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Thursday December 1st, 2022

India gifts maritime surveillance aircraft to Sri Lanka amid Chinese ‘spy ship’ row

ECONOMYNEXT – A marine surveillance aircraft donated by India was ceremoniously handed over to the Sri Lanka Air Force (SLAF) marking India’s 75th Independence Day celebrations amid a controversy over a Chinese tracking vessel.

The Indian Air force gifted a Dornier 228 Maritime Patrol Aircraft to the SLAF on Monday August 15, with another aircraft to be donated within two years.

The handover ceremony was a high profile event attended by President Ranil Wickremesinghe and Indian High Commissioner to Sri Lanka Gopal Baglay and other senior officials, even as the Chinese Yuan Wang 5 tracking vessel was en route to the Hambantota Port in Sri Lanka’s deep south.

The vessel, dubbed a spy ship by Indian media and at the centre of an apparent geopolitical standoff between Sri Lanka, India and China, docked at the Chinese-built Hambantota Port just a day after the India-centred ceremony in Colombo.


Chinese tracking vessel Yuan Wang 5 docks at Sri Lanka’s Hambantota Port

Speaking at the Colombo event, President Wickremesinghe said history has brought India and Sri Lanka together like two sides of the same coin and the two countries must forge ahead together.

Wickremesinghe said both countries must commit to further strengthening bilateral relations as India and Sri Lanka share “many commonalities” that they can build on.

“I have always said that we are two sides of a single coin. It is not possible to split a coin for one face to fall one way and the other face to fall the other way. For whatever it is, history has put us together and we have to stay together. What is this relationship? I haven’t got a word for it, but the closest I could come is the symbiotic relationship between the two countries,” he said.

Ever since he assumed office, President Wickremesinghe has repeatedly expressed his gratitude to India for its much needed financial assistance to Sri Lanka during its worst economic crisis in 74 years of independence. But analysts say he and the government have had to manage tough balancing act without alienating China which has had much influence over the island nation in recent years.

The president also had a word of advice for aspiring leaders.

“My word of advice to rising politicians and those who aspire for higher office is get to know your Indian colleagues, get to know them well and get to deal with them because if you do not do that, it will be difficult for you to look at issues and understand what each other says,” he said.

“We have common viewpoints in many areas. We are but a small country in the middle of the ocean, while India, while looking after its own interests must also look at its role as a global power. But it is essential that we speak to them. After all India is our closest neighbor and there are many issues that are common to us of which we are understanding, of which we have to resolve. Not only issues pertaining to Indo-Lanka relations but to the region and to the world. So in these areas it is possible for us, and it has been on many occasions for us to come to an agreement or have a similar viewpoint with India. It is with those that we consolidate.”

At India’s own Independence Day celebrations held on Monday, Prime Minister Narendra Modi said India must strive to be a developed nation in 25 years. Wickremesinghe acknowledged this possibility in his speech.

“India today is becoming a world power and it is still on the rise and by the mid-century when we are no longer there, you could see a powerful India playing a dominant role on the global stage,” he said. (Colombo/Aug15/2022)

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Sri Lanka’s inflation eases to 61-pct in November

ECONOMYNEXT – Sri Lanka’s 12-month inflation in the capital Colombo fell to 61 percent in November 2022 from 66 percent in October as price stabilized after interest rates were allowed to go up and the exchange rate was pegged around 360 to the US dollar.

The widely watched Colombo Consumer Price Index fell absolutely 0.5 percent to 242.6 points in November after falling .04 percent in the October.

Food prices fell 1.5 percent after falling 2.0 percent a month earlier. The sub-index containing gas fell 0.5r percent and transport fell 3.6 percent.

But some services continued to go up, as relative prices adjusted to the steep fall in the currency after two years of money printing to suppress rates.

Health costs went up 5.7 percent. Furnishing and routine maintenance rose 0.4 percent.

Sri Lanka’s central bank hiked policy rates to 15.5 percent in April and pulled back on longer term money printing, allowing market rates to go to around 30 percent.

The exchange rater is pegged around 363 rupees with a surrender rule where banks are forced to sell dollars to the central bank for new liquidity.

The ongoing currency and inflation crisis is the worst in the history of the central bank.

Sri Lanka’s Latin America style central bank was set up in 1950 giving powers to the country’s macro-economists the power to mis-target rates, create currency crisis and high inflation. (Colombo/Nov30/2022)

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Sri Lanka shares close at one-month high

ECONOMYNEXT – Sri Lanka shares closed at one month high on Wednesday gaining for the fourth session on news that government is in talks with ADB and World Bank to get a 1.9 billion dollar loan facility, brokers said.

The main All Share Price Index (ASPI) closed 3.3 percent or 276.02 points higher at 8,651.23, highest index gain in since November 01.

“Investor participation improved on the back of confirmed talks with multilateral and bilateral lenders including world banks and ADB for USD 1.9Bn after IMF board level agreement is reached,” First Capital Market Research said in it’s daily note.

Former Central Bank Governor Indrajit Coomaraswamy said in a forum on Monday that the government is in discussion with ADB and World Bank to get loans of 1.9 billion US dollars after a reform program with International Monetary Fund is approved

A policy loan now being discussed with the World Bank may bring around 700 million US dollars, Coomaraswamy told a business forum organized by CT CLSA Securities, a Colombo-based brokerage.

The Asian Development Bank may also give around 1.2 billion US dollars most of which will be budget support, he said.

The market witnessed a turnover of 3.3 billion rupees, higher than this year’s daily average turnover of 2.9 billion rupees. This is the highest turnover generated since October 04.

In the last few sessions market gained after Central bank governor said market rates should eventually ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.

In the past sessions, the index continued to fall on the speculation of a local debt restructuring although no proper decision has been taken so far.

The market saw a foreign inflow of 39 million rupees. The total net foreign inflow stood at 18.33 billion rupees so far for this year.

The more liquid index S&P SL20 closed 3.4 percent or 89.78 points higher at 2,730.08.

The ASPI has fallen 0.5 percent in November after losing 13.4 percent in October.

It has lost 29.2 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

Sampath Bank pushed the index up to close at 10.9 percent to 36.6 rupees.

Other top gainers were Browns Investment gained 15.4 percent to close at 7.5 rupees and LOLC gained 9.4 percent to close at 411.3 rupees.(Colombo/Nov30/2022)

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Sri Lanka bonds, T-bills ease, overall market dull

ECONOMYNEXT – Sri Lanka’s treasury bonds eased and T-bill yields fell on the speculation on talks with ADB and World Bank to obtain financial aid but the over all market was dull on Wednesday while the Central Bank’s guidance peg remained unchanged, dealers said.

“During the day, secondary market witnessed some buying interest on the back of speculations on yields easing while talks about financial aid from ADB and World Bank further strengthened interest,” First Capital Market Research said in it’s daily note.

A bond maturing on 01.05.2024 closed at 32.00/60 percent on Wednesday, down from 32.30/90 percent on Tuesday.

A bond maturing on 07.07.2025 bond closed at 30.80/31.30 percent up from 30.30/31.25 percent on Tuesday.

A bond maturing on 15.05.2026 closed at 31.00/30 percent down from 31.10/31.30 percent on Tuesday.

The three-month T-bills closed at 32.30/33.25 percent, down from 32.60/33.00 percent.

The Central Bank’s guidance peg for interbank transactions remained unchanged at 363.19 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers between 371.79 and 372.10 for small transactions, data showed.

Buying rates are between 361.79 – 362.00 rupees. (Colombo/Nov 30/2022)

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