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Sunday April 14th, 2024

Sri Lanka gets World Bank backing for ‘transformative initiatives’ in default recovery

ECONOMYNEXT – Washington based World Bank is supporting Sri Lanka’s return to a growth path by helping transform key sectors with more concessional funds Managing Director of Operations Anna Bjerde said, as the island recovers from a sovereign default.

The agency will ensure that its new funding is greater than repayments as the country works on making debt sustainable.

Sri Lanka defaulted on its external debt after the deployment of the most aggressive ‘macro-economic policy’ in the history of its central bank from 2020 involving large liquidity injections while taxes were also cut to close what economic bureaucrats said was a ‘persistent output gap‘.

The central bank from April 2022 Sri Lanka started to market price interest rates, ending liquidity injections to mis-target rates, containing private credit.

Sri Lanka also raised energy prices to reduce state enterprise credit and hiked taxes to contain the deficit, helping contain domestic credit. In September 2022 Sri Lanka recorded a balance of payment surplus as central bank re-financed domestic credit was contained, ending currency pressure.

Sri Lanka’s inflation, which rose to 70 percent as the rupee collapsed from 184 to 360 after two years of macro-economic policy and a failed float, has now come to near zero about a year after the currency stabilized.

“I think the government has come a long way and ….we have seen some positive signals of stabilization,” Bjerde said in an interview during a visit to the island.

“I think now we need to really make sure that we couple it with the reforms to make sure we can get growth.”

Sri Lanka can move forward with “coordination, capacity, communication” she said.

Transformative Initiatives

Key sectors that will get World Bank support for reforms and re-building are renewable energy, digitalization and human resources as well agriculture.

Bjerde’s and also met other development partners who support the island’s recovery and government officials, during her visit.

“So, we’ve talked a lot about renewable energy and connectivity with the rest of the region,” Bjerde said in an interview during the visit.

“We’ve talked about the opportunity to capitalise on the natural endowment of wind and sun that the country has and is starting to test out.”

Sri Lanka is eyeing a large renewable energy program on a public-private partnership model where the public sector has to ensure necessary reforms are done and there is stable revenues to support new investments.

“So, they have to do their part, which is the restructuring of the sector, the tariffs, the policies,” Bjerde said.

“Then the private sector needs to actually do the investment. And here, we think that generation through wind and solar should be totally private sector, but they need to know that they will have a steady income stream for their investment.”

The World Bank’s private sector arm, the International Finance Corporation has already helped conduct an offshore wind resource assessment.

It Multilateral Investment Guarantee Agency (MIGA) was also ready to help boost private sector investments across the globe by insuring against a range of non-commercial risks like transfer and convertibility; breach of contract; expropriation; and war and civil disturbance.

“So we’re looking at these sort of transformational programs,” Bjerde. “Another one I think the country will benefit from is digitalization.”

“And we’re working on agriculture, as well as looking at what we can do in other sectors.

“The other area I’d like to see is healthcare, because the country has some very good experience in building preventive healthcare. And I would like to see that scale up for human capital.”

Digitalization would be a key initiative, which could help transform government services to the public.

However, concerns have been raised by freedom activists about the digital ID and a ‘family tree’ given the country’s tendency to slip into authoritative rule.

Fears of a surveillance state have heightened especially given that there is already an existing ID number for every citizen, which can be extended at their own volition in line with the best liberal practices.

Sri Lanka has a history of cracking down on democratic protests, surveilling media and human rights activists, especially when monetary instability worsens.

Related

Freedom concerns over Sri Lanka’s digital identity and tracking to be raised

Sri Lanka Minister: won’t allow Indian funded digital ID project to access personal data

Net Positive Funds

Sri Lanka is working on restructuring bilateral and commercial debt in a bid to emerge from default and re-access bilateral and capital market debt. multilateral agencies are not re-structured.

But the World Bank has made Sri Lanka eligible again for cheaper International Development Association funds as the currency collapsed tipping large sections of the people into poverty.

Though still a ‘Middle Income’ country, Sri Lanka’s was de-graduated more market based International Bank for Reconstruction and Development credit as the country’s credit rating was downgraded to default.

The World Bank has estimated that about 60 percent of low income countries are in debt distress or at risk of debt distress, Bjerde said.

“So, for our IDA countries, we go from credit to grant, if they’re credit IDA countries,” she said.

“And for IBRD countries, like Sri Lanka again, we have gone to shift them from IBRD terms to IDA credit terms.”

As a result, countries in distress may save about one third of their financing cost, according to World Bank estimates.

The World Bank has already started to give budget support in the stabilization program linked to reforms, but project loans will start to kick in under the agency’s new country partnership network.

A project loan for a social safety net has been approved.

“The reforms will also take time and they will require some difficult adjustments,” Bjerde said.

