawilluwa. Three more were indicted in the Kegalle High Court for the attempted murder of Mohammad Taslim, a key witness whose body is partially paralised as a result of a gunshot to the head. Police believe Taslim was shot on the orders of Zaharan Hashim, the ringleader of the suicide bombers that blew themselves up on April 21 2019.

Mohammed Naufer Mohammed Yusri and Hejaaz Hizbullah and another were indicted for aiding and abetting terrorist activities in Gampaha and Puttalam High Courts.

Weerasekara said in November 2020, eight documents with charges were presented to the AG regarding the eight attacks that happen on Easter Sunday 2019.

“After that, I met the Attorney General personally on a few occasions. I understood that he was working on this with great dedication and enthusiasm. He said to wait till the report of the Presidential Commission of Inquiry (PCOl) is released to see whether there is a contradiction between the evidence and what the report revealed,” Weerasekara said.

The PCol that probed the attack presented its findings to the AG in February this year. According ot the minister, from March 12 to April 24, a team of 54 police investigators together with state counsels from the Attorney General’s Department worked in a team led by a Senior Assistant Solicitor General to thoroughly analyse the evidence and facts under the personal supervision of the AG.

Shortcomings in the investigation was reported to the police on April 24. The AG had then resubmitted the report to the IGP on May 12, by which time police had addressed most of the shortcomings and reported back to the AG’s Department, said Weerasekara.

Weerasekara said this could be the reason for the AG’s statement on May 15.

“We hope to attend to the rest of the shortcomings in the near future, after which the Attorney General can file indictments against suspects,” he added.

Authorities have apprehended 704 individuals suspected of being connected to the bombings, according to Weerasekara.

“We appreciate the assistance and the professional commitment the AG has demonstrated in this regard,” he said. (Colombo/May19/2021)

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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.

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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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Acuity Knowledge Partners with Sri Lanka office to be bought by Permira

ECONOMYNEXT – Permira, an investment fund with operations in Europe, US and Asia is buying a majority stake in Acuity Knowledge Partners, which has a 500 seat center in Sri Lanka for a undisclosed sum.

Equistone Partners Europe, from which Permira is buying the stake will remain a minority investor, the statement said.

In 2019, Equistone backed a management buyout of Acuity from Moody’s Corporation.

Acuity Knowledge Partners says it serves a global client base of over 500 financial services firms, including banks, asset managers, advisory firms, private equity houses and consultants.

“Despite the current challenges for the financial services sector, we have experienced continued growth and a strong demand for our solutions and services,” Robert King, CEO of Acuity Knowledge Partners, said.

“Given the significant demand within the financial services sector for value-added research and analytics, and the need for operational efficiency, with Permira’s deep experience in tech-enabled services and its global network, I am confident the business will continue to flourish.”

London headquartered Acuity has offices in the UK, USA, India, Sri Lanka, Costa Rica, China and Dubai, UAE.

Equistone was advised on the transaction by Rothschild & Co and DC Advisory, and Latham & Watkins acted as legal counsel. Robert W. Baird Limited served as financial advisers to Permira, and Clifford Chance is acting as legal counsel.

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