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Thursday February 22nd, 2024

Sri Lanka defence establishment monitoring protests for acts of violence: official

NO ROOM FOR CORRUPTION IN PRISONS – Defense Secretary Kamal Guneratne warns Prison officials of consequences if criminals are mollycoddled/Defense Ministry handout

ECONOMYNEXT – Sri Lanka’s defence establishment is monitoring the wave of protests that has erupted around the country and, while it recognises the people’s democratic right to peaceful protest, action will be taken against anyone unleashing violence, an official said.

Defence Ministry Secretary Gen Kamal Gunaratne in a video statement released Tuesday (05) afternoon said two district groups have been found to be organising the ongoing spate of protests.

One, he said, were peaceful protestors exercising their democratic right, while the other is intent on damaging public and private property due to various motives.

“The other group is deliberately causing damage to state property and the private property of various parties, and insolvencies the public on main roads and in public spaces and engages in violent protests,” he said.

Legal action will be taken against such violent elements, said Gunaratne.

Ruling Sri Lanka Podujana Peramuna (SLPP) MPs Roshan Ranasinghe in a seemingly impassioned speech in parliament on Tuesday lamented an attack on his residence in Polonnaruwa that had reportedly occurred Monday night. Other government MPs including Kanchana Wijesekara and Rohitha Abeygunawardena complained of protestors gathering outside their residences.

Thousands of Sri Lankans have taken to the streets since last Thursday (31) demanding the resignation of President Gotabaya Rajapaksa and his government over their handling of the country’s worsening economic crisis. The protest outside President Rajapaksa’s private residence last Thursday saw the most violence so far, with some government vehicles including a police bus that was torched by as yet unidentified protestors.

The government has blamed the violence on radical “extremists” affiliated with opposition parties, though the opposition claims the protests have been organic and spontaneous so far with little or no participation by mainstream political parties.

Some protestors, claimed Gunaratne in his statement, had on Monday (04) ridden motorbikes to residences and businesses and thrown rocks and petrol bombs at them, while others have engaged in robberies, including houses left empty by peaceful protestors.

“Government forces, the defence ministry and the public security ministry are constantly monitoring these protests. We have no problem with democratic, peaceful protests. But I must note that we have to act to prevent any violence,” he said.

“The security forces and police won’t hesitate to take legal action against such parties,” he added.

“As defence secretary, I ask the people to protest peacefully if they wish to, but not to damage public or private property, and not to be fooled by those with vested interest who [try to instigate violence].” (Colombo/Apr05/2022)

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  1. Leo says:

    When people gets hungry , violence could be more and more brutal.

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  1. Leo says:

    When people gets hungry , violence could be more and more brutal.

Sri Lanka parliament appoints members to committees including COPE, COPA

ECONOMYNEXT — Sri Lanka’s parliament has announced the names of legislators appointed to a number of committees, including the Committee on Public Enterprises (COPE) and the Committee on Public Accounts (COPA).

A statement from parliament citing Deputy Speaker Ajith Rajapakse said on Thursday February 22 that 19 members have been appointed to COPE.

These are, namely: Jagath Pushpakumara, Janaka Wakkumbura, Lohan Ratwatte,  Indika Anuruddha Herath,  Shantha Bandara,  Mahindananda Aluthgamage,  Duminda Dissanayake,  Rohitha Abegunawardhana,  Nimal Lanza,  U K Sumith Udukumbura,  Sanjeeva Edirimanna,  Jagath Kumara Sumithraarachchi,  (Major) Sudarshana Denipitiya,  Premnath C Dolawatte,  Upul Mahendra Rajapaksha,  M Rameshwaran,  (Mrs) Rajika Wickramasinghe,  Madhura Withanage, and  (Prof) Ranjith Bandara.