“So having this social protection that protects the most vulnerable and poor while you’re adjusting the economy will also be very good.”

A 150 million US dollar credit to strengthen a deposit insurance fund was approved in November which will protect small depositors from failures of regulated banks and finance companies, on top of 700 million already approved this year.

The World Bank will ensure that its new funding exceeds repayments and Sri Lanka recovers from the monetary and debt crisis.

“…[W]e make sure that we are what we call net positive in our terms,” Bjerde said. “We don’t want to be in a situation where the country actually has its bills greater to us than we have to them.

“So, we make sure every year we are net positive and we encourage everybody to do that.” (Colombo/Nov12/2023)

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LGBTQIA+ Rights: Europe and South Asia See Similar Discriminatory Practices

ECONOMYNEXT – The rights and protections of the LGBTQIA+ community have been fraught with challenges and continue to be so, despite the many gains achieved in recent years.

Nor are those handful of rights universally applied, a recent discussion which looked at the European and South Asian perspectives on same-sex rights and unions revealed. Most developed nations have introduced protections for those identifying as LGBTQIA+, and a view from a distant lens paints a picture of tolerance. Yet, a closer look at the European arena throws up the many gaps that are evident in the application of the law.

In the so-called conservative South Asian nations, changes to legislation are slow to be implemented. That may come as a surprise, for, contrary to popular belief, same-sex relationships were culturally acceptable in the South Asian region and is not a Western concept points out Ruhaan Joshi, a Public Policy Practitioner from India.

Society’s view on same-sex relationships dimmed with the imposition of Western values and the criminalisation of such relationships with the advent of colonial rule.

While the LGBTQIA+ communities in South Asian countries currently battle to have same-sex relationships decriminalised and their unions legally accepted, the irony is that countries that first made such relationships punishable by law have moved on to be more welcoming, though some discriminatory practices continue.

Joshi was part of a discussion themed ‘On Being Queer and LGBTQIA+ in South Asia and Europe, held in Germany on April 9 this year. The discussion which included the release of two papers which examined the rights and protections of the LGBTQIA+ community in Europe and South Asia, respectively, was organised by the Friedrich Naumann Foundation for Freedom.

Joining Joshi in the discussion were lawyer and parliamentarian Premnath C Dolawatte from Sri Lanka, Milosz Hodun, President, Projekt Polska Foundation, Poland, Michael Kauch, a Member of the European Parliament and RENEW Europe Group and Inaya Zarakhel, a Dutch-Pakistani actress and an activist on Queer Rights, who moderated the discussion. The two papers were presented by Hodun and Joshi, respectively.

In his opening remarks, Kauch pointed out that while the view of the liberals is that the rights recognized in one member nation of the EU must be accepted by all member countries, that is not the ground reality, the issue of Rainbow families being a case in point.

In the context of the European Union, though the Court of Justice has ruled on the freedom of movement of those in same-sex partnerships and their families, the ruling is not universally applied by member nations.

In Italy, and some European nations, surrogacy which helps childless couples to become parents is illegal. In other situations where same-sex parents are of different nationalities a child in that union faces restriction of movement or the possibility of being stateless if one parent hails from a country where such parental rights are not recognised.

Hodun meanwhile stated that in Poland transgender persons must first sue their parents for the gender assigned to them at birth, to have their gender marker changed on documents.

Some countries such as Russia and Azerbaijan resort to State-sponsored homophobia, and in many instances politicians and political parties promote such biases to boost their voter base it was pointed out. Even where laws are in place for the protection of LGBTQIA+ rights, there is no political will to implement them.

In Europe where migrants arrive in droves seeking asylum, and are frowned upon by many of those countries, LGBTQIA+ members face even more discrimination Hodun says, both by other refugees and governments, where most often the state ignores the situation despite the guidelines issued by the UN and the European Court of Justice. Hate speech and hate crimes too are on the rise he adds stating that at least 80 per cent go unreported.

Increasingly the LGBTQIA+ community has experienced a diminishing of their safe spaces as right-wing and populist governments are elected across the globe. Taking a dig at feminism, meanwhile, Kauch states that though feminists uphold a woman’s right to opt for an abortion, they take a different approach on the topic of surrogacy.

Dolawatte who waded into unchartered waters when he presented a Private Member’s Bill to decriminalise same-sex relationships through an amendment to section 365 of the Penal Code and the repealing of section 365A in its totality, is hopeful that the Bill will pass its third reading. It’s been an uphill battle he says, referring to the case filed in the Supreme Court against the Bill. The court ruled in his favour.

He had little or no support from his own party members, but says the President of the country, and younger party members are with him on this issue. Apart from making Sri Lanka a safe space, it would encourage foreign nationals identifying as LGBTQIA+ to visit without fear, and thus boost tourism he opines.

