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Sunday January 29th, 2023

Head of Sri Lanka Catholic church alleges attempt to pin Easter attack on ISIS

Archbishop of Colombo Malcolm Cardinal Ranjith with Prime Minister Mahinda Rajapaksa/PMD photo

ECONOMYNEXT – Colombo Archbishop Malcolm Cardinal Ranjith, the head of Sri Lanka’s Catholic church, has demanded an explanation on an alleged attempt to pin the 2019 Easter Sunday bombings on the Islamic State of Iraq and Syria (ISIS).

Speaking to reporters in Colombo on Friday (13), the cardinal claimed that a military intelligence officer referred to as ‘Sonic’ had used one ‘Zaharan of Matale’ to call an unspecified person in Indonesia to “force” ISIS to claim responsibility for the attack.

“Why was that? We don’t know if it was an attempt to prevent the discovery of who was actually behind the attack. Why was there that much interest in putting it on the shoulder of ISIS?” said Ranjith.

“That means someone here tried to hide it,” he added.

Days after the attack, international media reported quoting the group’s Amaq news agency that it had in fact claimed responsibility, though it did not offer evidence of its involvement.

“Amaq also released photos and a video that it said showed eight attackers — including a segment in which the men are seen standing in front of the group’s black flag, pledging allegiance to ISIS leader Abu Bakr al-Baghdadi,” NPR reported on April 23 2019, adding that, according to counterterrorism analysts who monitor ISIS, the group had previously made seemingly opportunistic claims about high-profile attacks.

At Friday’s press conference, the archbishop also claimed that the Directorate of Military Intelligence had had dealings with Zaharan Hashim’s outfit. The latter led the group of suicide bombers that exploded themselves on April 21 2019 in several parts of the island, killing 269 people and injuring over 500.

“We have to wonder what those dealings were – dealings that were conducted through the person known as Army Mohideen, which was brought up at the Presidential Commission of Inquiry (PCoI). Were these investigated?

“And what is the story behind the murder of two police officers in Vavunativu? Was that investigated?” said Ranjith.

The identity of a military intelligence officer who had allegedly had dealings with one of the suicide bombers – Jameel, who had attempted to attack the Taj Samudra Hotel in Colombo before seemingly changing his mind – was also unclear, said the cardinal.

“These facts have already been presented. They’re mentioned here and there in the PCoI report,” he said.

Referring to 25 arrests made in connection with the attack, Ranjith expressed his suspicion that only “small fry” are caught in the investigators’ net while the “big fish” are let go.

“We cannot allow this incident that shook the entire nation to be brushed under the carpet. Please don’t do that. The government must do its duty. Until then we will not stop this protest movement,” he said.

The cardinal has been increasingly disillusioned with government investigations into the Easter attack. In July this year, he said he was sceptical of what he called a politically compromised law enforcement’s ability to probe the “grand conspiracy” behind the bombings.

Related: Sri Lanka Easter attack probe: Cardinal sceptical of politically compromised law enforcement

“There can be doubts about finding out what really happened with a “police that acts according to the wishes of the current political leadership, a criminal investigation department (CID) that follows the political leadership’s agenda, and a legal system and law enforcement personnel that political leaders are trying to control,” Ranjith said on July 13.

Further investigations should be based on some of the contents in the PCoI report as well as certain revelations made by MPs in parliament, he said.

“The former Attorney General had said unequivocally that there was a grand conspiracy behind the attack. We have a right to know what that conspiracy was. Did he make his statement based on the contents of the commission report, or the contents of the 22 volumes that were hidden and submitted later because apparently they could not be released, we do not know,” he said.

Days before his retirement, outgoing Attorney General Dappula de Livera said on May 18 this year that there was clear evidence of a grand conspiracy linked to the April 21 2019 bombings that killed 269 people and injured over 500.

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

Twenty-two volumes of the PCoI report, purportedly containing sensitive information, were submitted to the Attorney General on March 12, this year, over a month after the ‘final’ PCoI report was handed over to the president.

The PCoI recommended that criminal proceedings be instituted against former President Maithripala Sirisena and others over the incident.

Related: Sri Lanka Easter attacks commission recommends criminal proceedings against President Sirisena

The government has been claiming for some months now that Maulavi (Islamic preacher) Mohamed Ibrahim Mohamed Naufer and one Rasheed Hajjul Akbar, both of whom are in custody, had been identified as the only confirmed masterminds of the attack. Public Security Minister Rear Admiral Sarath Weerasekara told reporters in May that no other suspect had been identified as having masterminded the attacks and stressed that the government has no intention to hide its findings.

Related: FBI confirmed Maulavi Naufar masterminded Sri Lanka Easter attacks: Minister

The official account has been contested by opposition lawmakers and others. Main opposition Samagi Jana Balavegaya (SJB) MP Harin Fernando in a controversial statement made in parliament on April 20 claimed that the Islamic preacher was never brought before a presidential commission of inquiry that probed the Easter bombings.

Fernando also claimed that an intelligence officer who had been arrested in connection with the bombings was transferred to the custody of military intelligence before a statement could be recorded. Investigations by former Criminal Investigation Department (CID) Director Shani Abeysekara had revealed that the suspect had had discussions with the perpetrators of the attack, Fernando said. (Colombo/Aug13/2021)

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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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