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Sunday February 25th, 2024

Sri Lanka COPF chair urges IMF to prioritise accountability, transparency as review begins

ECONOMYNEXT – Chairman of Sri Lanka’s parliamentary Committee on Public Finance (COPF) Harsha de Silva has urged the International Monetary Fund (IMF) to prioritise accountability and transparency as the international lender goes into its first review of its programme.

“As the IMF evaluates our progress, we urge them to prioritize accountability and transparency. Confronting past mistakes is crucial for our nation’s recovery. Let’s work together to rebuild Sri Lanka on a foundation of truth and justice,” de Silva tweeted Thursday September 14 afternoon.

The main opposition Samagi Jana Balawegaya (SJB) MP made this call in a Twitter thread about questions he had raised at a recent press conference about a former Central Bank of Sri Lanka (CBSL) governor guarantee repayment to a Chinese-American financier named Benjamin Wey when Sri Lanka was on the brink of defaulting in January 2022.

“Benjamin Wei’s involvement in questionable activities, including ties to the Hamilton Reserve Bank and Fintech Holdings Ltd., is deeply concerning. How did a small bank in a nation with 50,000 inhabitants and GDP under $1 billion amass a $250 million stake in our bonds?” said de Silva.

The same question was raised by an article that appeared in the London-based Financial Times on September 08 in a piece titled ‘The mysterious ‘global financier’ suing Sri Lanka’.

The FT story was on a lawsuit filed by the US government in the first week of September.

“The case has been brought by Hamilton Reserve Bank in St Kitts & Nevis. Somehow, a small bank based in a country with 50,000 inhabitants and GDP of under $1bn has amassed a $250mn face-value stake in a Sri Lankan bond,” the FT wrote.

This specific bond was issued in happier times (2012) and lacks some now-common clauses that make bonds easier to restructure, the FT noted. What was unusual, according to the newspaper, was the size of HRB’s stake and the “unusual aggressiveness” of its lawsuit against Sri Lanka, which began almost as soon as it defaulted in April 2022. The lawsuit “smelt a bit fishy”, the FT wrote.

“We’d heard whispers about who might be behind HRB’s lawsuit, and last week Sri Lanka’s law firm Clifford Chance for the first time said explicitly who it thinks is driving this: a Chinese-American financier called Benjamin Wey,” the paper said, adding that Wey is no stranger to legal controversy.

According to the FT, Wey had contacted several creditors about joining forces against Sri Lanka, and had even emailed a presentation laying out their case.

MP de Silva said in his Twitter thread on Thursday that parallels with Greek bond crisis are evident, “as we see investments in ‘junk’ bonds raising anger”.

“Recent revelations of Wei rallying creditors against #lka only deepen suspicions of undisclosed deals,  who truly invested in these bonds & at what discounted rates?

“The U.S., Britain, and France’s support underscores international unease. However, our refusal to accept allegations of #EconomicCrimes remains a significant challenge. The @IMFNews must not overlook governance issues in Sri Lanka’s recovery plan. 🌍 #IMF #Accountability,” he tweeted.

The IMF begins its first review of its ongoing programme in Sri Lanka on September 14. (Colombo/Sep14/2023)

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Sri Lanka could get US$500mn from ADB in 2024

ECONOMYNEXT – Sri Lanka could receive 500 million US dollars in support from the Asian Development Bank in 2024 based on the progress of policy reforms, Country Director of the Manila-based lender, Takafumi Kadono said.

The ADB expect to go to its Board around March or April with a 100 million US dollar power sector loan subject to the cabinet of ministers of approving a revised electricity reform bill.

A 100 million dollar loan to support SMEs could also be approved in the early part of the year. Sri Lanka is setting up a credit guarantee agency to support credit for small firms.

A 200 million dollar credit for financial sector was also slated for the year. The ADB gave the first tranche of the financial sector policy loan late last year.

A $100mn for the water sector could also be approved later in the year.

Sri Lanka could get around 200 to 300 million US dollars a year at the lowest rate, or concessional ordinary capital resources (COL) rate of 2 percent.

The balance of would come at the ordinary capital resource rate linked to SOFR.

The ADB has also started work on a ‘Country Partnership Strategy’ for Sri Lanka covering the 2024-2028 period, Kadodo said. (Colombo/Feb25/2024)

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Sri Lanka’s multi-aligned foreign policy based on friendship: Min

ECONOMYNEXT – Sri Lanka’s multi-aligned foreign policy is based on friendship to all and enmity to none, its Minister of Foreign Affairs has said.

“Non-alignment means not becoming a bystander. Non-alignment means you are not forced or coerced into a camp to take sovereign decisions… you make your own choices. Whether it is commercial, security, regional or otherwise,” M U M Ali Sabry said on X (twitter).

“I have repeatedly stressed that sovereignty is the right to have your own opinion on what’s right and wrong, and to stand by your principles. Our multi-aligned foreign policy is based on friendship to all and enmity to none,” Sabry was quoting from his speech at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI) Foreign Policy Forum, on the theme ‘Reassessing Non-Alignment in a Polarised World’.

Sri Lanka is one of the founding members of the Non-Aligned Movement.

The strategically located island has been increasingly walking a fine line between opposing global factions as it seeks to come out of a financial crisis. (Colombo/Feb24/2024)

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Sri Lanka’s Commercial Bank Dec net down on tax provisions

ECONOMYNEXT – Sri Lanka’s Commercial Bank of Ceylon reported profits of 6.9 billion rupees from the December 2023 quarter down 21 percent, despite an improvement in net interest income and lower provisions, amid a change in tax provisions.

Pre-tax profits were 8.89 billion rupees up from 2.4 billion rupees. There was a 6.4 billion tax reversal last year compared to a 1.7 billion rupee tax charge this year.

Commercial Bank reported earnings of 5.26 rupees for the quarter. For the year to December 2023 earnings were 16.07 rupees per share on total profits of 21.1 billion rupees, down 11.3 percent.

Net fee and commission income was down 1.2 percent to 6.1 billion rupees.

Net interest income went up 16.8 percent to 25.5 billion rupees, with interest income rising marginally by 1.3 percent to 73.0 billion rupees and interest expense falling 5.45 percent to 47.5 billion rupees.

Loans and advances to customers grew 4.06 percent to 1.17 billion rupees in the year to December. Debt and other financial instruments fell 10.5 percent to 649 billion rupees.

Financial assets measured and fair value through other comprehensive income was at 287 billion rupees, up from 117 billion rupees.

Impairment charges were 13.1 billion rupees, down from 19.6 billion rupees last year.

Gross assets were up 6.45 percent to 2.36 billion rupees. Net assets were up 5.51 percent to 214 billion rupees. (Colombo/Feb24/2024)

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