As Joshi states society has come a long way from when LGBTQIA+ were made fun of and were subject to violence to the positive portrayal in movies. Such movies are also well-received by society. Transgender identity has a distinct recognition in South Asian religious beliefs. Hijra, Khwaja Sara or Kinnar are some names given to transgender folk and they have, since ancient times been an accepted group in society. On the one hand, there’s Afghanistan and the Maldives which make no allowances for the LGBTQIA+ community, while Nepal became the first South Asian nation in 2023, to register a same-sex marriage, Joshi states. In most South Asian nations, the courts have ruled in favour of relaxing the rules against this community, and, like in Europe, it is the governments that drag their feet.

For governments to change their stance, society must take the lead in fighting for the unconditional dignity of the individual, freedom of movement, and safeguarding the tenets of democracy, he says adding that it must also run parallel with the LGBTQIA+ community looking beyond themselves at issues that impact democratic values, and the societal restrictions non-LGBTIQIA+ groups face, such as opposition to inter-caste marriage and the right to adopt outside their caste systems and equal access to many other privileges.

While the panellists advocated working together across the global divide as a step towards achieving equal rights for all, Dolawatte also called for caution; too much pressure on such issues from Europe he said may not be welcome, and must be handled with care.

With right-wing and populist governments getting elected across the globe, Kauch claims the forthcoming EU elections will prove crucial in deciding how future and current governments ensure tolerance and diversity amongst their citizenry.

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Sri Lanka making new economic laws to embed structural reforms

ECONOMYNEXT – Sri Lanka is making new laws and also revising old legislation following a comprehensive review of past experience and lessons learned, Treasury Secretary Mahinda Siriwardana has said.

Most of these new laws focus on structural changes of the existing executive and administrative structures, Siriwardana was quoted as saying in a speech to ministry officials on April 08.

The laws related to public finance, procurement, public private partnerships, state enterprises and also a law on the offshore economy.

The following new laws are being made:

a. Public Financial Management Bill
b. Public Debt Management Bill
c. Economic Transformation Bill
d. Management of State Owned Enterprises Law
e. Public Private Partnership (PPP) Law
f. Investment Law
g. Public Procurement Bill
h. Unified Labor Law Bill
i. Food Security Bill
j. Public Asset Management Bill
k. Microfinance and Credit Regulatory Authority Bill
l. Secured Transaction Bill
m.Offshore Economic Management Bill
n. New law for facilitating proposed agricultural land lease programme
Public Service Employment Bill
o. Sri Lanka Accounting and Standard Monitoring Act

Changes are planned to the following laws

a. Amendments to Agrarian Development Act
b. Amendments to Excise Ordinance
c. Amendments to Customs Ordinance
d. Amendments to Finance Act
e. Amendments to Foreign Exchange Act. Colombo/Apr15/2024)

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After PM’s Chinese visit, US NSA talks to Sri Lanka President’s advisor on peace, security

ECONOMYNEXT – The United States National Security Advisor (NSA) Jake Sullivan held talks with Sri Lanka President’s Senior Advisor on National Security Sagala Ratnayaka focusing on regional security issues this week.

The conversation between the two comes days after Sri Lanka Prime Minister Dinesh Gunawardena ended an official visit to China in which he met President Xi Jinping and his counterpart Li Qiang in Beijing amid discussions over further investments in Sri Lanka and concerns over banning Chinese research ships.

The United States along with India is highly concerned over increasing Chinese influence in Sri Lanka, which is located in a strategic location in the Asia.

China already owns a port and a proclaimed land next to the main Colombo port in Sri Lanka and analysts say the Beijing’s ownership of assets has raised doubts if China is planning to use Sri Lanka as a military base. China has denied this and said its relationship with Sri Lanka is only based on commercial aspects.

The discussion between Sullivan and Ratnayaka focused on a range of crucial topics aimed at bolstering bilateral relations between the two nations, the President’s Media Division (PMD) said.

“Central to their discussion was the unwavering U.S. commitment to supporting Sri Lanka’s security and sovereignty,” the PMD said in a statement.

“Acknowledging Sri Lanka’s ongoing endeavours, Sullivan emphasized the importance of completing the fiscal, monetary, and governance aspects of the IMF program.”

The US along with India has raised possible threats of increasing Chinese influence in Sri Lanka, government officials have said. Both  countries see China as a security threat to the Indian Ocean region, they say.

“The conversation also delved into future prospects for collaboration between the two countries, exploring avenues for enhanced cooperation in various spheres,” the PMD said.

“Sullivan conveyed his keen interest in fostering continued engagement with Sri Lanka, underscoring the mutual objective of advancing peace and security in the region.”

“This dialogue marks a pivotal moment in U.S.-Sri Lanka relations, demonstrating a shared commitment to promoting stability and prosperity in the Indo-Pacific region.” (Colombo/April 13/2024)

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