Members nominated for COPA are Mohan Priyadarshana De Silva,  Lasantha Alagiyawanna,  Prasanna Ranaweera,  K Kader Masthan,  (Mrs) Diana Gamage,  Chamara Sampath Dasanayake,  Wajira Abeywardana,  A L M Athaullah,  Wimalaweera Dissanayake,  Jayantha Ketagoda,  (Dr) Major Pradeep Undugoda,  Karunadasa Kodithuwakku,  Isuru Dodangoda,  Premnath C Dolawatte,  (Mrs) Muditha Prishanthi,  M W D Sahan Pradeep Withana,  Madhura Withanage,  D Weerasingha,  and (Mrs) Manjula Dissanayake.

The rest of the committees are as follows:

Committee on Ethics and Privileges
(Mrs.) Pavithradevi Wanniarachchi,  (Dr.) Wijeyadasa Rajapakshe, PC,  Vijitha Berugoda,  Tharaka Balasuriya,  Anuradha Jayaratne,  Chamal Rajapaksa,  Johnston Fernando,  Mahindananda Aluthgamage,  Jayantha Ketagoda,  Madhura Withanage, and  Samanpriya Herath

Committee on Public Petitions
Jagath Pushpakumara,  S. Viyalanderan,  Ashoka Priyantha,  A. Aravindh Kumar,  (Mrs.) Geetha Samanmale Kumarasinghe,  Gamini Lokuge,  Wajira Abeywardana,  (Dr.) Gayashan Nawananda,  Jayantha Ketagoda,  U. K. Sumith Udukumbura,  Mayadunna Chinthaka Amal,  Nipuna Ranawaka,  (Mrs.) Rajika Wickramasinghe,  M. W. D. Sahan Pradeep Withana,  and Yadamini Gunawardena

Ministerial Consultative Committee on Defence
Chamal Rajapaksa,  (Dr.) Sarath Weerasekera, and (Dr.) Major Pradeep Undugoda

Ministerial Consultative Committee on Finance, Economic Stabilization and National Policies
Mahindananda Aluthgamage,  M. W. D. Sahan Pradeep Withana, and (Prof.) Ranjith Bandara

Ministerial Consultative Committee on Women, Child Affairs and Social Empowerment
Jagath Kumara Sumithraarachchi,  (Mrs.) Rajika Wickramasinghe,  and (Mrs.) Manjula Dissanayake

Ministerial Consultative Committee on Investment Promotion
A. Aravindh Kumar,  Dhammika Perera, and Yadamini Gunawardena

Ministerial Consultative Committee on Education
Anupa Pasqual,  Wimalaweera Dissanayake, and Gunathilaka Rajapaksha

Ministerial Consultative Committee on Mass Media
S. M. M. Muszhaaraff,  Jayantha Ketagoda,  and Sanjeeva Edirimanna

Ministerial Consultative Committee on Health
Kanaka Herath,  (Dr.) Gayashan Nawananda, and (Dr.) Major Pradeep Undugoda

Ministerial Consultative Committee on Agriculture and Plantation Industries
Udayakantha Gunathilaka,  Kulasingam Dhileeban,  and Upul Mahendra Rajapaksha

Ministerial Consultative Committee on Wildlife and Forest Resources Conservation
Chamara Sampath Dasanayake,  Kapila Athukorala, and Kumarasiri Rathnayaka

Ministerial Consultative Committee on Justice, Prisons Affairs and Constitutional Reforms
Sisira Jayakody,  Premnath C. Dolawatte, and Sagara Kariyawasam

Ministerial Consultative Committee on Industries
Premalal Jayasekara,  U. K. Sumith Udukumbura, and Lalith Varna Kumara

Ministerial Consultative Committee on Urban Development and Housing
(Mrs.) Kokila Gunawardene,  Milan Jayathilake, and Madhura Withanage

Ministerial Consultative Committee on Foreign Affairs
S. B. Dissanayake,  Namal Rajapaksa,  and (Major) Sudarshana Denipitiya

Ministerial Consultative Committee on Buddhasasana, Religious and Cultural Affairs
H. Nandasena,  Gunathilaka Rajapaksha, and Samanpriya Herath

