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Tuesday June 18th, 2024

Sri Lanka court requests CB to furnish USD 500 mn ISB January repayment details

ECONOMYNEXT – A Sri Lankan court has requested the central bank to furnish payment details of a 500 million US dollar international sovereign bond (ISB) repayment in January when former governor Ajith Nivard Cabraal was head of the central bank, a lawyer said on Monday (23).

The court requested the details after political activist Ranjith Keerthi Tennakoon asked for the data while his case filed against Cabraal’s alleged misappropriation during his first tenure as the governor from 2006-2015 has already resulted in an extended travel ban until July 25.

“The court has requested the central bank to give the details on which sovereign bond holders were paid in January this year,” Maithri Gunaratne, a lawyer who appeared on behalf of Tennakoon, told Economy Next.

Critics of President Gotabaya Rajapaksa’s government have raised questions over why Cabraal decided to pay 500 million US dollars to bond holders from the country’s dwindling foreign reserves as the country was facing a severe shortage of dollars.  Sri Lanka is now experiencing queues for fuel, kerosine, and cooking gas because the country does not have any dollars to import them.

The shortage of dollars also resulted in extended power cuts in the island nation hitting its manufacturing and services sectors since February. People have also complained about lack of essential medicines in hospitals due to the lack of US dollars.

Cabraal’s successor, Nandalal Weerasinghe, and Treasury Secretary Mahinda Siriwardena have already suspended all foreign debt repayments with effect from April 12 as the country ran out of dollars in the reserves.

Some sources say the central bank under Cabraal did not want to default the 500 million US dollar sovereign bonds because some of his close allies had bought the bonds before it matured fully. Cabraal has denied any wrongdoing in the past.

Cabraal was not immediately available for comment on the court’s request. (Colombo/May23/2022)

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Sri Lanka’s Ceylon Chamber links up with Gujarat Chamber

ECONOMYNEXT – The Ceylon Chamber of Commerce has signed an agreement with the Southern Gujarat Chamber of Commerce and Industry (SGCCI) to increase trade cooperation between India and Sri Lanka.

The MOU was signed by CCC CEO Buwanekabahu Perera, SGCCI President Ramesh Vaghasia, in the presence of Dr Valsan Vethody, Consul General for Sri Lanka in Mumbai, India.

“With the signing of the MoU, … the Ceylon Chamber of Commerce and SGCCI aim to facilitate trade between the two countries via initiatives such as trade fairs and delegations, business networking events, training programmes,” the Ceylon Chamber said in a statement.

“This partnership will open doors for Sri Lankan businesses to explore opportunities in Surat’s dynamic market and enable the sharing of expertise and resources between the two regions.”

Established in 1940, SGCCI engages with over 12,000 members and indirect ties with more than 2,00,000 members via 150 associations. It promotes trade, commerce, and industry in South Gujarat.

The region’s commercial and economic centre Surat has risen to prominence as the global epicenter for diamond cutting and as India’s textile hub, and is ranked the world’s 4th fastest growing city with a GDP growth rate of 11.5%

Surat’s economic landscape is vibrant and diverse. As India’s 8th largest and Gujarat’s 2nd largest city, it boasts the highest average annual household income in the country.

The nearby Hazira Industrial Area hosts major corporations like Reliance, ESSAR, SHELL, and L&T. (Colombo/Jun18/2024)

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Sri Lanka telecommunications bill some clauses ruled unconstitutional by SC: Speaker

ECONOMYNEXT – Sri Lanka’s Supreme Court has found a number of clauses in a proposed amendment to the Telecom Telecommunications Amendment bill unconstitutional, speaker Mahinda Yapa Abeywardana said.

“Clause No 8, proposed section 9A 2 of the bill is inconsistent with Article 12 1 of the constitution, however this inconsistency shall cease if word ‘may’ will be replaced with word ‘shall’ as set out in the determination of the supreme court.”

“Clause No 9 is inconsistent with Article 12 1 of the constitution and only can be passed with special majority required under paragraph 2 of the Article 84. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.

Clause No 12, proposed section 17 10 of the bill is inconsistent with Article 12 1 of the constitution and can only be passed with special parliament majority required under Article 84 paragraph 2. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.”

Sections of clauses 13, 18, 20, 33 and 35 were also in violation of the constitution, and could only be passed by a special majority of parliament. (Colombo/Jun18/2024)

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Sri Lanka to exempt one house from imputed rent wealth tax: President

ECONOMYNEXT – Sri Lanka will exempt one house from a proposed wealth tax outlined in an International Monetary Fund program, President Ranil Wickremesinghe said.

About 90 percent of the people’s houses are likely to be exempt from the proposed tax, he said.

“[O]ne house will be exempt from this,” President Wickremesinghe told parliament Monday.

“It is going to have a very high threshold and I do not think the vast majority of the people in this country should even be worried about their house

“Don’t worry your house will be safe.”

The IMF program document however did not mention an exemption on one house, but did mention an exemption threshold.

Taxing houses and thrift in general could have detrimental effects on people’s well-being, housing stock and their willingness to remain in the country without migrating, critics say.

Related Sri Lanka to tax imaginary rents on houses under IMF deal

The mechanism of imputed rents was used because rates on houses were assigned to provincial councils and courts could strike it down.

Opposition legislator Harsha de Silva said the Samagi Jana Balwegaya welcomed President Wickremesinghe’s statement. (Colombo/June18/2024)

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