Ministerial Consultative Committee on Power and Energy
Gamini Lokuge,  Duminda Dissanayake, and Nalaka Bandara Kottegoda

Ministerial Consultative Committee on Environment
S. M. Chandrasena,  Isuru Dodangoda, and (Mrs.) Muditha Prishanthi Ministerial

Ministerial Consultative Committee on Sports and Youth Affairs
Premitha Bandara Tennakoon,  Milan Jayathilake, and D. Weerasingha

Ministerial Consultative Committee on Irrigation
D. Weerasingha,  Yadamini Gunawardena, and Jagath Samarawickrama

Ministerial Consultative Committee on Labour and Foreign Employment
D. B. Herath,  W. D. J. Seneviratne, and Jayantha Weerasinghe, P.C

Ministerial Consultative Committee on State Plantation Enterprises Reforms
Sampath Athukorala,  Thisakutti Arachchi, and M. Rameshwaran

(Colombo/Feb22/2024)

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Sri Lanka, Vietnam to cooperate on agriculture

ECONOMYNEXT – Sri Lanka and Vietnam have signed an agreement to develop the agricultural sector in the island.

The agreement will include the exchange of agricultural technology, studies and research, expertise, production of advanced seeds, application of fertilizers and pesticides, and training of farmers and officials to increase harvests.

Sri Lanka’s Minister of Agriculture and Plantation Industry Mahinda Amaraweera and Minister of Agriculture and Rural Development of Vietnam Minh Hoan Le signed a memorandum of understanding on Wednesday, a statement by the Government Information Department said.

Bilateral discussions between the two countries were held in conjunction with the 37th Asia Pacific Conference of the United Nations Food and Agriculture Organization. (Colombo/Feb22/2024)

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Merchant Bank of Sri Lanka and Finance given ‘BBB+(lka)’ rating by Fitch

ECONOMYNEXT – Fitch Ratings said it assigned Merchant Bank of Sri Lanka and Finance Plc (MBSL) a first-time national long-term rating of ‘BBB+(lka)’.

“MBSL’s rating is driven by our view that the parent, BOC, would provide extraordinary support to MBSL, if required,” the rating agency said.

“We assess MBSL’s standalone credit profile as being weaker than its support-driven rating because of its small franchise with 1.8% market share of sector loans, evolving business model, and weak financial profile, which is reflected in its poor asset-quality metrics, weak profitability and high leverage.”

The full statement is reproduced below:

Fitch Ratings – Mumbai – 22 Feb 2024: Fitch Ratings has assigned Merchant Bank of Sri Lanka & Finance PLC (MBSL) a first-time National Long-Term Rating of ‘BBB+(lka)’.
The Outlook is Stable.

MBSL is 84.5% owned by Bank of Ceylon (BOC, A(lka)/Stable) and other BOC group entities. BOC is the largest banking group in the country.

Key Rating Drivers

Shareholder Support Drives Ratings: MBSL’s rating is driven by our view that the parent, BOC, would provide extraordinary support to MBSL, if required. BOC’s ability to support MBSL is reflected in its credit profile, which is underpinned by its standalone strength. We believe that any required support for MBSL would be manageable relative to BOC’s financial capacity.

Our support assessment also takes into consideration BOC’s majority shareholding in MBSL, increasing product offerings by MBSL that are complementary to those provided by BOC, the parent’s oversight of MBSL’s policies and strategy through board representation, and the usage of the BOC brand by MBSL in its business operations, which raises reputational risk for BOC should MBSL default.

Limited Importance to Parent: MBSL is rated two notches below BOC due to its limited importance to the group. MBSL mainly serves high-yielding, under-banked segments that have limited overlap with BOC’s core customer base, but this is partly offset by BOC’s focus on increasing merchant banking via MBSL to strengthen group feebased revenue. MBSL made up 0.8% of BOC’s consolidated assets at end-September 2023, and makes negligible contribution to group profitability. MBSL also has considerable management independence and there is limited operational integration between the entities.

Weak Standalone Profile: We assess MBSL’s standalone credit profile as being weaker than its support-driven rating because of its small franchise with 1.8% market share of sector loans, evolving business model, and weak financial profile, which is reflected in its poor asset-quality metrics, weak profitability and high leverage. MBSL focuses on vehicle leasing, and gold- and property-backed loans. It has a high risk profile stemming from its significant exposure to borrower segments that are highly susceptible to economic and interest rate cycles.

Stabilising Economic Outlook: We expect the operating environment for Sri Lankan finance and leasing companies (FLCs) to continue to stabilise following the inflation and interest-rate shocks over the past two years. Easing inflation and interest-rate pressures should provide steadier conditions for FLC sector performance. Some headwinds linger, as higher taxes will continue to weigh on household finances in 2024. Investor confidence will also take time to recover. Nonetheless, we expect economic activity in Sri Lanka to improve in the financial year ending March 2025 as GDP growth recovers.

Asset Quality Pressure: The company’s loans that are more than three months past due were high at 25.3% of total loans at end-September 2023 (end-2022: 24.3%) due to its high risk profile. Nonetheless, MBSL’s focus on bad debt recovery has resulted in a decline in the non-performing loan ratio from a much higher level in previous years. We expect a pick-up in borrowers’ business activity and declining interest rates to aid loan collections in the medium term.

Weaker Profitability: MBSL’s pre-tax profit/average asset ratio was low at 0.9% in 9M23 and -0.9% in 2022, primarily due to the sharp reduction in its net interest margin and increase in operating costs on lower business volumes. We expect MBSL’s profitability to improve in the near to medium term, though it will likely remain weaker than that of peers, as its lending operations pick up, borrowing costs decline, and bad debt recovery improves.

History of Capital Shortfalls: MBSL’s capital adequacy ratio (CAR) rose to 16.9% (equity Tier 1 ratio at 13.4%) by end-September 2023 from 12.3% (11.7%) at end-2022, and against the regulatory minimum CAR of 12.5%. MBSL suffered significant capital shortfalls in 2020, with CAR at end-2020 of 5.6% below the minimum required 10.5% due to losses. BOC injected equity into MBSL in 2021 to improve its capitalisation. The breaches resulted in the regulator limiting MBSL’s deposit and lending balances, which affected its business franchise. The caps were removed after its capital ratios increased.

The recent improvement in CAR was due to significant reduction in total gross loans, an increase in gold loans, which carry lower risk weights, in the lending mix, and an increase in Tier 2 capital. We expect capitalisation pressure to ease in the medium term due to improved profitability prospects.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

MBSL’s rating is sensitive to changes in BOC’s credit profile, as reflected in BOC’s National Long-Term Rating, as well as Fitch’s opinion around BOC’s ability and propensity to extend timely extraordinary support. Developments that could lead to a downgrade include:

– meaningful reduction in the parent’s ownership, control or influence that could weaken its propensity to support the subsidiary

– notable decline in MBSL’s capital buffers, indicating reduced timeliness in financial support to back growth or meet regulatory norms

– insufficient or delayed liquidity support from the parent relative to MBSL’s needs, which hinders MBSL’s ability to meet its obligations in a timely manner

– sustained weak performance of MBSL that we believe will weaken the parent’s propensity to support the subsidiary

– a material increase in size relative to the parent that makes extraordinary support more onerous for the parent.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade is less likely in the near term. However, a significantly greater strategic role for MBSL within the BOC group, along with closer integration with BOC across broader functional areas and greater sharing of the BOC brand name besides the operational usage of brand, could be positive for the rating in the long term.

Date of Relevant Committee
19 February 2024

References For Substantially Material Source Cited As Key Driver Of Rating
The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings With Credit Linkage To Other Ratings
The rating is linked to rating on the parent, BOC.

This report was prepared by Fitch in English only. The company may prepare or arrange for translated versions of this report. In the event of any inconsistency between the English version and any translated version, the former shall always prevail. Fitch is not responsible for any translated version of this report.

Additional information is available on www.fitchratings.com

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